Paying For It All

Here are some frequently asked questions that will help you decipher and navigate the loan process as a smart consumer.

How do I borrow responsibly? 

• Some debt to fund your college education is normal and should be considered an investment in your future earning potential
• Take out only the amount of student loans that you need and no more.
• Try to cap your maximum loan amount at $6,000 a year.
• Stay enrolled at least half time to prevent your repayment plan from kicking in until you complete your degree.

 

What are “good loans” and “bad loans?” 

• Most Preferred: Select federal loans that have the lowest interest rates and best repayment options to protect your credit and ensure that you can repay them with just a small percentage of your income once you finish school.
  • Direct Subsidized Loans (Or Subsidized Stafford Loans) – lowest fixed interest rates (2.75%) that don’t accrue until after college and have a longer grace period before you have to start repaying.
• Proceed w/Caution: Some  federal loans have fixed interest rates and slightly more restrictive repayment terms. If it is the only way you can keep your out-of-pocket costs manageable, you might consider this option. 
  • Direct Unsubsidized Loans (or Unsubsidized Stafford Loans) – Fixed interest rate (currently also 2.75%) that accrue during and after college.  These loans have a shorter grace period before you have to start repaying.
• Strongly Discouraged: Try to avoid loans with the highest interest rates and the worst repayment terms.
  • Parent Plus Loans have some of the highest fixed interest rates (5.30%) across the federal loan programs and the grace period is only 60 days before you have to start repaying. Interest accrues during and after college. There might be some cases in which you might choose to take out a parent plus loan that are specific to your family situation and needs. But try to go with the above loan types first.
  • Private loans often have high variable interest rates and don’t carry any federal funding. The repayment plans and interest accrual can be quite aggressive. We do not recommend getting private loans. Remember that there are millions of dollars of scholarships that go unclaimed each year!

 

Loan Terminology – What do all these words mean?? 

• Deferment: When you postpone repayment by demonstrating financial hardship
• Entrance Loan Counseling: An online class that you  are required to view in order to receive your loan
• Expected Family Contribution (EFC): Your EFC is calculated according to a formula established by law and considers your family’s taxed and untaxed income, assets, and benefits (such as unemployment or Social Security). Schools use the EFC to determine your federal aid eligibility and financial aid award.
• Fixed Interest: Interest rates that don’t fluctuate with the market or increase with inflation.
• Grace Period: The time period after graduating that you don’t have to pay your loan back (typically 6 months for Direct Subsidized / Unsubsidized Loans)
• Interest Rate: This is an additional charge for using borrowed money. It’s calculated as a percentage of the amount of money you still owe (the unpaid principal of the loan)
• Loans: Money that you borrow, that you eventually have to pay back
• Loan Term: How long you need to pay the loan back (typically 10 years for Direct Subsidized /  Unsubsidized Loans, but can vary)
• Principal: This is the original amount of money that you borrowed that you have to pay back
• Promissory Note: A signed, legal document promising to pay your loan back to the lender in a specified amount of time
• Subsidized: Means that the government is paying for the interest that accrues on your loan while you are in school half-time, for the first six months of after you leave school (grace period), and during a period of deferment.
• Student Aid Report (SAR): Once you file the FAFSA and it has been processed, you will receive your SAR from the Federal Student Aid office. This report shows your EFC.

 

How do I get access to the best loans? 

• All federal loans (direct subsidized, direct unsubsidized, and Parent Plus) require that  you complete the FAFSA
• Most loans are awarded based on financial need. Students with the greatest demonstrated need as reflected by a low EFC in your Student Aid Report often are awarded direct subsidized loans.
• Remember that you must make Satisfactory Academic Progress (SAP), usually a minimum GPA, in order to maintain the loans awarded through a financial package.

 

How much can I borrow in student loans? 

• If you are an undergraduate student, the maximum amount you can borrow each year in Direct Subsidized Loans and Direct Unsubsidized Loans ranges from $5,500 to $12,500 per year, depending on what year you are in school and your dependency status.  

 

What is loan forgiveness, cancellation, and discharge? 

• If you’re no longer required to make payments on your loans due to your job, this is generally called forgiveness or cancellation. 
• If you’re no longer required to make payments on your loans due to other circumstances, such as a total and permanent disability or the closure of the school where you received your loans, this is generally called discharge.
• The Public Service Loan Forgiveness Program forgives the remaining balance on your Direct Loans after you have made 120 qualifying monthly payments under a qualifying repayment plan while working full-time for a qualifying employer (a government agency or nonprofit).
• Teacher Loan Forgiveness Program – If you teach for five years as a highly qualified teacher at a school that serves low-income students you may be eligible to apply for teacher loan forgiveness.
• Closed School Discharge – If  your college or university closes while you are enrolled or soon after you withdraw, you may be eligible to have these loans discharged.
• Visit this link to view all the different instances where a loan may be discharged such as permanent disability, death, bankruptcy, etc.

• Studentaid.gov has tried to make this process as easy and streamlined as possible. Here’s an overview of the process from start to finish. We’ve laid out each steps you need to take to complete the application process below:
  1. Apply for your FSA ID.  This video walks you through the process of applying for your FSA ID.
  2. Have your parent and/or guardian apply for their FSA ID.
  3. Gather all 2020 parent/guardian tax information (here’s a worksheet that shows the questions you will be completing), including:
     1. 2020 Federal tax return records
     2. W-2s
     3. Any other records of income in 2020 (W-4, 1099s, etc.)
     4. Current balance of cash, savings, checking accounts
  4.  Complete the FAFSA Application. Here is a video walkthrough from Khan Academy.
  5. Read your SAR (Student Aid Report) These videos walk you through how to access your SAR and how to read your SAR and find your EFC. 
• ISACorps Mentor! – The Illinois Student Assistance Corps is a talented group of recent college graduates who have been trained on supporting students through financial aid applications and FAFSA verification among other topics in order to serve as near peer mentors to high school students. There is an ISACorps Mentor assigned to every zip code so go to the site to look up the mentor assigned to your high school and/or your neighborhood.

Why have I been flagged for verification?

About a third of FAFSA applications are selected each year for verification, this number goes up to half for students who demonstrate exceptional financial need or whose parents did not file taxes. During FAFSA verification, you may need to verify information you provided about your family’s finances and demographics. There is no way to completely avoid getting flagged, since some schools have 100% of their students flagged for verification and others are simply chosen at random. 

So even if you feel like this…don’t worry.

You’ve got this.

How do you know if you are flagged for FAFSA Verification?

• Check Your Student Aid Report (SAR) – In your SAR, next to your Expected Family Contribution, there will be an asterisk* if you have been flagged for verification.

• Check Your Email – After you file your FAFSA, you will receive a Student Aid Report (SAR) from the Department of Education that gives you basic information about your eligibility for financial aid. You will also receive an email from each school that you’re accepted into.

• • • • • If you don’t see any emails, here are some phrases to search for in your inbox AND spam:
          • FAFSA verification
          • Missing Documents
          • Action Required
          • Non-filing status

What do you do if you are flagged for verification?

• Determine which verification is needed
  • Each college may request different information to be verified and may have a unique process for verifying that information.
  • It’s important that you read through the email from your school carefully. 
• Prepare your paperwork and respond quickly
  • There’s often a deadline so reach out as soon as you can to your college’s financial aid office if you have questions and work with your parent/guardian to get the necessary paperwork in.
  • Often, the paperwork is in your college portal, or has been emailed to you.
  • Be sure to complete all paperwork accurately and provide required signatures before submitting.
    • Common information that often needs to be verified includes:
      • The number of people in your household. Verifying this information might require:
        • Listing out the people in your household, their names, ages, and relationship to you. 
      • The income of the people in your household. Verifying this information might require:
        • The IRS data retrieval tool or an IRS tax transcript (if your parent(s) filed taxes.
        • Income tax returns can also be sent instead of a tax transcript for verification. You don’t need to request an official tax transcript through the IRS as a means of verifying income. For example, if your family filed with turbo tax, they could log into their tax account and download a copy of your tax return and submit that instead of a tax transcript.
        • Submitting a Form 4506T (if your parent(s) did not file taxes)
        • If you are unable to obtain a Verification of Nonfiling Form, institutions can now accept a signed statement that you and your family have made a good faith effort to obtain the documentation and were unable to obtain it.
        • W-2s received from employer (if there was income earned from work)

• Submit the necessary paperwork and follow up!
  • After you’ve submitted the paperwork, wait 2 weeks to see if your account has been updated.
  • If it has not been, FOLLOW UP by calling your college’s financial aid office.
  • This is one of those issues that won’t go away on its own and will impact your financial aid, so as annoying as the process may be, it is really important!

Additional Resources

This video is a quick tutorial about FAFSA verification made by Val from our New York staff but we are sharing it with the public! (Please excuse any program lingo such as “OneGoal Fellows” or “PD” as it was made for one of our classes but much of the FAFSA info is still relevant.)

• •  Help I’ve been Flagged for Verification!
  • ISACorps Mentor! – The Illinois Student Assistance Corps is a talented group of recent college graduates who are trained to serve as near peer mentors to high school students. These mentors have specifically been trained on FAFSA and verification. Search for your ISACorps Mentor by zip code!

It is important to remember that a Financial Aid Award letter from a college or university is an offer, and that it is perfectly fine to ask the college or university to reconsider your application and to seek out more funds for your financial aid package. 

Watch this video to understand why you would want to appeal your award letter and how to do it. 

Reasons to Appeal Aid:

• You got a better offer from a rival college or university. 
  1. This is common. Share the details of the offer letter from the competitor with the financial aid office at the college you really want to attend and ask if they can match it or do better. 
• Your family’s financial situation has significantly changed. 
  1. Remember, financial aid offers are based on the nearly two-years old tax information you submitted via FAFSA. It is very possible that your family’s income has changed since that tax year, and colleges will allow you to provide documentation demonstrating the financial change. Some reasons why financial situations change include:  a family member loses a job, there is a divorce or separation, or the family household grows in size (new baby, caretaking for an elderly family member, etc.).
• A significant traumatic event has impacted your family.  
  1. This could include a natural disaster, a medical catastrophe or the effect of a criminal event (robbery, identity theft, etc.). You will need documentation to support this claim, so be prepared to share evidence with the college. The important thing to remember here is that colleges are run by human beings and they will do their best to support you in times of crisis.
• This is just your dream college. 
  1. Even if you don’t have a traumatic event or a significant change, it never hurts to ask if this is their best offer. Tell the admissions and financial aid officers why you are passionate about attending their school and ask the college to reconsider its offer to help you attend. This is probably the least likely to succeed, since schools get a lot of this plea, but you never know. It’s possible the right message at the right time with the right financial aid advisor could lead to an additional grant or a work study opportunity.

 

How to Appeal Aid

You should feel empowered in these situations to negotiate with financial aid officers to attempt to receive a better financial aid package. The most important thing to remember in the negotiating process is that the worst that can happen is the financial aid officer could say no and leave you with the first offer. You can’t lose money you’ve already been offered when trying to negotiate, but in some cases you will be able to get more financial aid than was originally offered.

• • Remember that financial aid officers are not the enemy. 
    •  They are there to help you pay for college but need to work within the school’s budget.  It will be important to make this person your ally.
  • Focus on reasonably explaining your situation as opposed to ranting. 
    • People are more willing to help when they understand the perspective of someone who is calm and making a reasonable request. Make sure to prepare a list of compelling reasons so you can request in a calm and respectful manner.

• Try to speak to the financial aid officer that has been assigned to you or someone who manages the department.

• • • It’s helpful to speak to someone you’ve already built a connection with. It’s also a good idea to figure out who is in charge so you can speak directly to the decision maker.
  • Start your conversation with a question. 
    • For example: “I am having a difficult time identifying how I will cover the remaining costs for attending your school. Can you talk to me about where each of these figures came from and if there are any solutions for covering my financial gap?”
  • Consider presenting the college with a better offer you have received from another school. 
    • If the school really wants you to attend, they may be willing to match the offer. Be prepared to share copies of other award packages.

• Be sure to ask if you might qualify for any school-based scholarships, including scholarships specifically for minority or first-generation students (if these terms apply to you). 

• • • Financial aid officers often have scholarship money available that isn’t posted on an updated website. Always ask the financial aid office if there are additional scholarships available before you tell yourself you can’t afford to attend.

• Highlight your academic achievements from the past semester if they are an improvement on previous grades, and ask if this success would make you eligible for receiving more aid. 

• • Even though you weren’t able to share your senior year grades when you applied, colleges do care about your most recent grades because it provides current evidence of your achievement and work ethic. If your GPA has gone up since you applied, make sure your financial aid officer knows this.
• If your EFC is unrealistic and your family has a unique circumstance
  • If your family is dealing with unexpected expenses (like hospital bills), or other hardships that were not apparent on your FAFSA, be sure to explain this to the financial aid officer. Financial aid officers may have the ability to override what was automatically calculated on your FAFSA. Be prepared to show documentation of these expenses or circumstances if the school requests proof of your situation.

 

• Script for Calling the Financial Aid Office 

An added benefit to making the time to call financial aid offices is that you will likely learn a lot about the college’s level of ‘customer service’ and the level to which they are willing to help you enroll at their campus for next fall.

 

Here’s an example of a script for a negotiation call with the financial aid office: Student: Hello, may I speak to Financial Aid Officer [financial aid officer’s last name]? Financial Aid Officer: This is Financial Aid Officer [financial aid officer’s last name]. Student: I’m glad I was able to reach you. My name is [Fellow name] and I currently attend [high school name] in [city]. [COLLEGE NAME] has been my top choice school since I began searching for colleges last year. I recently received my financial aid award letter, and I am worried that I will not be able to cover the costs associated with your school. Can you help me identify additional options for assistance? Financial Aid Officer: I definitely can. Let me find your award letter so we can discuss it. Student: Okay, great, thank you. Financial Aid Officer: Alright, I found your award letter. It looks like you have several grants, both  subsidized and unsubsidized Direct loans, and work-study. Student: Yes, and I have a remaining out-of-pocket cost of $6,760. Based on the guidelines I have read, my out-of-pocket costs should be $4,000 or less. My family is also experiencing challenges with finances since we are paying for medical bills for my brother using my parents’ savings, which they might have been able to use to help pay for college. Financial Aid Officer: I’m so sorry to hear that. I think that this could be an instance of extenuating circumstances that our office can review to determine how to best adjust your financial aid. Can you send copies of documentation of the medical bills and payments your parents are making to our office for us to review? Student: Yes, I will talk to my parents and share copies with you as soon as possible. Thank you very much.

 

• Additional Resources
  • Use this Financial Aid Comparison Worksheet to do a side-by-side comparison of different financial aid packages to help you decide your best options available to you.
  • Swift Student is a free resource that provides letter templates and help in writing your financial aid appeal letter in a professional way.
  • Article: How to Appeal Financial Aid 
  • Article: How to Get More Financial Aid
  • OneGoal Advocating for More Money Resources Guide
  • ISACorps Mentor! – The Illinois Student Assistance Corps is a talented group of recent college graduates who are trained to serve as near peer mentors to high school students. These mentors have specifically been trained on FAFSA and verification. Search for your ISACorps Mentor by zip code!

The following describes in general terms the steps of application completion and the process used to determine MAP eligibility:

• The application will be accessible ONLY online through the ISAC website: Illinois Student Assistance Commission Alternative Application 
• A unique ISAC identification number will be assigned to each applicant who creates a student profile & begins the process of completing the application
• Pre-screening questions at the beginning of the application will help you determine which application (RISE vs. FAFSA) should be completed (Data you provide in the pre-screening questions will not be provided to the colleges)
• If your answers to the pre-screening questions show the application should not be completed, a message will advise you to consult your high school counselor, a financial aid professional, or an ISACorps member for assistance in completing the FAFSA.
• It’s important to pay close attention to the data you provide.  Once the application has been submitted, no corrections can be made.
• The Expected Family Contribution (EFC), the eligible MAP award amount, & other relevant data elements will be provided to colleges as the Illinois Alternative Application student record
• MAP award amounts will be calculated for eligible students and eligibility notification will be provided to the student by the college. No plans for verification!

• RISE/Alternative Application for Illinois Financial  Aid  Eligibility Criteria – This document explains the eligibility criteria you must meet in order to receive funding.
• Documentation Needed to Complete RISE Application – A list of items that you will need and other helpful tips in completing the application.
• Alternative Aid (RISE) Application – Step by Step – This presentation gives a brief review of each section of the application with screenshots. This will be helpful to access in case you  need help with a certain section. Please note the screenshots are from last year but the process and each step  is still the same. 
• Frequently Asked Questions –  Frequently asked questions pertaining to the RISE Act and alternative application.
• ISAC RISE Presentation – ISAC Webinar that details the RISE Act and the alternative application process.

• Libraries
  • University Library Circulation
    • Always check to see if your school library has copies of your textbook as circulation or reference material.  Even if you cannot check it out, at least you can read it for free if you cannot purchase a copy.
  • University Reserves
    • Professors often reserve the required textbooks/texts at the library so students may read them for free, but cannot take the book home.  
    • The “reserve” system means that a book is reserved for use at the library only, but students may check it out for a designated period of time (usually an hour or two).  
  • Inter-library exchange
    • Many universities have a sharing program with other educational institutions
    • The exchange means students in the network can borrow books from other libraries but would have to wait for the books to be physically transferred first
  • Public Library
    • Check a local public library for your books.  Even if you are not from the area you go to school, ask about opening a library card account with your university address and ID.  
• Digital Books
  • Google books: http://books.google.com/
    • Sometimes 80% of the book is available online or even whole chapters for free.  If you are in a bind and waiting for a shipped book to arrive or it is later than expected, check here to see if you can get a bulk of the reading assignment completed.
    • Usually, the newer the edition, the less free online access is available. Always check the table of contents and spot check a few pages to see the differences between editions.
    • Project Gutenberg: Digital library of 60,000 free e-books that features books where the U.S. copyright  has expired. So if you are in a class that requires reading of primary texts and older classics, you can probably find it free on this site.
    • Openlibrary.org:  Offers 1.7 million free ebooks online to readers, including over 1,000 textbooks.
    • Internet Sacred Texts Archive: This site is a freely available archive of electronic texts about religion, mythology, legends and folklore, and occult and esoteric topics. Texts are presented in English translation and, where possible, in the original language.
• Free Audio books can be found at https://librivox.org/ 
• Student swaps
  • Upperclassmen are often getting rid of their old books, especially if they know they may not recover a lot of money from them.  Instead of selling for low prices, some may exchange/swap/barter for other items you may have (e.g., silverware, video games, etc.)

• First-time purchase credit
  • First-time purchases might qualify for points toward future shopping, etc.  
• Free shipping
  • Books can be heavy so it is best to buy when shipping is included in the costs
  • Many sites have special shipping rates for university students.  Check first.
  • Amazon has a college student program that offers free 2-day shipping for six months:
    • http://www.amazon.com/Amazon-Student/b?ie=UTF8&node=668781011
• Student discounts
  • Many stores/sites have additional discounts for students who verify enrollment or show a student ID.  Ask and check first.
• Memberships for long-term discounts
  • Some subscriptions offer savings over time or membership rewards at some bookstores and online sites.  For example, if you subscribe to Amazon prime for $119/year, you could save on purchase for the rest of the school year.  Additionally, Amazon Student is free to join for the first six months.
• Older editions
  • Older editions of textbooks and other books are often less than half the price of the newer editions.  When bought used, they are even cheaper.  Make sure the older edition works for your course and the material is not so different that you would not be able to follow the professor and have a hard time deciphering syllabus assignments, page numbers, etc.

If in doubt, you can ask the professor if an older edition is okay since you are trying to save some money.  Your professor might have additional money-saving ideas for you, too!

• • Editions 
    • Always check that the used book is the correct edition and publisher as there may be multiple textbooks with similar names or the search may return similar titles instead of an exact ISBN match.
    • Again, sometimes an older edition is a lot cheaper (just be sure that you get approval from your professor that an earlier edition would be acceptable).
  • Condition
    • Check the condition of the book.  Conditions of “acceptable” and above are usually in workable quality.  Watch out for conditions that say “poor” or “worn.”  The condition should also indicate whether there are highlights, rips, etc. 
  • Notable used book sources include:
    • Ebay.com: https://www.ebay.com/
      • Look up by ISBN or book title. Option to buy used or rent. 
    • Powell’s: http://www.powells.com/used/
      • Popular online source for used and new books
    • Powell’s Chicago: https://powellschicago.com/ – located in Hyde Park, with online bookstore available 24/7, with many used books available at a discount. They will also buy books from you that you no longer need.
    • Amazon: http://www.amazon.com/
      • Look up by ISBN or book title. Instead of clicking on the “new” sellers, click “used” sellers
      • Many sellers who sell through Amazon have top ratings (90%+).  Be wary of those who have lower than 85%.  Lower ratings may mean that those sellers do not ship books on time or are not honest in describing the condition of their books.
      • Nationally-recognized sellers like Goodwill use Amazon as a platform to sell used books.
      • Free student shipping does not apply for these individual used books sellers.  Shipping rates are usually $3.99.
    • Direct Textbook: https://www.directtextbook.com/
      • Enter an ISBN or book title to see a comparative list of online sellers and prices available.
      • The list consists of new, used, and rental books.
      • The list is not exhaustive but gives a good start on where to look.
    • Your school’s Craig’s List
      • Everyuniversity usually has an online marketplace for students to sell/buy used belongings; books are on top of the list
      • University of Chicago example: https://marketplace.chicagomaroon.com/
    • Local used bookstores
      • In addition to the official university bookstore, there might be a local used bookstore targeting university students.  Ask around.
    • University Bookstore
      • Prices are usually highest here, but they do have some used books for sale.  They usually buy back from students at lower prices and re-sell at a higher price.

• If you work there, your student discount may come in handy

• Kindle: http://www.amazon.com/Kindle-eBooks/b?ie=UTF8&node=154606011
  • Kindle is Amazon’s reading tablet.  You can buy books digitally for usually a fraction of the price of a printed book. 
  • A clear advantage is that the book arrives immediately.  With a Kindle account, you may also access the digital book via the internet on your laptop/computer.  Highlights and notes are also tracked for you on the Kindle website: https://kindle.amazon.com/
  • If you receive PDF articles, you can email them to your Kindle and read all your readings from the same device.
  • It is an investment because the Kindle costs $89+. You need to decide if you are able to likely buy digital Kindle versions of your textbooks and course books for long-term savings.
  • Also, if you are more accustomed to using pen and paper for reading, consider whether this device is suitable for your study habits.
• Nook: http://www.barnesandnoble.com/u/nook/379003208
  • Nook is Barnes & Noble’s version of a reading tablet.
  • Details are similar to the Kindle but it depends which device you like more.

• Buying books new will not garner the most savings, but it is still possible if you catch a sale or go to discounted online sellers.
• Always take advantage of any student, members, employee, and/or credit card discounts.
• Always apply gift cards you win or receive toward expensive items that cannot be found at cheaper prices.
• Some professors sell photocopied packets at the bookstore, which must be bought new.
  • For these cases, it is not worth it to go look for used versions because it is a custom-made packet of articles, readings, excerpts, etc.
• Popular places to buy textbooks new (and also old or rentals) are:
  • Amazon: http://www.amazon.com/
  • Barnes & Noble Textbooks for Sale: http://www.barnesandnoble.com/u/textbooks-college-textbooks/379002366/
  • Powell’s: http://www.powells.com/section/textbooks/
  • AbeBooks: http://www.abebooks.com/
  • Book Finder: https://www.bookfinder.com/
  • TextbookX: https://www.textbookx.com/
  • ECampus: https://www.ecampus.com/
  • Campus Books: https://www.campusbooks.com/
  • Big Words: http://www.bigwords.com/book/
  • Alibris: https://www.alibris.com/
  • Cheapest Textbooks: https://www.cheapesttextbooks.com/
  • College Books Direct: https://www.collegebooksdirect.com/