Understanding college financial aid

Q. I have grandchildren who will be entering college in the fall and I would like to be educated so I might be able to help them. What is the step-by-step process for applying for financial aid, asking for more aid after the initial offer and if needed, applying for loans? Are government loans better than private loans? Should we use a CPA for assistance or someone else? How can one find scholarships for special needs students, e.g. a hearing impaired child?
— Grandparent

A. You’ve got a lot of questions — just like every other family that’s trying to pay for college.

Let’s try to walk you through the process.

It all starts with filling out the Free Application for Federal Student Aid (FAFSA). Most of the deadlines have already passed, but it should still be done, even if it is late, said Steven Sirot, co-founder College Benefits Research Group (CBRG) in Roseland.

The FAFSA is the source of federal aid.

Once that’s done, the family should look to any additional financial form requirement at each school where their child applied. The most common is the College Scholarship Service Profile (CSS), but there can be college specific forms too, Sirot said.

“It is very important to know that schools also require verification of information given on financial aid forms such as requests for tax returns/transcripts, W2s, etc.

Sirot said many schools now use a tool called the DRP (data retrieval tool).

“This is where the applicant can go back into the FASFSA portal approximately two to three weeks after they have filed federal tax returns electronically and use the DRT to pull the submitted tax info from the IRS,” Sirot said. “As the information is directly from the IRS, schools may waive other verifications if this is done properly.”

It’s important to know that schools can rescind an award already offered if requirements are not met.

Going back for more aid is something people can do but they have to be realistic, Sirot said. He said families need to understand whether their original award was strong or not.

“This is not simply whether or not you think it is large enough – but rather is the award appropriate for the student’s academic performance and/or the family’s financial profile,” Sirot said. “It is important to keep in perspective how that particular school gives money – some schools give lots of need based aid, some schools give merit based aid, some give neither, and everywhere in between.”

Having the proper information is essential in both understanding the original award and establishing any basis for appeal. If you consider an appeal, be sure to understand the school’s process, and you can find that out by contacting the financial aid office.

Regarding loans, one needs to apply for each year they are in school.

“Families must be financially qualified to receive loans. If their credit is bad or they have huge outstanding debt, they may not qualify,” Sirot said. “Therefore, it is essential the family understands how to not only borrow the money for one year – but also will they be able to borrow whatever is needed for all four years.”

The only thing worse than huge student loan debt is finding out you cannot even borrow the amount needed to have the student complete their degree, Sirot said.

So are government loans better than private loans? They're not necessarily better, Sirot said, but they're different. You have to examine which is more appropriate for each family situation.

“Some important aspects of federal loans is they are the easiest to qualify for and many times more flexible during repayment in situations like disability, a lost job, or other unfortunate circumstances,” Sirot said. “It is essential to know they are not dischargeable in bankruptcy.”

Private loans vary from lender to lender and people with excellent credit may be able to find an interest rate that is lower than the federal rates, Sirot said, but they are usually a variable rate, which can increase over time.

Should you ask for a pro to help you? As a college funding financial expert, Sirot believes it’s “acceptable to seek professional assistance.”

As a grandparent, Sirot said the best way you can be educated about financial aid and the college process is to be proactive along with the parents.

“A good recommendation is for the grandchild to start the process early,” Sirot said. “Their freshmen year of high school is a great time.”

As for scholarships, you and your grandchildren will need to do some legwork. Take a look atFastWeb.com, a scholarship search engine that displays scholarships from all kinds of groups geared at all kinds of students. You’ll probably find ones for special needs students, too. Also consider contacting alumni groups, professional organizations and any organization or association related to what your grandchildren want to study.

Then start applying!