Education in India

Scholarships, Loans, and Financial Aid Misconceptions

Scholarships: The most prized form of financial aid is, of course, the scholarship. Hundreds of thousands of scholarships and fellowships are available every year. Most are reserved for students with special qualifications, like academic talent. But awards are also available to students who are interested in a particular field of study, to those from under represented groups, or to students who demonstrate financial need.

Scholarships are offered by the schools themselves and by private organizations or individuals. The trick, of course, is to find out about the scholarships that may be available to you. There are several free scholarship databases available on line--free is the operative word here. Don't waste your money on fee-based scholarship matching services. All the information that you'll need can be found on the Web and in various print resources.

Log on to as many scholarship search sites as you want, and compile information on scholarships that you're interested in. Then submit away! The good thing about scholarships is that there's no limit to how many you can get.

Myths about Scholarships
There are many widely held myths and misconceptions about scholarships. Perhaps it's because of the many different kinds of scholarships available or the variety of requirements needed to get them. Maybe it's because the process is time consuming and sometimes complicated. Whatever the reason, several scholarships myths are out there, so we'd like to take this opportunity to dispel some of them.

Myth #1: Billions of scholarship dollars go unclaimed.
Most universities will tell you that they seldom have unawarded scholarships, and, if they do, it's usually because of timing or because of the highly restricted nature of a small number of scholarships. The "billions of dollars" figure comes from unused employee tuition benefits, which account for about 85 percent of unclaimed aid dollars. The number of unused scholarships is actually miniscule.

Myth #2: I can't possibly get a scholarship with all the competition out there.
Alan Deutschman, author of Winning Money for College, received a degree from Princeton University for practically nothing by taking the initiative to enter scholarship contests wherever and whenever he could find them. As Deutschman claims, there are a lot of contests out there; you just need a little resourcefulness to seek them out. Not all scholarships are for A students; some are for those with a particular interest, those from a particular ethnic background, those affiliated with professional and fraternal groups, and so on--the list is endless. Another tactic is to look locally for opportunities in churches, civic organizations, and other groups. You won't believe the number of opportunities that you'll find if you just look hard enough.

Myth #3: Scholarship searches are worth paying for.As a prospective student, you have a wealth of information at your fingertips. For starters, visit your library, search the Web, and browse through bookstores--you'll soon find that you don't need to pay anybody for what you can do for free.

Myth #4: I'm a top student, so I don't have to seek out scholarships. They'll come to me.Don't take it for granted that you'll get a free ride through business school. The odds are not in your favor. Very few students are lucky enough to get through college on scholarships alone--and in graduate school, it's practically impossible. Therefore, we strongly encourage you to explore all the options that are available to you for funding your business degree, including loans, employer-funded tuition remission, and work-study.

Beware of Scholarship Scams
Unfortunately, there are a lot disreputable people who make a killing by taking advantage of students searching for aid. The Federal Trade Commission (FTC) claims that several unscrupulous companies promise you scholarships, grants, or fantastic aid packages; many use high-pressure sales pitches at seminars where you're asked to pay them immediately or risk losing out on the "opportunity."

According to the FTC, several legitimate companies can get you access to lists of scholarships for a fee or compare your profile with a database of scholarship opportunities and provide a list of awards for which you may qualify. The difference? Legitimate companies never promise or guarantee scholarships or grants. The FTC (www.ftc.gov) advises you to keep your eyes open for these tell-tale claims:

"The scholarship is guaranteed or your money back." No one can guarantee that they'll get you a grant or scholarship. Refund guarantees often have conditions or strings attached. Get refund policies in writing--before you pay.

"You can't get this information anywhere else." There are many free lists of scholarships. Check with your school, your employer, or your library before you pay someone to do the work for you.

"May I have your credit card or bank account number to hold this scholarship?" Don't ever give out your credit card or account number on the phone without getting information in writing first. This may be a set-up for an unauthorized withdrawal."We'll do all the work for you." Don't be fooled. You must apply for scholarships or grants yourself. There's no way around it.

"The scholarship will cost some money." Don't pay anyone who claims to be "holding" a scholarship or grant for you. Free money shouldn't cost a thing.

"You've been selected by a `national foundation' to receive a scholarship," or"You're a finalist" in a contest that you never entered. Before you send money to apply for that scholarship, check it out. Make sure the foundation or program is legitimate.

If you're approached by someone who you think is a scam artist, contact the FTC's Consumer Response Center at 877-FTC-HELP (toll-free).

The Reality: Loans
We're not trying to discourage you from going out and seeking a scholarship (or a dozen scholarships, for that matter), but the reality is that you'll probably need to take out a loan to pay for part of your business degree. There are fewer scholarships and grants at the graduate level, unfortunately, and competition for assistantships and internships can be tough; there simply isn't enough money to go around for everyone. But never fear--scores of low-interest loans are available to help you make ends meet.

Student Loans from the Federal Government
Federal education loan programs offer lower interest rates and more flexible repayment plans than most private loans; they also do not require credit checks or collateral, as most private loans do. Federal loans can be either subsidized, where the government pays the interest while you're in school, or unsubsidized, where you pay all the interest (these payments can be deferred until after you graduate).

To receive a subsidized Stafford Loan, you must be able to demonstrate financial need. All students, regardless of need, are eligible for unsubsidized Stafford Loans. With Stafford Loans, graduate students can borrow $18,500 per year; of that, $8,500 is subsidized. Many students combine subsidized loans with unsubsidized loans to borrow the maximum amount permitted each year. Perkins Loans are awarded to students with exceptional financial need.

With this program, the school acts as the lender, using a limited pool of funds provided by the federal government. The amount of the Perkins Loan that you'll receive is determined by the financial aid office; the limit for graduate students is $5,000 per year, with a cumulative limit of $30,000 for undergraduate and graduate loans combined. (Some institutions participate in the Expanded Lending Option program, wherein they can offer higher loan limits for Perkins Loans.)

Student Loans from Private Institutions
Many students must turn to private loans after they have tapped into all other sources of aid. Fortunately, several low-interest student loans are available through many lenders. If you're a wise consumer, you'll shop around for a loan that will offer you the best interest rate and terms of repayment. Remember, you should be certain that you have exhausted all other options for paying for your education before you consider a loan. You may not want to approach your parents for money, but chances are that their interest rates are more lenient than any that you'll find at the bank! They may have even saved some money for you in the hopes that you'd go back to graduate school some day. It can't hurt to ask.

Applying for Financial Aid:
Following information will take you step by step through the aid application process, as well as give you guidance as to where you need to pay particular attention and where you should focus for best effect. They will even tell you where you need not be especially concerned. If you are reading this, you already have an "edge." You are the kind of person who will take the necessary time to ask the right questions, verify results, and in doing so, ensure that you receive the consideration you deserve. While the process of applying for financial aid may seem daunting when you first start out, it is not really all that complicated if you just follow the formula and attend to each step listed. The process was designed to be as simple as possible, and it really doesn't take much time, or effort, or training, to do it right. But, the key is that you do it right! Thousands of dollars depend on it.

What Everyone Should Do:
File the FAFSA (Free Application for Federal Student Aid). It is the one key application necessary to receive full consideration for federal aid, most state grants, college scholarships, and many other private (or "outside") aid programs that require you to demonstrate financial need. There is absolutely no risk in filing a FAFSA. Filing it and applying for aid at colleges in which you are interested is the best way to get a full picture of your likely annual costs and the options available to meet them. For example, by applying you may find that a good deal of the aid offered to you is in the form of loans. But remember, you do not have to accept them merely because they are offered. Many students use loan offers as a hedge, at first declining them and then asking that they be reinstated at a later time if additional funding becomes necessary. Most colleges can process loan funds for you in a few days, even near the end of a semester.

File the FAFSA as soon as possible after January 1st of the year in which you will be entering college and before the college's priority filing date. For example, if you will be starting your freshman year in September of 2003, and the college in which you are interested has a priority filing date of March 15th, you should file as soon after January 1, 2003 as you can. This way you can assemble all your financial information for the 2002 tax year and definitely complete it before March 15, 2003. To find the priority filing date, check the school's information: it's almost always in the catalog, admissions application materials, brochures, or on ine. Filing after the priority date may cost you a substantial portion of the aid for which you might have been eligible. You should heed this date even if you must estimate tax related information; you can make corrections to the FAFSA later on if your estimates prove inaccurate. So, hit the filing date target and make changes to the FAFSA later if you must. However, if for some reason you file afterward, you are still eligible to receive loans and Pell Grants, up to the last day of the academic year at many schools.

To apply, you will need to list the schools to which you would like the FAFSA sent. We strongly advise filing on line, but paper applications are available at your high school guidance office or any local college's financial aid office.
Timelines:
School Juniors:
Take the SAT or ACT for the broadest scholarship consideration and admissions to many schools.

File a "practice" FAFSA, after January 1, to get an idea what your Expected Family Contribution (EFC) will be. This is the amount your family will be expected to be able to give you to help you meet each year's expenses. Doing this a year early will give you an additional year to plan, will position you to ask really smart questions, and will help you develop competitive financial strategies. To file your FAFSA, go to www.fafsa.ed.gov. You should leave the school code blank, since you are not going to be attending for another year and don't want this information actually sent to a college.Optional.

Some schools offer early admissions beginning in the high school junior year. Check with the colleges you are considering to see if there is any financial advantage in seeking early admission. Optional.

Begin your scholarship search. See the Scholarships section for details.

High School Seniors: Start a financial aid file. Keep important copies of all documents, on line and paper, that relate to your applications.

File the FAFSA between January 1 and the school's priority date. File on line at www.fafsa.ed.gov. Be sure to do the following elements in the Before Beginning a FAFSA section:

Especially important, you must list a school code for each school to which you apply. Use the code link in this section to retrieve your school's code.

Apply for and record your PIN. This step by step site is excellent and will help you file accurately and easily. You may use the paper application, but we recommend the online application because it helps you file accurately and easily.

Many colleges and universities may also require you to complete one or more supplemental applications. These forms collect information in addition to that on the FAFSA, which is used to award institutional (collegiate) financial aid. To ensure consideration for all types of aid awarded by a school, complete all required applications. Once again, failing to submit a form by its deadline may jeopardize your chances of receiving all the financial assistance for which you may be eligible.

Check on the status of your FAFSA. If you mailed in your application, or filed electronically and mailed in a signature page, check 16-8 days after submitting the application. You can check the status of your application by either calling 800-4-FEDAID (toll-free) or via the Web at www.fafsa.ed.gov. Note that you can check the status via the Web site even if you mailed in your application. Anyone who checks their status on line must have a Personal Identification Number (PIN). We recommend that you apply for a PIN on the FAFSA site prior to filing the FAFSA, but you may apply at any time by going directly to the PIN site at www.pin.ed.gov. You can receive a PIN in three days by email.

Some state aid programs also require additional information. Since required forms can vary from campus to campus and from state to state, work closely with the financial aid office at each school to which you are applying. This will ensure that you have filed all of the necessary forms for all the types of aid available. Reviewing college catalogs, Web sites, or comprehensive college guides, such as those published by Peterson's, can also be helpful in determining whether the FAFSA is sufficient or if additional applications are required.

Check on your aid application at the school. If you applied on time, you should receive notice in the time period specified by the school. If that is not clear, find out when you should expect to hear about your application for aid. Use the college financial aid office email if they have an email address; otherwise call them to check this.

For best consideration, apply for admission as soon as the school will allow you to do so.

The admissions application acceptance cycle usually begins in August, just prior to the beginning of your senior year. Check with your colleges of interest.

Apply for college scholarships at each school to which you apply. Make sure you understand the process. Usually it is detailed in the admissions application materials. Ask questions.

Scholarships:
Don't be afraid to apply for any and all scholarships! We strongly encourage it. Many students do not fully realize their scholarship potential. Everyone is good at something, and there's usually money around somewhere to support it. Begin this search early in your junior year.

Go to Peterson's scholarship search at www.petersons.com and click on the Financial Aid option. Then click on Scholarship Search. This comprehensive search engine will give you entry into a national database with thousands of potential scholarship sources. It will also give you many ideas as to how to refine your own search.

Check with your guidance office at your high school. This is usually the best place to start a local scholarship search. Your best chance for receiving a private scholarship is from your local community. Private scholarships are those that derive neither from the college (institution) you will be attending, nor from the federal or state government.
Check with your parents' employers. They may already have a program, or, under some circumstances, they may be willing to start one just for you.

Check with all charitable and service organizations with which you and your parents may have connections.Prompt your parents to apply for college tax credits on your behalf. This will apply to the tax returns filed after you have begun college.

Additional Issues:
Corresponding With Your School:
Always remember that it is the student's application. Student name, student school ID#, and the student SS# are all required on each document or communication you send related to financial aid.

Additional Document Requirements: When the college receives your output from the FAFSA Central Processing System (CPS), the financial aid office evaluates the information to determine whether additional documents are required. The documents required by each school differ somewhat depending on the types of aid the institution has to offer and whether or not you have been selected for a process called verification. Your school will inform you if other documents are required. Heed deadlines in responding to these requests, if you receive them.

Special Circumstances:
The College Scholarship Service's CSS/Financial Aid Profile is required by select private colleges and some public institutions who use the results for institutional scholarship awarding purposes. A student must register with CSS by calling the toll-free PROFILE telephone registration service at 1-800-778-6888. A student may also register on the internet: http://www.collegeboard.com. CSS charges $7.00 for the student registration fee and $17.00 for each college listed by the student. Each college listed receives a copy of the Profile results for that student.

There may be situations where the income information for the year requested on the FAFSA (called the "base year") does not provide an accurate reflection of your family's financial strength. Has your parent's job changed or been lost? Are there unusually high medical expenses in your family? Are parents paying off college loans for siblings? The aid administrator is able to change most data elements that result in the FAFSA Expected Family Contribution (EFC) if you can provide adequate, believable, documentation of extenuating circumstances. A financial aid administrator may, for example, make a judgment to use your projected or current-year income in the need analysis formula rather than the base year. Colleges may differ markedly in their views on what constitutes an extenuating circumstance and even on their willingness to apply professional judgment in individual cases. You must submit this information, separately from the FAFSA, directly to each school to which you are applying.

Paying for Business School
Going to business school is a big investment--of your time, your energy, and especially your money. You'll undoubtedly have to depend on a variety of sources to pay for business school--loans, scholarships, work-study, even money from your family (if they're willing). As always, good preparation will ensure that you get the money you need and won't go broke paying it back. Before you sign on the dotted line at any school, be sure you are well-informed about all the costs entailed in attending. When budgeting for business school, you have to take into account not only the tuition charged by the program, but also any fees the school charges, the cost of living in the area where you'll be attending the program, and a vast assortment of extras, including insurance and medical expenses, transportation, and entertainment. Unless money is no object, the total cost of attending should be one of the most important criteria you consider when looking at schools. Some students find that it's worth their while to spend big bucks to attend the most selective programs; others don't. When looking at a program and its costs, calculate how rapidly you'll get a return on your investment.

A good idea is to find out what the starting salary is for students graduating from the program, and then look at all the costs of attending. Is it worth it? Will you recoup the money that you've spent on the program in no time, or will you spend years paying back the loans that you had to incur to get through?

Where and When to Begin?
You should start exploring sources of financial aid as soon as you begin thinking about business school. When gathering information about specific schools, always request information about aid. After you've narrowed down your choices of programs to those to which you'd like to apply, contact their financial aid offices and schedule an appointment to speak with a school aid officer. Investigate each and every source of aid that the school and the program offer; some schools have specific financial assistance schemes that include grants, scholarships, work-study, and loans. Find out about school- and program-specific aid before you begin looking at outside sources. File all applications for aid that the school and program require on time. Many outside resources are available to help you seek out the best sources of aid. Peterson's Grants for Graduate &Postdoctoral Study is a listing of more than 1,400 fellowships, grants, and internships that you can search by field of study; the volume also provides advice about how to apply for and win these sought-after awards. Additionally, we encourage you to go to your local bookstore, to your company's human resources office, or to your local library to seek out other books on aid. A vast amount of materials is available to help you.

The Internet is also an excellent source of information about financial aid. Begin with the Web sites of the schools to which you're applying. From there, you can search for information on private loans, government loans and grants, scholarships, internships, and much more. You can download applications for aid from most private lenders' Web sites or submit requests for aid to them directly on line. A word of caution, though: Beware of any site that asks you to send them a fee to process a request for any type of aid, especially scholarships. Before you send money or give your credit card number to any organization, do a little investigating to find out if the organization is reputable. If you wisely go about your search for financial aid, you shouldn't have to pay money to get money.

Timing, Deadlines, and Applying for Aid
The first step in the financial aid process is to complete and submit all of the required applications. Procedures vary from school to school, so above all else, make sure that you check with the financial aid office at each program about specific deadlines and guidelines. In all likelihood, you will have to complete the Free Application for Federal Student Aid (FAFSA). This form is required for all students who wish to receive federal and state financial aid; even if you're not applying for federal aid, most programs will have you fill out the form anyway, as it provides them with the information that they'll need to process any aid request. You can pick up a copy of the FAFSA from the program's financial aid office or fill it out on the Department of Education's Web site at www.fafsa.ed.gov.

The program may also require you to complete additional school-specific applications to determine whether you're eligible for funds from the institution. Remember, some of the best sources of aid that you may find will be from the schools and programs themselves, so be sure to fill in all the information requested and to submit the forms by the deadlines. When it comes to financial aid, deadlines are crucial; practically every student applies for financial aid, so you don't want to be disqualified because you didn't hand in your forms on time.

Getting aid isn't always quick, and it's certainly not easy. You'll spend a lot of time filling out forms and stressing over deadlines, so the more prepared you are when you begin, the better off you'll be. Determine what is needed for each aid application as soon as you can, and figure out the best way to remind yourself of deadlines. Sometimes, you'll need to show a certain GPA or financial need or will need to submit essays or letters of recommendation. Make several copies of all supporting materials at the beginning of application process and keep them handy.

Once your forms are received and reviewed by the schools' financial aid offices, your eligibility for assistance is determined. You are then sent an award notice informing you of the assistance that you are eligible to receive, both from the government and from the school. Make sure that you respond to the award letter as instructed by the school. If you are instructed or advised to apply for loans, be sure to complete those applications, sign any promissory notes, and return your application to the lender.

Who Offers Aid?
Institutional Resources
Some schools offer institutional loan programs to help you with educational expenses. The financial aid administrator can tell you what you'll need to do to apply for a loan from the school. Your school may also offer a variety of scholarships and grants that could be awarded based on either need or merit. Many graduate students use teaching assistantships to pay for the cost of their education. A typical teaching assistantship requires a commitment of about 20 hours per week. You might also want to check with your school to see if they offer other on-campus employment opportunities that are not based on need or merit. Explore internship opportunities that are available at the school; a paid internship enables you to receive financial support while gaining work experience and, in some cases, academic credit.

Federal and State Financial Aid
The U.S. Department of Education provides financial assistance for students who attend eligible institutions. To determine your eligibility for these programs, you must complete the financial aid process established by the schools to which you're applying as well as that of the federal government. Aid programs that are offered by the federal government include Federal Subsidized Stafford Loans, Federal Unsubsidized Stafford Loans, Federal Perkins Loans, Federal Pell Grants, Federal Supplemental Educational Opportunity Grants, and Federal Work-Study Programs. Most state governments also offer grants, loans, and scholarships to their residents. Each state has a different FAFSA submission deadline, so be sure to keep this in mind when you're applying for aid.

Private and Alternative Financing
Foundations, corporate sponsors, and individuals offer millions of dollars of aid every year through scholarships, grants, internships, and loans either directly to you or to you school, which then administers the awards. Private sponsors establish their own application procedures and eligibility criteria. You may need to do a little work to uncover all of the private aid that you're eligible to receive and to shop around for the loans that offer the best interest rates and terms of repayment--but the work you put into this process will be well worth the effort.

Other Financing Options
Check with the schools you're interested in to see if they offer payment arrangements to lessen out-of-pocket expenses. At some schools, you can divide tuition and other fees out over the course of a year rather than having to pay everything up front. Several private organizations also offer tuition payment plans; these include Academic Management Services (800-635-0120, toll-free), FACTS Tuition Management System (800-624-7092, toll free), Key Education Resources Monthly Payment Plan (800-KEY-LEND, toll-free), and Sallie Mae (888-272-5543, toll-free). Additionally, Sallie Mae offers College Answer, a free service staffed by financial aid counselors ready to offer advice to students and parents about financing college expenses. Call toll-free at 800-239-4269, or e-mail them at: college.answer@slma.com.

If you have a steady source of income, such an alternative could be a godsend. If you work while attending school, your employer may provide tuition assistance as a benefit to you, so be sure to ask if you qualify for this assistance and what you must do to maintain your eligibility. In most cases, you'll need to pay for your classes up front and then be refunded upon successful completion of your course work ("successful" is usually defined by maintaining a certain grade point average, usually a B average or better). Every company has its own rules, however, so be sure to find out all the details before you apply to receive aid or to enroll in a program. If your company doesn't offer this benefit, you may want to make a persuasive argument to your boss for doing so; with the present boom in the economy, employers are always looking for ways to keep good employees, and tuition reimbursement is a great way to do this. Be sure that you are aware of the tax ramifications of accepting tuition reimbursement from your employer. In some cases, these funds may be taxed as income.

If you are a veteran and have completed at least one year of active service, Veterans Educational Benefits are available for graduate study. The amount of the benefit for which you are available depends on your length of military service, the number of dependents you have, and how many course credits you are carrying. For more information, check with the veterans' affairs offices at the schools to which you're applying or call the Veterans Affairs Department in Washington, D.C.

These creative means of financing your graduate education are just the beginning. If you look hard enough, you'll find vast resources to which you can turn to pay for business school. Before you take out a loan, put in the time to investigate every source of aid for which you may be eligible. Chances are that you will end up borrowing at least some of the money that you'll need to pay for business school, but you want to keep this amount as low as possible.

This article is an excerpt from "Gameplan for Getting into Business School" by Michele F. Kornegay.