To determine the amount of financial aid a student may qualify for requires the student to complete the Free Application for Federal Student Aid, or FAFSA application. The FAFSA application obtains information on the student, income information and depending on the age of the student, the income information of his parents. This application determines how much financial aid that you may qualify for in the way of student loans and grants. The application can be completed online and is listed in the Resources section of this article.
Complete the FAFSA information between January 1 and March 1. Check with the university that you are planning on attending to find out if there are any state requirements that require the FAFSA to be completed earlier than March 1. Your federal income taxes do not have to be completed prior to applying for student aid because estimated income is acceptable for the application purposes. Some programs and grants have limited funds to give out; the earlier the FAFSA is completed, the better the chances to obtain these grants monies if the student qualifies.
The FAFSA application must be completed every year. Financial situations change and depending on those changes, a student may qualify for more or less financial aid. Some items that may change the amount of aid you may qualify for include income received and number of household members attending college. Grant programs also change over time, and reapplying will help determine if you now qualify for additional aid. The renewal of financial aid also ensures that the student is making progress toward a degree.
Your parents are not required to co-sign for federal student loans. The FAFSA requires the parents' financial information; however, the student is the lone party responsible for these loans. Students under 18 are not held to the "defense of infancy" for federal student loans as private lenders. The defense of infancy does not allow people under the age of 18 to enter into a legally binding contract alone. The one exception is the Federal Direct PLUS loans, in which the parents take out student loans for their dependent students. Private student loans, such as student loans obtained through a bank, may require parents to co-sign a loan.
Student aid comes in the form of subsidized and unsubsidized student loans. Subsidized student loans are loans in which the interest that accrues during the time the student is in school is paid by the federal government. This means the student has an interest-free loan while she is in school and is not responsible for paying any interest on it until the loan becomes payable. Unsubsidized loans are loans where the interest accrues while the student is in school. For this reason, students should maximize the use of subsidized loans and take out as little unsubsidized loans as possible to reduce the overall debt they will incur over their college experience.
Student loans, both subsidized and unsubsidized, can be paid in part or in full at any time. There are no pre-payment penalties associated with either of these loans. The loans are not required to be paid until the student has been out of college for at least six months. Students will receive notice of what the payments will be about one month prior to the first payment due date. Once the loan is in repayment, it is paid monthly typically over 120 months. The loans can be placed back in deferment, not required to be paid, if the student goes back to school or applies for forbearance if he is struggling in making payments for certain reasons.