Worst Financial Aid Mistakes – How To Avoid Them

Many people are not in the financial position to be able to pay for college. There are many scholarships and student loan options. When applying, there are many mistakes that have been made in the past and below you will find the most common mistakes and how to avoid them. 

The first mistake many people make is they ask their friends and family if they think they would qualify for a scholarship or school loan. Sometimes their friends or family will tell them that their parents make too much money so therefore they would not qualify. You need to go online and research the topic.

“All students can borrow up to $23,000 in Federal Stafford Loans over the course of their college education, starting at $2,625 their first year.” The form that you fill out for this is called the “Free Application For Federal Student Aid” (FAFSA). The form asks you to list details about your family’s income, savings, and other assets to determine how much you should be able to contribute towards the college costs. Once this number is established they label it as the “Expected Family Contribution” (EFC). Taking the EFC number and subtracting it from the schools cost of attendance determines the financial need.

Another mistake many parents make is they create a bank account for their son or daughter for school. The parents do this figuring this will help towards college. Although it will help, it doesn’t help as much as if their parents kept the money in their own accounts away from their kids. “The expected contributions are treated differently for students and parents. Parents have a larger amount of financial responsibilities and are expected to devote only 5.64 percent of their assets to college costs. A better idea would be for the parents to put money into a 529 plan. Every state in the country offers a 529 plan. It is best to research the plan that is offered in your state to find out how much you can contribute to it.

You should review the deadlines for submission for financial aid. The reason for the deadline is they allot a specific amount to award each year and can only offer that amount up until the deadline date. If you get your application in even a day late, they could dismiss your application altogether. You may want to submit your application one or even two months before the deadline, as this will give the committee more time to review your qualifications. I know people who sent their child to school and got the application in one day late. The committee ended up dismissing their application and their child had to come back home. 

Make sure to make a copy of your application. Fill out the copy first, this way if you make a mistake you can fix it on the copy and then you can fill out the original without making any mistakes. It is good to type your answers in a word document to double check the spelling of the words you wrote. You should have someone proofread it first before making your final copy.  Leaving out any data could lead to an automatic dismissal of your application. Do not white out your mistakes on the original. It is beneficial to make sure all the spelling is correct. Attention to detail is extremely important and you should keep that in mind.

Follow all directions. Most scholarship applications have specific requests and questions for you to supply. This may include an essay, high school transcripts, extra curricular activities, etc. If you are asked to write a 500-word essay, don’t write one that is 460 words. It is better to write a little more than less.

You don’t want to write too much either. If you need to edit your essay to have fewer words, ask a teacher or a family member who has experience at writing to review your essay. Many students think that if they can’t answer a question that they will leave it blank. It is best to answer the question by writing N/A (not applicable) as the answer to questions you can’t answer. Always use a pen when filling out the forms. Using pencil can lead to your answers getting smudged if the application gets wet. This will make your answers unreadable and lead to a dismissal of your application.

Once you get approved for a school loan, make sure you budget out your years so you don’t end up having to pay more after you graduate. Although the thought of pulling up to the school parking lot in a brand new Ferrari sounds fantastic, in most cases, it will ultimately lead to a debt amount later that may be impossible to pay off. I knew a guy who bought a brand new Porsche when he was a freshman. He said by getting a school loan it is helping him to finance his ride.

A few years after graduation, I saw him at a restaurant. I asked him if he still had the Porsche. He told me he ended up not finding work right away and ultimately defaulted on his loan so the car was repossessed. Be very careful on how you spend your money while in college. College is a time to be frugal. Don’t try to impress anyone by spending more than you can afford. You must think of the long term instead of the short term in regards to consequences.

In conclusion, there are many scholarships and student loans available out there. You need to research and fill out the applications by the deadlines the schools provide. Make sure you follow directions and don’t under or over exceed the requests that the organizations ask for. Always have someone double check all of your applications after you are done filling them out. Once you get a student loan, budget your year out every year and follow your budget, so you don’t end up in a higher debt than you already are in. It is wise to choose a major that has a strong job growth prediction. If you plan ahead and stay focused you will get your degree and start a professional life that should lead to eventually paying off your student debt and enable you to live a prosperous life.