Financial Aid Tips for High School Seniors & Grads

You should know these financial aid terms

As high school seniors and their parents begin the college financial aid process, they may find themselves faced with unfamiliar terms. This short glossary from KHEAA may help.

Conversion scholarship/ loan. This type of scholarship requires students to provide certain services. If they don’t provide the service, the scholarship becomes a loan.

Cost of attendance. The total cost of one year of college: tuition, fees, room, meals, supplies, transportation and personal items.

Expected family contribution (EFC). This is the amount the student and family are expected to pay for the student’s education. It is based on a formula set by Congress.

FAFSA. The Free Application for Federal Student Aid must be submitted by students applying for federal and state aid. The best way to do so is at www.fafsa.gov.

Financial need. The difference between the cost of attendance and the EFC.

Institutional aid. The scholarships, grants and other financial aid programs provided by the college.

Verification. The process of making sure the information submitted on the FAFSA is correct. The federal government requires colleges to have certain students’ FAFSA information verified.

Time to start repaying student loans

 If you finished college in May and have federal student loans, it’s almost time to start repaying them. These tips from KHEAA may help.

One of the smartest things you can do is pay more than your scheduled amount. If you ask your lender to apply the extra to the principal, you’ll pay less interest over the life of your loan.

Several plans are available. The standard repayment plan calls for equal monthly payments over 10 years. The minimum monthly payment is usually $50. Other options include:

Graduated repayment, with lower amounts that get higher over the 10-year period.

Income-driven repayment plans, with monthly amounts based on income and family size. Some plans forgive the balance if you make on-time payments for a certain time.

Pay As You Earn, if you received no loans before Oct. 1, 2007, and at least one loan after Sept. 30, 2011.

You’ll probably pay more interest over the life of the loan if you use any option other than standard repayment. Also, you may have to pay taxes on any amount that is forgiven.

Remember that the federal government can change repayment programs at any time.

KHEAA is a public, non-profit agency established in 1966 to improve students’ access to college. It provides information about financial aid and financial literacy at no cost to students and parents.

KHEAA also helps colleges manage their student loan default rates and verify information submitted on the FAFSA. For more information about those services, visit www.kheaa.com.