If you have a child heading off to college in the fall, time is running out to apply for financial assistance. We’ll talk about the Free Application for Federal Student Aid form known as FAFSA on this Faith and Finance.
If you have a child heading off to college in the fall, time is running out to apply for financial assistance. We’ll talk about the Free Application for Federal Student Aid form known as FAFSA on this Faith and Finance.
The deadline for submitting your FAFSA is this Friday, June 30. Fortunately, you can fill one out and file it online at FAFSA.gov.
Submitting a FAFSA is the necessary first step in receiving either grant or loan money from the Department of Education. It’s easy to get loan money, but obviously, you want to borrow as little as possible.
Now, let’s go over the types of aid that you might receive by filling out a FAFSA.
First, there’s the Federal Pell Grant. This is an income-based grant program for full or part-time undergrad students, but exceptions are made for students seeking a post-grad teacher certification. The less your family income, the more likely you are to receive a Pell Grant, which could be as much as $7,400 for 2023.
Next is the Federal Supplemental Educational Opportunity Grant. This one’s administered by individual schools, but not all participate, so you may want to check with your school’s financial aid office. It’s also income based with a maximum grant of $4,000 a year.
Teacher Education Assistance for College and Higher Education grant: If you plan on being a teacher, you’ll want to look into this grant with the convenient acronym “TEACH.”
Qualifying for a TEACH grant could get you up to $4,000 a year, but you’ll be required to complete a teaching service obligation. Failure to fulfill that obligation will get the grant converted to a loan and you’ll have to pay it back with interest. So make sure you’re committed to teaching before accepting the money.
Next is the Iraq and Afghanistan Service Grant. If you’ve lost a parent or guardian due to military service in those countries, and you were under the age of 24 or attending college at the time, you could be eligible for up to $7,400 for 2023.
Now, since you’ll be filing at this late date for the 23/24 academic year, a lot of the available grant money has probably been disbursed, so you’re much more likely to receive assistance in the form of Federal work-study programs.
These are funded by the feds, but administered by schools. As the name implies, they provide undergrad and graduate students with the chance to work and earn money for their education expenses. The work could be related to your major and may not necessarily be located on campus.
With these work-study jobs, you’d earn at least the federal minimum wage, and possibly more depending on the job. Again, check with your school’s financial aid office for details and availability.
Now we get into the dangerous area of federal financial assistance …
STUDENT LOANS
We say student loans are “dangerous” because the system makes it incredibly easy to borrow, both for students and their parents.
College students graduating in 2023 who took out loans owe an average of nearly $30,000. The average length of time to pay that off will be around 10 years with a monthly payment of just under $300.
Worse, many students who borrow fail to get a degree that could lead to a higher salary, meaning it will be even more difficult and take longer for them to repay their loans. The lesson here is, of course, to borrow as little as possible and if you do borrow, make sure you graduate.
Then make sure you graduate with a degree that gives you marketable skills that employers are willing to pay you for. It’s great to pursue dreams, but attending college is as much a financial decision as anything else.
Remember Proverbs 22:7, “The borrower is slave to the lender.”
That said, here are the types of loans that could be offered after filling out the FAFSA:
First, the federal direct subsidized loan. This is needs-based and allows you to skip interest payments while you’re in school.
Next is a federal direct unsubsidized loan. This one isn’t needs-based, so basically anyone can get it
Next is the federal Parent PLUS loan. No mystery there, parents take out these loans to put their children through school, but it’s a bad idea and we recommend you not do it.
Your child will have many more years to pay back the money than you will.
Again, the deadline for submitting a FAFSA application is this Friday.
On this program, Rob also answers listener questions:
Are credit card rewards taxable?
How do you determine the wisest place to put your retirement money as you near retirement age?
What is the best way to start an emergency fund?
What is the Windfall Elimination Provision and when does it apply to pensions?
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