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College and Career Preparation: How Will I Afford College?

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Award Package:
The total financial aid offered to a student by a school. This may include grants, loans, and work-study awards.
Direct PLUS Loan:
A loan that graduate students, professional degree students, and the parents of undergraduate students may take out to pay for college education expenses. It is available through the federal Direct Loan Program.
Direct Stafford Loan:
A student loan that is guaranteed by the U.S. government and has a fixed interest rate lower than private loans. The loan can be either subsidized or unsubsidized, and there are strict eligibility requirements and borrowing limits. Repayment begins at the end of the six-month grace period after the student leaves school.
Federal Work-Study Program (FWS):
A federally funded program that helps college students earn aid through part-time work. Students find jobs through their college. The money goes toward paying college expenses.
First-Generation Student:
A student who will be the first from his or her family (including grandparents, parents, and siblings) to graduate from a college.
First-Time Freshman:
A student enrolling at his or her first college after graduation from high school.
Free Application for Federal Student Aid (FAFSA):
The application required by the federal government for calculating need-based college financial aid. It can be obtained from high school guidance offices, college financial aid offices, and the Internet.
Grant:
A financial award that is usually dispensed by the financial aid office of a college or university. Most grants are need-based, but some are merit-based.
Loan Default:
Failure to repay a loan on which borrower has made no loan payments for 270 to 360 days and has not made any arrangements to defer.
Merit-Based Aid:
Awards through grants or scholarships based on excellence in academics, leadership, volunteerism, athletic ability, and other areas determined by the granting organization, which can be a college or university, an organization, or an individual. The awards are not based on financial need.
Need-Based Aid:
Awards through grants, scholarships, or loans based on a student's or parent's level of income. Those with lower income levels are offered more money to make college more affordable.
Pell Grant:
A federal grant provided to students who demonstrate financial need. It is known as the foundation of federal financial aid.
Perkins Loan (Federal):
A loan for high-need students that offers up to $5,500 a year for undergraduates and up to $8,000 a year for graduate students. The loan may be forgiven for public service under some circumstances.
Private Loan:
Money borrowed from a private financial institution, such as a bank.
Scholarship:
A sum of money that is used to pay educational expenses and is awarded to a student on the basis of academic merit. The student is not required to repay the money.
Student Loan:
A sum of money to pay educational expenses that must be repaid. Loans to college students are often obtained through the government.
Transfer Student:
A student who moves from one college or university to another.
Most merit-based scholarships are offered to students based on their:
Academic achievements, which include high GPA, high class rank, and high scores on the ACT or SAT.
Scholarship money can be awarded to students who have:
Financial need. This type of scholarship money is called need-based aid . The greater a student's financial need, the more money he or she qualifies for. Students are required to complete the Free Application for Federal Student Aid (FAFSA) in order to determine how much financial aid they can receive.
Scholarships can also be based on the following factors:
Demographic:
★ Race
★ Ethnicity
★ Religion
★ Family history
★ Gender
★ Disabilities

Involvement:
★ Individual and family involvement in military duty
★ Student interest in specific majors or careers
★ Student interest in serving a geographically high-need area
A list of where you can search for specific scholarships:
★ Start by researching local scholarships.
★ Check organizations and employers.
★ Use a free scholarship search service.
★ Contact your state's department of higher education.
★ Research institutional scholarships.
Aside from doing your best in all your classes:
★ Get involved in an extracurricular activity you enjoy. Organizations that award scholarships look for well-rounded students.
★ Consider people you might be able to ask for a letter of recommendation. It should be someone who can provide a unique perspective on your strengths and weaknesses.
★ Begin the outline of your personal essay. Think about experiences that have shaped who you are.
Another avenue for obtaining money to pay for college expenses is through a:
Grant. Like scholarships, grant money is offered as either merit-based aid or need-based aid, although most grants are given because of financial need. Grants do not need to be repaid.
What's the difference between a grant and scholarship?
The requirements to apply for a grant are less strict than those for a scholarship. Grants are more need-based, whereas scholarships are more aptitude-based.
Grants can be divided into two categories:
★ Student-specific: awarded based on a student's personal characteristics, such as race, ethnicity, gender, and family background.
★ Subject-specific: awarded based on a student's intended major. These are offered by companies, organizations, and agencies to ensure there is a good range of potential employees entering their fields.
Here is a list of grant programs the federal government offers:
★ Teacher Education Assistance for College and Higher Education Grant (TEACH Grant): provided to students who plan to teach in public or private elementary or secondary schools that serve low-income students.
★ Federal Pell Grant : considered the foundation of financial aid, to which all other aid is added.
★ Federal Supplemental Educational Opportunity Grant (FSEOG): provided to college-bound students with the most exceptional financial need.
★ The Academic Competitiveness Grant (ACG): provided to first- and second-year college students based on need.
★ The National Science & Mathematics Access to Retain Talent Grant (National SMART Grant): available to third- and fourth-year college students who are majoring in physical, life, or computer sciences; mathematics, technology, engineering, or a critical foreign language; or nonmajor single liberal arts programs.
States use a good portion of this money to provide need-based aid to a diverse number of students. Here is a list of the types of grants they offer:
★ Minority state-funded grants
★ Grants for low-income and disadvantaged students
★ Grants for students pursuing a field of study in which there is a high need for professionals
Here is a list of students who benefit from such grants:
★ African Americans
★ Hispanics
★ American Indians
★ Asian Americans
★ Those with disabilities
Here is a full list of the fields of study that receive the most grant funding:
★ Science
★ Engineering
★ Math
★ Nursing
★ Teaching
★ Technology
★ Arts
There are three federal student loan programs:
★ Perkins
★ Direct Stafford (subsidized and unsubsidized)
★ Direct PLUS
Perkins Loan and Stafford Loan similarities:
Both the Perkins Loan (federal) and Direct Stafford Loan are part of an award package that colleges offer to accepted students.
★ The loans are funded by the United States Department of Education.
★ Their interest rates are low.
★ Students apply for the loans by completing a FAFSA and must demonstrate financial need.
★ The student's college receives the loan money and applies it to the student's tuition, fees, and room and board. The college sends any money left over directly to the student.
Perkins Loan:
★ Maximum amount offered is $27,500
★ Grace period of 9 months
★ Fixed interest rate of 5 percent
Stafford Loan:
★ Maximum amount offered is $31,000
★ Grace period of 6 months
★ Fixed interest rate of 3.4 percent of 6.8 percent
There are certain requirements for the parent who borrows the money. He or she must:
★ Be the student's biological or adoptive mother or father and a U.S. citizen
★ Complete a Direct PLUS Loan application
★ Have a good credit history
Take a look at the details for the Direct PLUS Loan:
★ The interest rate is fixed at 7.9 percent.
★ The amount awarded depends on the college's cost of attendance, minus any other financial aid received.
★ Funds are provided through the college to pay for the student's tuition, fees, and room and board. Money left over is sent to the parent who is borrowing.
★ The borrower can begin to pay back the loan 60 days after the loan is fully disbursed or six months after the borrower's child is no longer enrolled in the school.
Take a look at the details of private loans:
★ Interest rates vary and are higher than those of federal loans.
★ Loans are in the student's name, and he or she is responsible for paying the loans back.
★ Repayment terms vary, and loans with shorter repayment periods usually cost less than loans with longer repayment periods.
★ When a student considers a private loan, it's important to look at the annual percentage rate (APR), which is the sum of the yearly interest and fees he or she will have to pay beyond the loan amount. The APR can make the loan payment quite high.
How do students apply for a Direct Stafford Loan?
By completing the FAFSA.
The grant available to third- or fourth-year college students majoring in physical, life, or computer sciences is the _____.
SMART Grant.
Two areas that have a high need for minority students and thus offer many grant opportunities are nursing and _____.
Education.
In the _____ Work-Study Program, college students who have financial needs can work part-time jobs to help pay for education expenses.
Federal.
Financial aid that is awarded based on a student's academic, artistic, athletic, or other exceptional ability is called _____ aid.
Merit-based.
All of the following should be taken into consideration when researching scholarships except:
Parents' income.
Which of the following websites has a search tool with over 2.7 million scholarships listed?
Scholarships.com.
Cost of Attendance:
The total cost of attending college, including tuition, fees, books, and room and board.
Meal Plan:
A plan in which a student pays up front to eat a specific number of meals in the college dining halls. Each college has its own way of regulating the meal plans.
Here is a list of what constitutes a college's cost of attendance and discuss each item:
★ Tuition and fees
★ Books
★ Living arrangements
★ Food
★ Personal costs and transportation
Excelling academically and being involved in extracurricular activities will:
Make you attractive to top universities, but those institutions might not offer you the best financial aid package.
Another way to save on tuition at a four-year college is to:
Complete your general education (GE) requirements at a community college.
Off campus living:
★ Find an apartment close to campus to save on transportation costs.
★ Share the apartment with a few college friends and split the rent.
★ Look for an apartment that includes the utilities (water, gas, and electricity) in the rent. This makes it easier for students to budget the household expenses.
★ Try to find a furnished apartment or one that at least has appliances so she doesn't have to buy them.
Credit card guidelines to follow:
★ Obtain only one credit card.
★ Use it only in emergencies. Don't use it to pay regular expenses. For those, you're better off writing checks, because then you're using your own money, not money you're borrowing from the credit card company.
★ Pay off the balance every month to avoid paying credit card interest and fees.
Use technology cheaply:
★ Take advantage of the free Wi-Fi available on almost all college campuses.
★ Install a free Voice over Internet Protocol (VoIP) service to make phone calls.
★ Use freeware and shareware for games, music, apps, spyware removal, antivirus, and firewall programs.
What is one way to limit college tuition costs?
Take summer and winter courses.
Which of the following is a good way to save money if you attend college out of state and are traveling home?
Contact airlines for student discounts.
Aside from a student ID, what is another card a college student can use to obtain discounts?
Student Advantage card.
529 plan:
A tax-advantaged savings plan designed to encourage saving for future college costs. Legally known as qualified tuition plans, 529 plans are sponsored by states, state agencies, or educational institutions and are authorized by Section 529 of the Internal Revenue Code.
College savings plan:
A plan in which a student's family saves money for college by investing funds in the stock market. It offers several investment options, and the value goes up or down based on the market performance of the option selected.
Coverdell Education Savings Account:
An education savings account for K through 12 and college expenses. There is a yearly maximum contribution limit. Contributions are taxed up front, but the account is not taxed as it grows, and withdrawals are tax-free.
Prepaid tuition plan:
Also known as a guaranteed tuition plan. This plan allows a family to prepay all or part of the costs of an in-state public university education. The plan may also be converted for use at private and out-of-state colleges.
The 529 plan is legally known as a:
Qualified tuition program. It is a tax-advantaged way for families to invest money for their children's future college costs. Those who invest in the plan are exempt from paying federal taxes on it and receive certain state tax benefits.
529 plans are established and maintained by state governments, state agencies, and higher education institutions. There are two types of 529 plans: the prepaid tuition plan and the college savings plan
Prepaid tuition plan:
★ Locks tuition prices
★ Limited enrollment period
★ State residency requirement
★ Allows only pre-purchase of tuition
★ Not available in every state.
College savings plan:
★ Does not lock college costs
★ No state residency requirement
★ Available in every state
★ Enrollment open year-round
★ Covers all qualified higher-education expenses
Money from 529 plans can be used for all accredited post-secondary schools. This includes:
★ Four-year colleges and universities
★ Community colleges
★ Certain vocational schools
★ Certain foreign institutions
A prepaid tuition plan guarantees that:
The cost of future tuition prices will be covered, while a college savings plan is determined by the market performance of the investment.
Benefits of enrolling in a 529 plan:
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Coverdell ESA:
★ Yearly maximum contribution limit
★ Funds can also be used for K-12
★ More investment choices
★ Age limit for disbursement of funds
529 plan:
★ No yearly maximum contribution limit
★ No age limit for disbursement of funds
★ Fewer investment choices
★ Funds only for college expenses
★ Contributions not taxed up front
A plan that allows a family to pre-purchase one part of a college's cost of attendance is called a _____.
529 prepaid tuition plan.
Where can you open a Coverdell Education Savings Account?
Any financial institution.
All of the following should be considered before enrolling in a 529 plan except which?
There is a limit on how many colleges you can apply to.
Which of the following is a characteristic of the college savings plan?
It is administered only by states.
Which of the following makes the Coverdell Education Savings Account unique?
It offers many investment choices.
For which plan or plans is knowing the withdrawal restrictions important?
Both 529 plans as well as the Coverdell Education Savings Account.
All of the following are important questions to ask before enrolling in a college savings plan except which?
What happens if the beneficiary changes college majors?
A plan that covers all qualified higher education expenses is known as the _____.
College savings plan.
Which of the following is a difference between a prepaid tuition plan and a college savings plan?
One covers all college expenses, while the other covers only tuition.
Which of the following is a tax-advantaged savings plan designed to encourage savings for future college costs?
529 plan.