Of course, to receive this aid, your child must be admitted to one of these schools, and competition is particularly brutal this year. Harvard said last week that it has received more than 27,000 applications — a record high — for about 1,670 freshmen slots.
Still, if your child has what it takes to get into an Ivy League school, it's worth a shot, because you probably won't have to go into debt to pay the bills.
For most families, "If a child is accepted at Harvard and Berkeley, it's now less expensive to send that child to Harvard," says Terry Hartle, senior vice president for the American Council on Education.
But to qualify for these generous financial aid packages — or any financial aid — you must fill out a FAFSA. The form is used to determine eligibility not only for federal aid but for state aid and for scholarships and grants from private schools.
- You need a FAFSA to apply for federal student loans. All college students are eligible for unsubsidized Stafford loans, no matter how much money their parents make, Kantrowitz notes. These loans, which the federal government guarantees, offer lower interest rates and more flexible repayment terms than private student loans.
Private lenders are expected to tighten credit standards and increase interest rates and fees. Interest rates on most private loans are variable, so there's no limit on how high they can go.
The rate for unsubsidized Stafford loans is 6.8% for the life of the loan. The rate for new subsidized Stafford loans, available to students who can show financial need, will drop to 6% on July 1. And under a federal financial aid bill enacted last year, Stafford borrowers will never have to spend more than 15% of their discretionary income on loan payments.
Smoothing the way
Once you've resolved to fill out the FAFSA, here's how you can improve your chances of receiving aid:
- Apply online. You'll immediately receive confirmation that your application has been received, along with a preliminary estimate of your Expected Family Contribution — the amount your family will be expected to pay under the federal financial aid formula. In addition, the online application lets you list up to 10 schools to receive your financial information, says Kalman Chany, author of Paying for College Without Going Broke. If you use the paper application, you're limited to four schools, he says.
- Know your deadlines. If you're applying to a state school in Connecticut, get busy, because the deadline for financial aid applications for such colleges is Feb. 15. That's the earliest state deadline, but several others impose a March 1 deadline. Some private schools and scholarship programs also impose early deadlines. You can find deadlines for state schools at www.fafsa.ed.gov. Private schools and scholarship programs usually provide deadlines on their websites.
- Start collecting your documents. To complete the FAFSA, you'll need your 2007 income tax returns, bank statements, brokerage statements and mortgage information (see box for checklist).
- If you haven't done your 2007 taxes, you can estimate your earnings and revise them later if necessary.
- Make sure to use the student's full legal name and Social Security number when filling out the form. If the student's name doesn't match the number in the Social Security Administration's database, your application will be delayed.
Click here for more information about FASFA.
