hey guys Tina here the FAFSA guru just wanted to get online today to talk to you all about
financial aid award letters this is the time of year I'm getting a lot of phone calls from
parents who and students who are receiving their financial aid award letters in the mail and they
are making appointments with me so that we can kind of go over them and discuss them and they
can figure out what they are all about so that's what we're gonna talk about today how to breakdown
that financial aid award letter and what does it all mean so it can seem like a lot of mumbo-jumbo
you know you fill out the FAFSA you fill out the CSS and then all of a sudden you get this
award letter in the mail and it tells you these different sources of aid but you have no idea
what they mean so that's what I'm going to go over today so let's break this down the financial aid
award letters students are starting to receive now but a number of them will be coming usually
around March is when they typically start getting sent out from the colleges and when you get your
financial aid award letter it's actually going to outline financial aid that you're eligible or
your student is eligible to receive for the fall and spring semester so it's going to be broken
down by each semester there will be a total award amount for the year and they'll get half in the
fall and half in the spring so let's kind of go through these one by one so the first types of
financial aid that you'll see in your financial aid award letter will be the free money so any
merit scholarship money that your student or you got awarded as a result of your GPA at the high
school level is going to be noted first typically and that's called a merit scholarship in all
colleges have different amounts of money to offer so you may see a larger merit scholarship at one
University then you'll see it another university that you apply to the next thing you'll see if
you're eligible is called a federal pell grant this is a free grant that the government offers
to help you pay for your education and typically pell grants are for lower income span so all the
information you provided on the FAFSA is actually being considered in determining your Pell Grant
eligibility this year the award amount is up to around $6,000 for the year which is nice if you
do get it but again there's a lot of people that don't a lot of those families kind of fall into
that middle income category and don't qualify for the Pell Grant unfortunately the next thing
you may see is a federal state grant this is also usually based on income although the guidelines
are a little bit more lenient than the federal pell grant every state has their own grant money
to award residents of that state and they usually use FAFSA information to determine the award so
if you're eligible or your students eligible to receive that you will see that in your financial
aid award letter then there are what are known as institutional grants so institutional grants are
really it really depends on the amount of money that your college has to offer how well-endowed
they are I guess you could say so some colleges have a lot more money to offer than other colleges
do and this is where it will reflect in the institutional grant or scholarship they'll call
it so you may receive a $5,000 institutional scholarship at one college and a $15,000
scholarship at another college because they have more money to offer so you could see it one of the
most expensive private colleges on your list that you actually get a better financial aid package
then the public university you applied to it all depends on how much money they have to offer and
with the institutional grants they're taking into consideration the FAFSA information and then the
CSS profile information if they required you to fill that out so the first few things would be the
merit scholarship based on GPA in high school the federal pell grant and the state grant which are
typically income based and then any institutional scholarships that your students are eligible to
receive the next thing that you're going to see in your award letter that every student sees is
called the subsidized and unsubsidized Direct student loan so this is a guaranteed loan that
the government offers students to help them pay for their education if you're going to take a loan
it is a good loan to get it's guaranteed which means it's not based on credit it's a loan that
they can get in their own name they don't need a cosigner a parent doesn't need to be on the
loan with them and no payments come due on this loan until six months after they graduate or drop
below a half-time status so as long as they stay in school at least six credits a semester these
loan payments will be deferred and they won't have to make any payments on them until after
they graduate with the Direct Loan it's broken down into two different portions subsidized and
unsubsidized excuse me unsubsidized portion and it just depends on your income in terms of the
different amounts that you'll qualify for in each one the big difference between the two is that the
government will pay the interest that accrues on your subsidized loan while you're in school and
on the unsubsidized loan the government will not pay the interest so that's going to be accruing
in adding up the more you borrow so what a lot of families will do is choose to make interest
payments while the student is in school to prevent that interest from accruing so that's really the
big difference between subsidized and unsubsidized Direct Loans current interest rate on those right
now is five point zero five percent so it's it's a good loan to borrow it is a variable rate it
does change every July so that's the subsidized and unsubsidized Direct Loan the next thing that
you may see in your award letter is a federal PLUS loan this is a parent loan that parents
can take out on behalf of their students it's also federally funded it's a low interest rate 7.6% it
is variable it changes each July this is different in that it is based on credits so parents this is
a loan that the government is going to actually check your credit on and determine whether or
not you can borrow this loan the nice thing about this loan is it covers you can borrow up to the
total cost of attendance - any financial aid the student is getting so it is a good loan to
to kind of cover the large expense that your student may have left to pay however it's a
loan that you have to take out and in your name and be responsible for and payments typically
start coming due about 60 days 30 to 60 days after the loan is dispersed but you can choose to have
those payments to fir'd also while the student is in school but the interest will accrue so that's
something to keep in mind one thing I just want to mention about the Parent PLUS loan that a lot
of people aren't aware of if there's a REIT for some reason you might be denied a Parent PLUS
loan based on credit or something like that it's worth applying for because if you get denied that
loan then your student can qualify for some additional unsubsidized Direct Loan money to
kind of make up for that so that's just something that you you know a little tip that not a lot of
people are aware of if you think there's a chance you may not qualify for a Parent PLUS loan based
on credit apply for it get the denial so that your student can actually get some additional
unsubsidized Direct Loan money awarded to them in their name it's it could be an extra four thousand
dollars so it makes a big difference and then one of the last things that you'll see in the
financial aid award letter would be alternative loan eligibility so alternative loans are intended
to pick up the gap in financial aid it's really a last resort of funding you know it's the last
resort type of loan that you would ever want to borrow because the interest rates tend to be
higher the terms aren't as good as the Federal Direct and the PLUS loans you know so you just
kind of want to keep that in mind there are a ton of different alternative loan lenders you
can find right through your financial aid office they usually have a preferred lender list of five
or six or seven different ones that you can apply for but again this would be a loan that
you can borrow to cover the total cost of your students attendance - any other financial aid
they're getting so a student can actually borrow an alternative however it is based on credit so
they I mean 99% of the time it requires that they have a cosigner so even though the loan would be
in the student's name whoever's co-signing of course is going to be responsible for that loan
also most of those payments do come due while students are in school there are some lenders
that are now offering deferred payments for once they graduate but I just kind of wanted to break
it down a little bit for you between scholarships and grants and loans to kind of help you figure
it all out because I'm getting a lot of calls you know you see these different things in the award
letter but you're not sure what they are oh and there's one thing I wanted to mention I forgot
to mention federal work-study you might also see in the financial aid award letter so if a
student gets awarded work-study that basically means that they can get a job on campus in one
of the academic departments usually you know there's a ton of different work-study positions
that students can apply for and they can earn a paycheck for the work that they do so let's say
they get an award of $2000 for each semester that means they can earn no more than $2,000 for that
semester and work-study funds and they will get a paycheck you know bi-weekly is the way that it
works so some students will use that some families have students to kind of use that as their money
to help them live you know for the incidentals and then other families have them work and then
have that money go directly towards their tuition and and their bill so that's federal work-study if
you're eligible for that it's actually a really great resource for students and you know if mom
and dad you're kind of putting money in their account every month or gonna be giving them
some spending money this is a great way for them to to make some money on their own and
be responsible for for that a little bit and take a little bit of burden off you so that's
it if you have any questions give me a call you know I'm here I'm scheduling appointments
now to help families go over their financial aid award letters and apply for their loans and kind
of figure it all out and I'm happy to help in any way that I can thanks for watching guys take care