Financial planning for college. A student’s guide to FAFSA, student loans, and scholarships.

For two decades, tuition has climbed faster than family income. Most students close the difference with four kinds of money. Grants and scholarships first, then work-study, and loans last of all. This page takes each in the order you will meet it, so the spring of senior year finds you with a plan instead of a pile of confusing letters.

Start with the net price

The figure a college advertises is its cost of attendance, a single number folding in tuition, fees, books, housing, food, and transportation. Almost nobody pays it.

A family pays the net price instead. Subtract every grant and scholarship a student receives from the cost of attendance, and what remains is the net price. Two colleges can post the same advertised figure and still bill families amounts thousands of dollars apart, according to how generous each is with aid.

Any college that accepts federal funds has to post a net price calculator on its website. Use it in junior year, before a school becomes a favorite. A few questions about family income and assets produce an estimate of your likely aid and your likely cost. The estimate is no promise. It is close enough to tell you whether a college belongs on your list.

The FAFSA, your first and most important step

The Free Application for Federal Student Aid governs your access to federal grants, federal student loans, and work-study. State programs draw on it too. Because the FAFSA also serves as the TOPS scholarship application in Louisiana, a student who skips it forfeits TOPS along with everything else.

One mistake quietly costs families money, and that is assuming the household earns too much to qualify. File regardless. Some aid has no income ceiling, and many colleges hold back their own institutional aid until the FAFSA is on file.

How the FAFSA decides your aid

Your family’s income and asset details feed the form, much of it pulled straight from IRS records. The federal processor turns that into your Student Aid Index, the number that replaced the older Expected Family Contribution. A college subtracts your SAI from its cost of attendance, and your financial need is the result. Need-based aid cannot exceed it.

A lower SAI signals greater need and a larger need-based award. The figure is not a bill, and it is not what you will pay. Treat it as a planning number, nothing more.

When to file

For the school year ahead, the FAFSA opens on October 1. File during the first weeks of October in senior year, for two reasons.

A good deal of aid is handed out until the money is exhausted, and the early filer arrives before that happens. Louisiana also holds a firm July 1 deadline for TOPS. Miss the date, and the award vanishes for the year.

A federal student aid account comes first, set up at StudentAid.gov, and one parent will need an account to sign the form. Create both before October, and the application itself takes only minutes.

Free money first, grants and scholarships

Neither a grant nor a scholarship is ever repaid. Pursue every one within reach before you so much as consider a loan.

Need is what earns a grant. The largest is the Pell Grant, a federal award for undergraduates from lower-income families, and the FAFSA is what identifies a Pell-eligible student. Louisiana adds its own GO Grant on top, again for families who show need.

A scholarship rewards a strong record, a talent, service, or background, and three sources supply them.

• Merit scholarships come from the colleges themselves. Many state universities award them on a published grid of grade point average and ACT score, so a strong junior-year transcript converts straight into a lower cost. Look up each college’s grid before you apply.
• Outside scholarships come from local businesses, civic clubs, churches, and the places parents work. A few hundred dollars draws far less competition than the famous national contests, and a handful of modest awards together will cover a genuine portion of a year.
• State programs lead with TOPS for Louisiana students. It covers tuition at in-state public colleges for those who finish the TOPS core curriculum and meet the grade and ACT thresholds.

Schedules differ from one award to the next, and the variation catches students off guard. Outside scholarships open and close on their own calendars, a lot of them through the fall and winter of senior year. The Benton High counseling office keeps a running list, so look at it monthly rather than once a year.

Hold one rule as absolute. A legitimate scholarship never charges a fee to apply. Any form asking for a credit card number is a scam, so leave it alone.

Work-study, earning while enrolled

Federal Work-Study pays for part-time jobs for students with financial need, and the FAFSA determines eligibility. The positions are on or near campus, often in a library, a research lab, or an administrative office, and a supervisor arranges the hours around your classes.

Work-study reaches you as an ordinary paycheck for hours worked, not as a discount on your tuition. Students mostly put it toward everyday costs, which keeps that spending off a loan. A quieter benefit, the wages stay out of next year’s FAFSA income calculation, while the pay from a regular part-time job does not.

Student loans, borrow last and borrow carefully

Once free money and earnings are counted, a loan covers the rest. Borrowed money comes back with interest, so two principles govern the whole decision. Take the cheapest loans available, and take no more than the year genuinely demands.

Federal loans before private loans

Federal student loans come in two forms, and the difference between them is worth a substantial sum across four years.

Need earns a subsidized loan. The federal government covers the interest while you stay enrolled at least half-time, so the balance holds steady until after you graduate. An unsubsidized loan is open to any student, need or no need, and interest gathers on it from the day the money is paid out, through every year of school.

Congress sets a fixed interest rate on federal loans, and they carry protections a private lender rarely matches, among them income-driven repayment plans, deferment if you return to school, and forbearance during hardship.

A private loan from a bank or credit union belongs at the bottom of the list. The rate can move, approval usually depends on a parent co-signer’s credit, and none of the federal protections apply. Exhaust your federal eligibility before you so much as open a private application.

Match the loan to the paycheck ahead

Before accepting a loan, find the typical starting salary in the field you intend to enter. A sound ceiling keeps your total borrowing, across all four years, at or below one year of that salary. Stay under the line, and a standard repayment plan fits a normal starting paycheck. Cross it, and the monthly payment begins to dictate which jobs you can afford after graduation.

What repayment looks like

Federal repayment starts six months after you graduate, withdraw, or drop below half-time enrollment. The standard plan spreads the balance over ten years. Income-driven plans stretch the term and tie each payment to your earnings, which lowers the monthly figure while adding interest over the longer life of the loan.

Interest is the part students underestimate most. A balance left untouched through four years of school, repaid slowly afterward, can cost well beyond the original sum. Whenever a budget allows, paying the interest on an unsubsidized loan during school keeps the balance from compounding against you.

A head start, the 529 plan

A 529 plan is a state-sponsored investment account meant for education costs. The money inside grows free of federal tax, and a withdrawal spent on tuition, fees, books, or housing escapes tax as well. Louisiana operates its own version, the START Saving Program, and adds a state tax deduction for deposits.

This account belongs to parents and relatives, and it rewards a start years ahead of college rather than months. A grandparent who wants a birthday gift with a longer reach can pay into a 529. Even a small account, opened early, trims the borrowing a family faces later on.

Your year-by-year plan

Financial planning is not a single conversation in the spring of senior year. The work is spread across high school.

• Freshman and sophomore years. Your grade point average is a financial asset, since merit scholarships are built on it. Keep funding a 529 if the family has one.
• Junior year. Use the net price calculator for every college on your list. Take the ACT, because the score governs both admission and the size of merit and TOPS awards. Start listing outside scholarships and their deadlines.
• Senior year, fall. Create your StudentAid.gov account, and have a parent create theirs. File the FAFSA in October. Submit outside scholarship applications as they open.
• Senior year, spring. Compare award letters as they arrive. Accept grants and scholarships in full. Accept only the loan the year truly requires, and decline the rest.

Reading an award letter

A college’s award letter is not a bill, and it will not sort its money cleanly for you. A single letter can list a Pell Grant, a merit scholarship, a work-study allotment, and a loan offer in one column, set out as though the four were equal.

They are nothing alike. Sort every line into two groups. Grants and scholarships are money you keep. Loans and work-study are money you repay or have to earn. Weigh your colleges on the first group, the cost left after aid, rather than on the advertised price or the size of the headline number.

Questions

Call Benton High School at 318-759-2580, or visit 449 Fairburn Avenue, Benton, Louisiana 71006.