Financial aid demystified

By on January 1, 2010

by Morgan Buerke
Krier Reporter

KANELAND—Senior Beth Smith has spent many tedious hours filling out scholarship applications.

“I’m applying for all of the financial aid and scholarships I can. I’m trying to get as much as possible,” Smith said.

It’s a smart move, the experts say, because college costs have skyrocketed in the past few years, and with it, so have student debts.

Among 2008 college graduates, 67 percent of students graduating from four-year colleges and universities had student debt, a U.S. Department of Education study found—and on average, those graduating seniors owed $23,200, an increase of 24 percent since 2004. For those who attended private four-year universities, the average debt was even higher: $27,650.

This problem has been receiving growing attention as debt loads increase and recent graduates struggle in a poor economy. Often, they have to wait a year before finding a job, while struggling to repay the loans, or they begin graduate school immediately in order to defer them.

And yet despite this, many students still aren’t applying for financial aid and scholarships. It’s a stupid mistake, counselor Andrew Franklin said.

“Applying for financial aid will help you stop throwing your money out the window,” Franklin said. “Realistically, not applying is foolish.”

While financial aid may not seem that important, counselor Maria Mecic, who’s in charge of helping students get scholarships, strongly advises students to apply.

“I’m applying for scholarships and filling out the FAFSA form. I need the grants and scholarships, especially because I have other siblings in college,” Smith said. “I participate in extra-curriculars, do community service and work (to improve my chances).”

Mecic said students should check the Student Services website and the board outside Student Services to find scholarships they’re eligible for.

“Most scholarships students will send off on their own,” Mecic said. “But local scholarships, which are only for Kaneland students, need to be turned in directly to Student Services.”

According to Sallie Mae, the nation’s largest financial aid organization, there are four types of financial aid: scholarships, grants, earned money and borrowed money. Scholarships can be given for a variety of reasons, including excellent grades, financial need, community involvement, parents’ employment, sports and memberships in organizations. Grants, which are need-based aid distributed by the federal government, the state and colleges, are similar in that they do not need to be repaid.

Earned money is just that: earned. Students awarded this participate in a work-study program and are guaranteed a job on-campus—an important benefit because jobs in college towns can often be difficult to find.

The last and least desirable type of financial aid is borrowed money. These are loans that have to be repaid and usually collect interest. Among the better loan options are those offered by the federal government, such as the Perkins loan and the Stafford loan, both of which are low-interest, need-based loans. The Federal Parent PLUS loan is not need-based, but it is low-interest. To qualify, parents must have a undergraduate dependant child enrolled in college at least half-time.

The last two loans are institutional loans and private loans. Institutional loans are directly from the college and the payment and eligibility are determined by the college. A private loan, the least desirable option, is a loan from a private lender, bank or other organization. Private loans often have high interest rates.

Smith, who is applying to the University of Illinois-Chicago and Arizona State University, is still working on her scholarship applications.

“I’ve applied for scholarships through FastWeb and McDonald’s Corporation,” she said.