And now for my next trick, I will attempt to free myself without help
from anyone. Watch and be amazed as this scarf falls away on its own.
On second thought, anyone got some scissors? Anyone?
Anyone? Help! I need my hands to flourish my wand. Speaking of flourishing and help,
that reminds me that today we're going to learn about flourishing with financial aid.
So get your magic wands, I mean, pens or pencils ready, while we learn about financial aid types
like grants, federal loans, and private loans, the Free Application for Student Aid, otherwise
known as the FAFSA, and the fundamentals of financial aid, such as deadlines,
award letters, college claims, and student debts. Let's get started! Abracadabra and away!
Wonderful, and we'll start our magic show with financial aid types. Let's begin with grants.
Grant money can come from the federal government, the state government, the university, or a private
or non-profit organization. Grants do not need to be repaid. The most well-known federal grant
is the Pell grant. It can be awarded in different amounts based on the student's financial need.
Other federal grants are available through the US Department of Education.
Now, grants are designed for students with lower income families. So if you come from a higher
income family, or if you received a large amount of scholarship money from other sources, you may
be ineligible for certain grants including federal grants. And since we're on the topic of federal
student aid, let's take a look at federal loans. Under the main program for federal student loans,
the direct loan program, undergraduate students who are dependents can borrow up to $31,000.
Students who identify as independent can borrow up to $57,500 in total.
Be aware that federal loans are just that, loans. They will have to be repaid. They are
fixed interest rate loans, which means that the interest rate for each academic year
is set on July 1st, and that rate will remain the same for as long as the loan lasts.
There are four types of federal student loans, subsidized, unsubsidized, plus,
and consolidation. Let's take a look at direct subsidized and unsubsidized loans. On this chart,
you can see the main differences. For subsidized loans, you must demonstrate financial need,
whereas unsubsidized loans are available for any college student. Subsidized loans usually
come with a smaller amount, while unsubsidized loans have higher limits. With subsidized loans,
the Department of Education pays your interest while you are in college. However,
with unsubsidized loans, the interest accrues or continues to grow while you are in school.
Direct plus loans are for graduate or professional students, or for the caregivers of dependent
undergraduate students. The money from these loans are to help pay for education expenses
not covered by other financial aid. While financial need is not an eligibility factor,
a credit report is required. Direct consolidation loans are for students who have multiple loans.
With a direct consolidation loan, you can combine all your federal loans together into one with a
fixed interest rate, which means your interest rate won't get any higher. Be aware though,
that the interest itself will get higher, and you might have a higher interest rate
in order to take the consolidation loan. All right, so those are all federal loans, but
what about private loans? Private student loans are offered through
banks, credit unions, or online lenders. Not the government. The interest rate for a private loan
is usually higher than for federal loans. Approval for a private loan is based on your credit score.
Even if you don't have a credit history, I certainly didn't have one when I was a teenager,
you can apply with a cosigner. A credit worthy adult who shares accountability for the loan.
The final type of financial aid is work-study, but we're actually going to spend the entire
next lesson talking about that. Since we're on the subject of what's next, let's move on to our next
magic trick in this show. The Free Application for Federal Student Aid,
or the FAFSA. The FAFSA is pretty much exactly what it says. It's an application used to
determine college aid for students. The FAFSA is available to fill out online through the US
Department of Education's website. To fill out the FAFSA, you will need to create an online
account with a username and password. Either you or your caregiver can complete the FAFSA.
The first section will be your basic personal information like name, date of birth, and address.
Then you will list the schools that should receive your FAFSA. Sending your FAFSA to a school
won't signify your acceptance of their offer. You still have time to make up your mind. Afterwards,
you'll answer a series of questions to determine whether you are a dependent or independent. If you
are a dependent, you will need to enter your caregiver's demographic information. Next,
you will enter the financial information section, and finally sign and submit. Even if you think you
might not qualify for financial aid, you should still fill out the FAFSA. You never know! You can
begin filling out the form as early as October 1st for the following academic year. The deadline to
finish the FAFSA for federal aid is June 30th, but many colleges set earlier deadlines, and you might
receive more money if you fill it out earlier before everyone else. Get that money, honey!
Now that you're excited to fill out that FAFSA,
let's speed things along with our final magic exhibition! Fundamentals of financial aid.
And the first fundamental is deadlines. Yet another thing to mark on your calendar.
Pay attention to financial aid deadlines. They can be different for different universities and
different between states. Many times financial aid is distributed on a first-come first-served basis.
So be the first! When you receive financial aid, it usually comes to you in a letter or
email. Typically it will arrive in early spring. Usually there will be instructions in the letter
or email of any steps you need to take. Be sure to follow those instructions as soon as possible.
Many times, you will be asked to log into your student account and officially accept all the
financial aid offered by a specific date. If you don't accept by the deadline, your financial aid
could be rescinded. Now, sometimes you may want to rescind some of that financial aid yourself.
I know, that sounds wild, but just hear me out. Some universities say that they offer a full
tuition coverage, but part of their financial package includes student loans. In my case,
I would go into my account and turn down the student loan options offered to me. Some of you
may be wondering, why would you turn down student loans? Isn't that just more money for you? Well,
not exactly. Remember that loans are loans. You will have to pay them back. Usually payments will
begin six months after you graduate, and just like we learned in our earlier lesson, To Go
To College, Or Not To Go To College, student debt never expires and can affect your credit score in
the future, and your freedom to pursue a specific career. Ah, freedom. Isn't that a lovely word?
I'm so glad we got to learn about freedom with financial aid, with financial aid types such as
grants, federal loans, and private loans, the FAFSA, including finding it and filling it out,
and the fundamentals of financial aid with deadlines, award letters, college claims, and
student debt. Well, I've got to come up with a new magic trick for my show while you check out the
supplemental materials for this lesson to prepare for our next class, where we'll learn all about
Winning With Work Study! Until then, keep constructing your college castle in the sky.
Okay, let's try another magic trick. Oh hey, maybe using this pencil wand
will help. What do you think, pencil wand? Oh, oh no. Oh it's, it's stuck! Seriously?