Tag Archives: financial aid


4 Things Teens Absolutely Must Know Before Taking Out a Student Loan

A college degree today is equivalent to a high school diploma 50 years ago. That is to say it’s an expected, if not necessary, level of education needed in order to secure a job in a number of professional fields.

The one major difference between high school and college is, of course, price. But given the importance placed on higher education, many families will do whatever it takes financially to ensure their child can earn that degree.

For most, that means taking out student loans. Before you and your teen go down that road, you should both be aware of the implications going forward.

These are four things you and your teens absolutely must know before taking out a student loan:

  1. Almost 71 percent of bachelor’s degree recipients will graduate with a student loan.

As a parent, you might think loans aren’t necessary since they weren’t when you were looking into college. According to a 2015 Wall Street Journal article, your memory doesn’t deceive you — less than half of students graduated with student loans two decades ago and about 64 percent did 10 years ago. These days, however, roughly 3 out of 4 students will need to borrow money to graduate.

  1. The average 2015 college graduate with student loan debt will have to pay back a little more that $35,000.

If your teen is one of those three students who will take out a loan, they can expect to be saddled with $35,000 upon graduating. That amount is more than double what borrowers had to pay back two decades ago, even after adjusting for inflation. So not only are more students taking out loans, they’re also paying more in loans.

  1. Only borrow what you need.

It’s generally thought the biggest loan you can get is the best. This is not true. A loan should strictly serve to cover the cost of college — this includes spending costs in addition to the basic costs of education, room and board. When taking out a loan, look at what the averages are and then apply yourself and your situation against those. This is one of several tips you should consider during the process.

  1. Know what types of loans are out there

When applying for financial aid, loans are normally included in the school’s offer. Some student loans are made through the federal government, while others come from private sources like banks for financial institutions. Generally speaking, federal loans offer borrowers more ways to pay the money back along with a lower interest rate.

Make sure your teen has a basic idea of what they’d like to study and what they hope to achieve while in college. They can figure it out while already there, but that’s a costly deliberation period. Getting some real world experience first either through a job, volunteering, or even traveling can help hone their interests and formulate a plan for a worthwhile college experience.

Remember to remind your teen to speak to someone in his or her desired college’s financial aid office. They’re there as resources to help you!


Navigating Student Loans: Use Summer to Prepare for FAFSA

The Free Application for Federal Student Aid (FAFSA) can be a cause for confusion when it comes to thinking about paying for college, but it is possibly the single most important step in securing your teen the financial aid he or she needs.

While you may not be able to file the form prior to January 1 of a school year, there are steps you can take now to relieve stress and maximize efficiency when filling it out.

Is FAFSA for me?

Everyone should fill it out! Completing FAFSA is the first step toward obtaining not just federal, but also state-level and university-specific financial assistance. Frequently, parents and teens believe that they are not qualified to complete FAFSA; this is not the case—everyone is eligible to submit the form.

Paper or Digital?

The first choice you need to make when completing the FAFSA is whether you and your student would prefer to complete the application via paper or online. Online offers a suite of innovative tools, including user-friendly application tracking, IRS DRT—a tool that allows you to find your personal tax information on the IRS website, and a sophisticated checking process prior to submission, to ensure you’ve completed the document correctly.

[READ MORE: Helping Your Teen Choose A Financial Aid Package]

If you prefer to complete a paper version of the application, they’re available for download on the FAFSA website. You can also request to have one sent to your home or you may pick one up in your teen’s guidance counselor’s office.

What do I need?

Compiling all of the required documents and information is a common reason for delays and complications. Use time over the summer to locate these crucial items for your teen (and yourself if your teen qualifies as a financial dependent):

  • Social security numbers
  • Alien registration numbers (if you or your student are not U.S. citizens)
  • Driver’s license numbers
  • Most recent federal income tax returns
  • W2s
  • Other records of money earned
  • Records of investments
  • Records of untaxed income
  • Bank statements with savings and checking account balances (remember to pull these near your FAFSA submittal date)
  • FSA ID

Many parents and students wait to submit FAFSA until they’ve filed their income tax return for the year, however this can delay the process. FAFSA allows you to use estimated information, and you can return to FAFSA to update your information later in the year post-filing if necessary.

Create your FSA ID

A FSA ID is required to complete and submit the form. Save yourself a step in January and create your login ID and password this summer—and write it down/save it somewhere safe. After, be sure to fully explore the FAFSA website so you are ready to go in January.

Don’t wait until January; plan ahead now so that you can submit as soon as possible (maybe even on January 1!) While the federal deadline is in June, many schools have independent deadlines for aid consideration falling earlier in the year. Filing as early as possible ensures that your teen’s financial information is received by all of their schools’ priority deadlines.

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Financial Aid 101: Finding an Affordable Path to College

By Brian Page, personal finance adviser

For most folks, finding a way to overcome the ever-increasing cost of college is a daunting thought. The sticker price of college has increased 1,200% since 1980, and bankruptcy is not an option for most seeking student debt relief. However, earning a college degree is still within reach; it’s just that the path to get there is full of many more twists and turns. H&R Block Dollars & Sense  wants to help you find your best path by arming you with the resources you need to make an informed decision. And by the way, we’re awarding millions in scholarships and grants to H&R Block Budget Challenge participants.

Explore college programs

The Institute for Education Sciences College Navigator is the ideal college comparison tool to begin exploring your options. Keep an open mind that when you begin. A cited barrier for students enrolling in college is the perceived cost. As an example, high schools that require a completed FAFSA to graduate see significantly more students enroll in college, as they are more informed of what they will pay after financial assistance. In the same breath, attending community colleges for the first two years may be the best option, particularly for students who do not qualify for much need- or merit- based assistance.

Complete the FAFSA on time

FAFSA is the application used by nearly all colleges and universities to determine eligibility for federal, state and college sponsored financial aid, including grants, educational loans and work-study programs. Applications are due your senior year between January 1 and the end of June. After completing the FAFSA, families will better understand their financial aid options, in particular, grants and subsidized loan opportunities. In the event a student doesn’t have regular access to high school guidance counselors or parents who can help, Khan Academy’s College Admissions program provides timely and free educational tips. If you’re eager for a glimpse of what you may pay ahead of time, have a peek at the FAFSA4caster.

A word of caution: It was reported that some schools may use the college ranking inquiry in the FAFSA application process against you. Schools ranking at the top of your list may award you less money because they believe you will still commit to them. Schools low on your list may deny you to improve their admission rates. To get past this, rank and note your top 10 schools as being in alphabetical order.

Take advantage of grants, scholarships and subsidized loans (if necessary)

The federal government is the largest source of need-based aid. State governments and colleges award need- based, and at times, merit-based grants. Like scholarships, grants do not need to be paid back. States and colleges award scholarships, as do private organizations and companies such as H&R Block. Set aside time beginning early in the summer prior to your senior year to begin researching and preparing for scholarship applications. Every little bit helps offset the cost.

If it’s necessary to borrow money to attend college, keep in mind that the CFPB does not recommend total student debt exceeding your first year’s anticipated salary. Further, do not borrow more than you need, even if you have the opportunity. If you’re unsure of what your desired career will pay, the Bureau of Labor and Statistics Occupational Handbook can help. Prioritize subsidized loans; they are the best borrowing option for students. And most importantly, study hard. Bachelor’s degree-graduates comprised just 1.1% of all students who were in default in a recent Department of Education survey. So do all you can to graduate, and graduate on time.

Compare college costs and financial aid packages

When comparing financial aid packages, be sure to see what awards are for all four years (or two years). Unfortunately some institutions will provide packages that only provide aid for one year. This is a lot to consider, so utilize resources such as the CFPB Paying for College Compare Financial Aid tool to compare up to three schools at a time.

College application, financial aid and college search resources

Federal Student Aid, An Office of the U.S. Department of Education

CFPB Paying for College


College Preparation Checklist, Federal Student Aid

College Scorecard


Khan Academy’s College Admissions

Federal Student Aid, Why Go to College

Debt Forgiveness Programs

Bureau of Labor and Statistics Occupational Handbook

Scholarships.com [Scholarship search engine]

The Common Application [Common App]

U.S. News College Rankings

A College Financial Aid Guide for Families Who Have Saved Nothing – Ron Lieber, New York Times