Developing and implementing plans for attaining a formal education aimed at securing some professional endeavor would likely consume significant resources. In fact, that educational roadmap often mushrooms into an incredibly expensive and foreboding proposition few can afford in any event. Employers regularly supply proprietary training deemed necessary in the course of their business operations and at times shoulder the cost of higher education external to the workplace as an extra benefit. However, the contradiction in terms becomes self-evident as most people can’t attain employment without acquiring the credential in the first place.
From where would such financial resources be supplied and what long-term obligations or implications might loom as a result? In all likelihood, such endeavors would necessitate outside funding sources commonly referred to as financial aid. A broad array of methods used to fund the disparity between college or career school costs and what a family can afford generically refers to financial aid. And despite most students enjoying eligibility, merely two-thirds of full-time undergraduates indeed exploit its use for one reason or another.
Financial aid may originate from many sources depending on the circumstances, although substantial portions remain underwritten from individual states or the federal government. At the same time, private foundations, advocacy organizations, trade groups or even the institution attended all become potential funding vehicles to round out a rather comprehensive list. Grants and scholarships, work-study programs and even loans formulate the three principal categories of financial aid offering today’s students a financial bonanza for those taking the time to learn the nuances and distinctions between each instrument.
Unquestionably, the necessity for a thorough understanding of such programs as evidenced by contemporary research and education would likely never be greater. The largest provider of financial aid for higher education in the country, the United States Department of Education, manages financial assistance programs sanctioned under Title IV of the Higher Education Act of 1965. Moreover, their office of Federal Student Aid provides federal grants, loans, and work-study funds each year to millions of students paying for college or career school.
The pivotal document known as the Free Application for Federal Student Aid (FAFSA) consists of an annualized form prepared by both current and prospective undergraduate and graduate students to determine eligibility for financial aid. Unless a student has locked up a full-ride scholarship or family foots the bill for college, it behooves most students to spend time researching available grant and scholarship money as many funds continue to go unclaimed due to the sheer ignorance of students who have dire need of them.
A consolidated list of websites illustrated in Figure 15. t the end of this chapter, highlighted by the U. S. Department of Education, provides a solid core of information sources to review. The subject matter covered includes student grants, scholarships, loans as well as federal and non-federal work-study programs. Primarily need-based awards, student grants describe financial aid emanating from foundations, corporations, governments or specific higher educational institutions one might attend. On the whole, such funds target the completion of some higher education scholastic goal directly or provide indirect support for the same endeavor.
None of which oblige reimbursement. Accordingly, seemingly countless different reasons exist for the issuance of grant money including starting a business based upon one’s education, medical research such as new treatments for disease and even providing funds for a place to live during one’s academic tenure. Fueled by government granted funds, success stories such as the microchip, the Internet, and even the lowly bar code continue to transform seemingly unlimited applications from across the globe to this day.
While they essentially represent free money for college with no strings attached, there nevertheless appears considerable misunderstanding regarding their availability in general. A well-publicized report from NerdWallet, the personal finance website geared to younger adults, indicates close to three billion dollars in free federal money remained on the table in 2013 alone by prospective students for failing to complete the necessary paperwork.
Outside of the proposal justifying their awarding, such funds become free to the signatory. In the case of federal grants, that would be the Free Application for Federal Student Aid (FAFSA) form required for most of the grant types listed in Figure 15. 1. Moreover, beyond attaining the funds themselves, the donor might require accountability measures paralleling the life of the specific endeavor such as reporting on a project’s progress toward that end. Nonetheless, in the final analysis, a grant represents free funds for education.
A financial aid instrument which shares many similarities with grants, scholarships characteristically manifest as merit-based awards used to attain a higher education. And, much like its grant counterpart, the award does not require remuneration in any case; a real boon to students especially when combined with other forms of financial aid. In a traditional sense, scholarships have centered on achievement through athletic, academic, or an artistic ability where high visibility inevitably created a competitive marketplace with winners securing the valuable prize.
As an illustration, what might the financial value of a full-ride athletic scholarship to Northwestern University entail? In sports like football, it could easily translate to five years and approximately $400,000! Be that as it may, not all scholarships base themselves around achievement either. Although most scholarships tend to set competitive standards, others target their offerings to specific institutions and academic disciplines across a remarkably broad spectrum of categories for consideration. Figure 15. ists a brief overview of these categories representing an extensive landscape from hundreds of possibilities. What’s more, students and their families need to realize that procrastination or delayed action could result in missing out entirely for much-needed funds to attend college similar to leaving grant money on the table for not completing the FAFSA. Frequently part of a more comprehensive financial aid package, the Federal Work-Study program, offers part-time employment to help pay for students higher education expenses.
For this reason, each potential candidate should research the offerings and nuances, especially relating to the sharp divide between federal and non-federal programs to avoid being left out at crunch time. Applied through the familiar Free Application for Federal Student Aid (FAFSA) document, the Federal Work-Study program awards benefits to students demonstrating financial need and requires an annual reapplication to retain continued eligibility afterward.
Student eligibility and securing a commensurate award as a collegiate freshman must initiate during the senior year of high school for the allocation of financial aid funds to occur. Undoubtedly, NerdWallet’s discovery of significant sums left behind demonstrates the value of conversancy with guidelines published by the United States Department of Education and participating institutions nationwide. Earnings from the federal program become taxable to the recipient, cannot exceed award allocation and ought not to count toward the following year’s contribution for financial aid need.
Students would be assigned work hours by their employer with consideration of their total award and class schedule; presumably, to spread these out as efficiently and evenly as possible. On the other hand, students denied federal financial aid may still be able to take advantage of one of the many non-federal work-study programs offered throughout the country at different institutions. Similar to the federal programs, these would encourage students to seek employment in fields related to their academic studies whenever possible.
And while jobs on-campus offer convenient logistics for the student, there is no guarantee of meeting those accommodations. In any event, off-campus jobs often materialize in nonprofit agencies for the public interest offering the possibility of a greater substantive experience with which to build a resume. Also, realize that non-federal work-study programs exist at the will of the institution or entity that controls the purse strings.
Just as the Federal Work-Study program, non-federal award earnings become taxable to recipients yet could conceivably reduce a student’s need determination on a consecutive FAFSA filing. A crisis looms in the American economy tethering directly to the accumulation of student loan indebtedness now surpassing one trillion dollars and continuing to grow virtually unabated. In fact, bankruptcy attorneys nationwide have begun to witness potential clients symptomatically encumbered with student loan obligations in recent years as never before.
Many young people now express serious misgivings whether attending college would provide benefits once readily expected in the shadow of today’s long-term economic drought. Furthermore, according to a recent survey from NerdWallet, rather startling testimonies among medical doctors reveal a high percentage harboring considerable dissatisfaction. Although expressing a multitude of reasons for their unhappiness, government intrusion with the disastrous Affordable Care Act and onerous debt rank near the top.
Of all the ways to fund one’s education, student loans should become the last resort as this type of financial aid must be remunerated back to the originating entity or note holder. Indiscriminate debt accretion necessitating years to extinguish without the benefit of earning appreciably more income with the education sought equates to an effort in futility, does it not? Even so, recent research from the Institute for College Access & Success reports 66% of graduates from public colleges and 75% of graduates from private nonprofit colleges averaged more than $25K and $32K of student loan debt respectively.
As a result of such burdensome long-term obligations, many graduates have continued to place themselves in the unenviable position of never purchasing a home or significantly delaying that prospect for the foreseeable future. Unquestionably, it can affect many aspects of a person’s life. Just as all loans, the contractual provisions formulating an agreement between borrower (student) and lender (institution) deserve maximum scrutiny since those become obligatory for any loan signatories including co-signees in the case of a default.
Two critical components of that contract, one being the loan principal and the other an annualized interest rate highlight that review accordingly. The principal identifies the actual amount borrowed and requires reimbursement to the institution based on an amortization schedule taking into consideration the applied interest rate over a designated timeframe. Never wade into one of these decisions without consultation with family, friends, or anyone with experience. Again, these financial edifices can become quite onerous – seek assistance.