Applying for Financial Aid to Go Back to School

Have you recently decided to go to school? Maybe you’re a first-timer  with your sights set on grad school and then a corporate job.

Or maybe you are returning to school after a long break and lots of real-world work experience along the way. Whatever your story, odds are financial aid will be a part of your college tale.

The average four-year state school education costs over $50,000.  And it’s going up more than 7% a year, which means that even if you put money aside, you need to be earning a pretty decent interest rate to keep up with that kind of inflation. Then there is the whole credit crunch and crumbling economy to contend with as well.  Yes, the facts are grim. But there is a silver lining. According to a recent Wall Street Journal article, the number of government-backed student loans actually increased in the last quarter of 2008, despite a near total freeze-out in all other consumer credit sectors.

Here are some of the basics you need to know about student loans:

>> There are two types of government student loans — the Stafford loan and the Perkins loan. The latter is for students with extreme financial need. Both feature fixed and relatively low interest rates, along with attractive repayment terms (especially when compared to the more expensive and less flexible private student loans.)

>> If you are a non-dependent student (meaning mom and dad no longer claim you on their tax returns), you can borrow up to $57,500 from Stafford loans toward your four-year degree.

>> You qualify for federal student loans by filling out the FAFSA.  The FAFSA is the Free Application for Federal Student Aid, and it is your key to the treasure chest of government student assistance.

Included are not only the Stafford and Perkins loans, but also federal grants, like the Pell Grant and work-study awards. Many states use the FAFSA to calculate their state-based student aid, as do a handful of private scholarship foundations.

>> The federal deadline for the FAFSA is June 1st, although most state and private schools have earlier deadlines. The 2009-2010 FAFSA was available as of January 1st. To complete it, you will need a copy of your 2008 federal income tax return, so be sure to get that done as soon as possible.

>> Despite its rather imposing acronym, the FAFSA is actually a breeze to complete. Plan on spending 60-90 minutes in front of the computer, once you have gathered all the necessary documents (see JobMonkey’s article on the FAFSA application for a complete list.) If you need help, visit the FAFSA website or call their toll-free help line at 1-800-4-FED-AID.

Are you planning on going to school/back to school in the fall? Tell us your plans?