Understanding federal student aid (FSA) is not an easy task. It is such an extensive subject and many people can become confused easily. When studying FSA, make sure you use a reliable source so that you know the information is accurate. One of these excellent sources is NASFAA (www.NASFAA.org). NASFAA, or the National Association of Student Financial Aid Administrators, offers information for both students and financial aid administrators. The following statements are some common misconceptions about financial aid. Through the next five statements we’ll rule out which are applicable, and which ones are outright false.
- FSA is free money.
Unfortunately, this statement is a myth. Certain FSA types are essentially free money — grants normally only require students to maintain a certain academic standard. However, federal work study programs require students to work for their aid, and loans are required to be paid back after a period of time. Before accepting any FSA, make sure you fully understand the requirements.
- If I borrow $10,000 in student loans, I will have to repay that same amount.
Again, this statement is unfortunately a myth. Most loans accrue interest. This means that the borrower will usually have to repay the principle amount ($10,000 in this case) as well as all the interest accrued. The government will pay some or all of the interest on certain loans, so in some cases the above statement could actually be true. Be sure to fully understand the terms and conditions of an FSA loan before committing to borrowing.
- Students must take the loan amounts offered in their award.
This statement is absolutely a myth. Students will never be forced to take the full amount of loans offered in their award package. Of course, students are allowed to if they would like. However, you should only take as much of the loan amount in your award as absolutely necessary based on your cost of attendance (COA).
- Financial aid awards contain all the money needed and available to pay for college.
Yet another myth. Students will always be able to look outside of FSA for college aid. Outside of scholarships, loans through private lenders, and other outside sources are available. While FSA is the encouraged route, there are other options available, and they may even be necessary depending on your COA. Again, it is important to fully understand the terms and conditions of any aid you are receiving.
- Financial aid professionals are available to help and to answer your FSA questions.
This statement is absolutely true! Your school’s financial aid office is always a great resource for questions about FSA. Financial aid administrators are trained professionals who are more than willing to help prospective, current, and former students with any questions they may have about paying for college, what aid to utilize, how much to borrow, and many more topics. Contacting a financial aid administrator is always a great idea.
There are many other myths and facts about FSA. Reach out to credible resources, such as federal websites and financial aid administrators, for answers to any of your FSA questions. It is very important to be financially literate, so always take advantage of your resources!
By Ryan Laspina
Compliance and Default Prevent Specialist at American Public University System