Hi Senior Parents: 

This is the 3rd in our email series to help you better understand and navigate the financial aid process! If you missed the first two emails you can find the first one here and the second one here. 

REMINDER: October 1 is the first day you can access, complete, and submit the CSS Profile financial aid form. The FAFSA will not be available until December (possibly January 1st). 

STUDENT LOANS

• Even students who have no financial need are eligible to file a FAFSA and take out federal unsubsidized student loans in the amounts approved by the colleges
• If approved, these are the maximum amounts your student can borrow each year: 
  • First Year: $5,500
  • Second Year: $6,500
  • Third & Fourth Years: $7,500 each
  • Cap on Total Borrowing: $27,000 ($31,000 if takes more than 4 years for degree)
• Interest accrues from the time of origination 
• You may be wondering how students can finance college through loans (and/or how it's possible for students to graduate with a huge debt load if they are limited as to how much they can borrow each year) -- the answer is Parent PLUS loans and other parent loans
• Parent PLUS Loans
  • Federal program
  • Parents must sign the promissory notes and other documentation -- and the parents are legally obligated to repay the loans
  • Can borrow up to the cost of attendance (less amounts the student received themselves from student loans, scholarships/grants and other sources)
• Other loan options
  • Private lenders
  • For Texas residents attending public or private eligible institutions in the state of Texas, the College Access Loans program may offer better interest rates and terms than Parent PLUS loans or other private loan options

WHY YOU MIGHT WANT YOUR STUDENT TO TAKE OUT LOANS

• Taking out even one federal student loan and then repaying it within 6 months of graduation is a boost to the student's credit score
• Student loans can bridge the gap between the family budget and the cost of attendance
• Student loans can defray some of the personal expenses and indirect costs of college that can easily exceed the expected budget
• Putting a FAFSA on file with the enrolled college, whether your student takes out federal student loans or not, can be a benefit if your family experiences unforeseen financial changes while your student is enrolled in college.
  • Some colleges won't consider (or impose a one-year waiting period) institutional needs-based aid packages if the student didn't file the required forms as an incoming freshman
  • Even if the college has no waiting period, they can act more quickly if a FAFSA is already on file

WE WANT LOANS BUT WON'T QUALIFY FOR ANYTHING ELSE

You've decided to file a FAFSA and/or do want the student to take out federal student loans -- here are the factors you should weigh in deciding WHEN to file:

• Selective Colleges -- If the student is applying to some more selective colleges and it seems unlikely you will qualify for any needs-based aid, it may be advantageous from an admissions perspective for the student to check the box that says "NO, I don't plan to apply for needs-based aid" on the Common App (or other application portal)
  • Most of these colleges are "need-aware" -- meaning that as they review applications and create their incoming class of freshmen, the admissions officers are aware if the student has indicated they are applying for needs-based aid
    • Students who are deemed "full pay" may be at an advantage from an admissions standpoint, especially at the stage where the admissions team is shaping the class from the standpoint of the overall budget
    • "Full pay" does not mean your student won't receive merit aid scholarships
    • If you have need, say so. It won't do any good for the student to be admitted to a college that you cannot afford
  • If you check "NO," but you then go ahead and file the FAFSA and CSS forms in the fall/winter, you risk creating confusion or false assumptions (risking the potential admissions advantages)
• If you checked the "No" box but do want some loans, you can simply hold off and file the FAFSA in May/June after your student has selected the final choice college. You would contact the financial aid office of the college where he/she intends to enroll and tell them you want to initiate the process for taking out federal student loans. You will file the FAFSA and only list the one college and follow their other instructions

WE HAVE NEED AND PLAN TO FILE

I previously provided tips for filing the CSS Profile this fall (beginning October 1st). In the next email, I'll provide more information about filing the FAFSA when it's available and address some of the common questions or issues with these forms. 

Continue to watch your email for more fun financial aid facts and tips!
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