A Complete Guide to College Loans and Financial Aid (For Parents)

Although college is expensive, there are many ways to pay for it. With so many options, how do you find what is right for you? Fortunately, there are many ways to effectively pay for college without breaking the bank or being in debt, as discussed in a recent webinar hosted by BeyondDreams and FLI Raleigh. In this webinar, Thomas Benza, a financial aid officer at Wake Forest University, and Sheryca Crossland, a financial aid officer at the University of North Carolina at Chapel Hill, answered frequently asked questions about college loans. The full webinar is on the BeyondDreams YouTube channel, but here are a few summarized tips and tricks!

College 529 Plan

Although there are custodial and traditional saving accounts (like Roth IRAs), there are also accounts that can help save up for college. Specifically for education, the College 529 plan is the most common college saving plan for parents. This plan differs from state to state, like how North Carolina has the College Foundation of North Carolina (CFNC). The account can be used to pay for expenses in any qualified colleges in the country, whether they are private or public.

College 529 plans also have post-tax contributions. This means that when you first deposit money into the account, it is taxed so that the money can later be invested or withdrawn without any tax in the future. Money is also invested in usually low-risk environments associated with the college 529 plans. Tax-free withdrawals occur if they are used on educational expenses, meaning that the money is subject to a 10% federal tax penalty only if it is withdrawn for a cause not related to educational expenses. Additionally, there are no annual contribution limits and no income restrictions to open an account, meaning that you may deposit as much money into the account per year as you would like. When looking for a 529 plan, take the time to go through the details and benefits to determine if it matches your family’s needs.

Which of the various costs, whether it be tuition, housing, food, books, computer, transportation, etc. can be paid for with funds from a 529 Plan?

Such costs might be considered depending on the specific state’s 529 plan. Generally, if the cost is direct, the 529 plan would cover the expenses. On-campus charges, such as living at the school, are generally easier to document through your billing statement at your university. On the other hand, the line is more blurred in regards to indirect education costs. For example, if the student has an off-campus apartment, it may be more difficult to use funds from the 529 plan when dealing with a landlord. To be sure of what exactly can be paid for, check the details of your specific 529 plan.

Where Do You Recommend Looking for Outside Scholarships?

To begin, you can simply Google search for scholarship opportunities. Shercya Crossland recommends websites such as Fastweb and Niche. If you live in North Carolina, you can use the College Foundation of North Carolina (CFNC) for a local scholarship search. Additionally, the College Board has a scholarship search, which can match you to scholarships that fit you.

You can also check the financial aid homepages at different colleges and universities since anytime financial aid officers receive a scholarship notification from an outside scholarship provider, they put announcements on their college’s financial aid homepage. Sometimes, the scholarships are targeted to the college’s students, but most of the time they offer general scholarship opportunities. Also, reach out to guidance counselors, as they sometimes have a list of scholarship opportunities available.

Once you are in your college, you may also reach out to your department that may know of scholarships that you are eligible for. With any scholarship, make sure to adhere to the deadline and the requirements specified.

When is the Best Time for a High School Student to Apply for a Scholarship or Financial Aid?

There are some scholarships that juniors can begin looking at now, but make sure to understand the specific age rules for each scholarship. Additionally, FAFSA and CSS Profile opens October 1st every year, so be sure to mark your calendars!

After You Get Accepted into a College, How Long Does it Take for Them to Send You Your Financial Aid Offer?

How long the college takes to send your financial aid offer depends on when the student applies for admission to the university. If they do Early Admission, UNC's deadline is October 15, and students are being notified at the end of January through the beginning of February. For students who choose Regular Decision, they are notified around March. If the student is not selected for the verification process, they will receive a financial aid award package that includes student loans, grants, and scholarships. Colleges only send financial aid packages to students who are admitted into the school.

Consider the admissions acceptance letter and financial aid notification to be a relatively parallel process since you can apply for both at the same time. As soon as you are accepted into the university, you can find out about your financial aid status. Watch your requirements, as you may think that you have submitted everything, but the financial aid office might request an additional requirement. Therefore, watch the requirements for financial aid and admissions applications to ensure that everything is submitted so you get a timely notification.

Will My Home Equity Have an Impact on the EFC on My Child’s FAFSA?

Home equity is not assessed on the FAFSA. However, it is taken into consideration in the CSS Profile.

Are There Any High Schools That Can Get You Into UNC Directly So You Would Not Have to Pay for College Fees and Tuition?

Students must apply for college, and the admissions team looks at the student as a whole. There is no easy way to get in, just make sure that you are taking the correct courses to get admitted into the universities or colleges that you desire and that you complete your applications promptly.

What Are the Best Scholarship Programs for Technology and Science Fields?

There are a lot of specific scholarships out there, so you must take your time and do your research. Write a strong essay by making it unique and putting in details towards the scholarship that you are applying for, then use the template across multiple scholarships.

Look for STEAM/STEM scholarships and try to start locally and then expand from your town to your county, state, and southern region before going to national scholarships. You have a much stronger opportunity to receive the local scholarships since it is less competitive.

Will My 401k Balance Have Any Impact on My Kid’s FAFSA?

There will be no questions about your 401K balance since retirement will not be assessed on the FAFSA and therefore does not have any impact. The CSS Profile will ask you about your retirement accounts, like what is the total value of your retirement accounts, however, no contribution is expected from those accounts. It is simply a part of the financial picture of a family.

Is There a Cap Limit on Parent’s Income for Scholarships or Financial Aid?

There is no income level limit for either scholarships or financial aid. You may have 2 students in college who can both qualify for need-based financial aid. Financial officers understand that income can be a rollercoaster — income and assets can go up and down, family members can enter and exit college, etc. Thomas Benza encourages families to use net price calculations at the desired college website to see how income levels start to impact need-based scholarship eligibility.

If You Got Accepted but Haven't Confirmed Going to the College, Do They Still Send You the Financial Package?

You do not have to pay your deposit to get the financial aid notification. You first receive your acceptance from the admissions office, then a financial aid notification, and then you determine whether or not you are going to deposit and become an accepted incoming enrolled student.

College is expensive, but using accounts such as the college 529 plan can help raise enough money. Additionally, applying for financial aid such as FAFSA and scholarships will help you get to college more cheaply. Hopefully, these commonly asked questions will help you gain a better understanding of the financial aid and scholarship process.


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