Not true. While the federal processors will look at all of your savings, they will assess your assets at a rate of only 5.65 percent, and your income at 47 percent. In order to qualify for financial aid, your goal should be to appear as "needy" as possible without lying. Sometimes we African Americans tend to focus on the "top line." But when it comes to qualifying for financial aid, your top line can hurt you. The smaller your taxable income is, the better. Remember: the goal here is not to focus on how much money you make, but on how much you get to keep.
Although we definitely encourage you to investigate sources of scholarships and grants in your local community, believing that you can pay for college this way is a mistake. When you consider the many thousands of dollars that college will cost, you can see that finding this much money would be a feat to behold. Federal loan programs are meant to help you, and with interest rates as low as they are, you should take advantage of them by filing your government forms. Don't realize too late that the "free money" from local organizations and random scholarships that seemed so promising is harder to find than you'd expected.
This is neither entirely true nor entirely false. Each college wants the best possible class of students. If a student has a stellar high school record, colleges will likely be more eager to persuade him or her to choose their school, and may give more financial aid as an incentive. However, the basis of financial aid is the EFC, which measures the family's financial situation. Your income and assets will be the same whether your child has straight A's or not; scholarships, though, are often awarded on the basis of merit.
We often hear people say they have no interest in going to college because they don't want to be paying back loans for years and years. But don't many of us feel this same financial burden paying hundreds of dollars a month to credit card companies, trying to chip away at plastic debt? Taking out loans to finance college is a smart money move, and nothing you can buy with a credit card compares to the value of your higher education. There is good debt, and then there is bad debt.
Student loans represent an investment in YOU. Your college education is one of the most important investments you'll ever make-it will last you a lifetime. Your education is worth being in debt for.
The interest rates on student loans are typically much lower than on other types of consumer loans. On July 1, 2002, student loan rates dropped to the lowest levels ever. Because of rule changes voted on by Congress, the interest rate for Stafford Loans fell from 5.99 percent to 4.06 percent, and the rate for PLUS loans dropped from 6.79 percent to 4.86 percent.
Graduating students and those who graduated but had not already consolidated their loans were able to begin repaying their loans at these new rates. Your education will likely lead to a higher salary, which should enable you to repay the loans and maintain a higher standard of living than you would have had if you had not graduated from college.
Student loans, like credit cards, are not free money. Six months after you graduate, drop below half-time enrollment, or drop out, you will have to begin repaying your loans with interest. It's not easy. And it's important to remember that student loans involve both the parents and the student. These loans usually make up a large part of a financial package and affect the parents while the student is in school. But they're called "student loans" for a reason-you, the student, is the borrower, and repayment is your responsibility. Parents and students should discuss loans together. Everyone should be involved and aware of what sort of debt you're taking on.
One of the classic causes of bad debt: the irresponsible use of credit cards. According to Nellie Mae, a provider of federal and private education loans, credit card use among college students increased by 24 percent between 1998 and 2001. Eighty-three percent of undergraduates have credit cards, and 54 percent of freshmen have them; the average credit card debt level among undergrads is $2,327. Nellie Mae also reports that the average combined student loan and credit card debt for graduating seniors is $20,402. With credit card interest rates averaging 18.9 percent, the debt burden students may face after graduation is scary.
We've been conditioned to believe that receiving a credit card is a rite of passage, signaling that we have "arrived." But credit cards can get you into a heap of trouble if you don't know how to use them wisely-that is, charge within your means, and pay off your balance each month.
One of the biggest mistakes students (and plenty of other credit card holders) make is that they pay only the minimum amount due each month. If you adopt this plan of action, your balance will continue to grow and you'll spend all your money on the interest that is accumulating.
So instead of paying credit card companies money that you don't even have, pay yourself. Save and invest 10 to 15 percent of what you make. Invest in the stock market, in solid companies that have been around for years and whose products you use and understand. Prepare for your retirement by investing in IRAs and your employer's 401(k) plan, where the company will match your contribution.
Educating yourself about money is a big part of preparing for the college years. You might consider reading money management and investment magazines such as Black Enterprise, which will help educate you about investing and offer tips that match your financial situation. Black Enterprise also has a wealth-building kit that can help you get started. For more information, visit Black Enterprise on the web.
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