Simple Ways To Save Money

We have all read and heard the numerous ways in which to save money, but perhaps there are a few ideas that bear repeating.

Not all of these ideas need to be implemented simultaneously. Even adopting a few of them could generate funds that would facilitate that great vacation or at the very least ease your mind of some financial pressure.

My Coffee Habit

So let’s begin with the first place you spend money in the morning. Is that latte so much better than coffee brewed at home? Think of this: a pot of coffee brewed first thing in the morning, the aroma greeting you the minute you walk into the kitchen. And all for the cost of a coffee machine with a timer. That is not to say you should never indulge in the occasional latte or other delightful treat at your local coffee shop. After all, the coffee shop has become one of our social locations of choice.

And if you’re an espresso or latte junkie (like me) consider buying a Nespresso or equivalent espresso maker that uses pods. I just purchased a top-of-the-line Citiz Nespresso maker at Williams Sonoma for $349. Sounds like a lot of money huh? Not really when you consider that I had a twice a day Starbucks habit at a minimum of $3 per drink. And then, on top of that, I’d often buy an unhealthy cookie or other snack. $7 bucks a day 5 days per week = $33 per week = $134 per month!!!!! Youch. You can see how I justified the Nespresso machine which makes the exact same drink at $1.00 a piece. (Including the coffee pods.)



Moving on through the day, let’s consider lunch options. Perhaps brown bagging several days a week in addition to eating out the other days would be advantageous in reducing daily costs and yet still keep you out there socializing with your coworkers. (Networking is important after all.)

And then yikes – what’s for dinner! A few ideas to avoid that quick stop for fast food.

Consider jotting down a couple of menus ideas for the week and then make a grocery list that will accommodate the planned menus. And ALWAYS shop after eating in order to cut back on impulse buying.

Shop within a limited time frame so that you remain focused on the items you have listed to purchase. Wandering the grocery store aisles without a time limit leads to impulse buying.

There are some who swear by weekend cooking in order to have delicious homemade meals packed away in the freezer – or at the very lease have leftovers to enjoy on those very busy week nights. By cooking larger meals that can be consumed more than once will save a lot of money over a new meal prepared every night.

Here are a few miscellaneous ideas that could point you toward saving money:

  1. Take advantage of your town library to borrow books instead of purchasing them. There are so many options now in our libraries. It’s not just a place to read for free, you can now check out movies, make use of the computers and enjoy the peace and quiet of the library.
  2. If you really want to own your books, seek out half price or gently used  book stores.
  3. Go to that new movie during matinee times and save a couple of dollars.
  4. Instead of buying 48 bottles of water at the wholesale store, invest in a couple of water bottles that can be refilled just before you walk out the door from your sink or filter.
  5. Unless you have older family members or very young children, consider giving up your land line in favor of just using your cell phone.
  6. Pay bills on time –  late charges add up quickly.
  7. Most pharmacies will substitute a generic product of your prescription that can result in huge savings.
  8. If your car is running well, all four wheels roll on the ground at the same time and it is not costing you tons of money for major repair, hang on to it.

And last but not least – do not attempt to stay up with the Jones’. Chances are, they are not as solvent as they appear to be and maybe just maybe, they are envious of your already paid for car!

So let’s get out there and save money and you’ll enjoy life much more!

Borrowing Wisely

Borrow Only What You Need

It’s tempting to borrow extra money, just in case. But keep in mind that loans are not free. You’ll need to pay back everything you borrow, plus interest. When you’re determining how much money you want to borrow, plan to have it pay only educational expenses – not entertainment and lifestyle choices. Your loan agreement will likely require you to do this, too.

Before you borrow money, consider your anticipated income and living expenses after graduation, so you can predict what you’ll be able to afford in monthly loan payments.

Understand the Basics

There’s more to borrowing money than just signing on the dotted line. The extent to which you understand the cost and subtle intricacies of borrowing will affect your ability to effectively manage your debt.

One thing that’s helpful is to be familiar with common terms associated with borrowing:

  • Principal – amount of money the lender loans to you
  • Interest – additional amount that you pay to the lender for the privilege of using the money they are lending you
  • Capitalization – process of adding accrued interest to the principal amount owed
  • Accrue – accumulation of interest

Remember, the total amount you owe on your loan is much higher than the amount you receive because of the interest. For example, if you borrow $10,000 at an interest rate of 8.25%, your payments may look something like this:

Loan amount: $10,000
Interest rate: 8.25%
Repayment period: 10 years
Number of payments: 120
Each payment: $122.65
Total amount repaid: $14,718

Making Payments

Note: This section does not apply to Stafford Loans

Another important point to remember about borrowing is that loans are structured to put most of your initial payments toward the interest you owe, rather than toward repaying the principal.

For example, suppose you decide to pay off a loan after you’ve been making payments for three years. You may be surprised to find out that your principal has not been reduced as much as you thought because the majority of your payments over those first three years went to pay off the interest portion of the loan, not the principal.

With revolving credit such as a credit card, the picture can be even more dramatic. If you have a high enough balance and make low enough payments, you may not be repaying the principal at all. In that case, your debt will just continue to increase.

Let’s say that you have a $5,000 balance at a 17% interest rate. If you paid $100 a month for 36 months, your new balance should be approximately $1,400. Instead, due to the structure of most credit-based loans, your monthly payment is applied toward the interest first. That means out of the $3,600 you paid, only $1,346 went toward the principal. In reality, you still owe $3,654. And if you continue paying $100 each month, it would take seven-and-a-half years to pay off the $5,000, and with interest you’d have paid a total of $8,819.

TIP: Be sure to make loan payments as scheduled or you may be charged late fees and collection costs

Financial Aid FAQs

Applying for Financial Aid

More about Student Loans

Taxes and Student Loans

Deferment and Forbearance

FAFSA – The Free Application for Federal Student Aid

What is financial aid?
Financial aid is a term used for all of the many federal, state and private programs designed to help students pay for higher education. This includes grants, scholarships, work-study aid and loans. There are even a number of federal tax credits and deductions that are part of the larger financial aid picture. The goal of all these programs is simple: to ensure that students and their families are able to find the money – whether through low-interest loans or grants, scholarships or tax breaks – to be able to afford an education.

Should I apply for financial aid?
Everyone is better off applying for financial aid. Even if you don’t end up qualifying for any scholarships or federal or school grants, you still may qualify for federal loan programs such as the Stafford loan which offer attractive interest rates and repayment terms. In order to get any kind of financial aid, however, you must fill out a Free Application for Student Aid (FAFSA) form. This is the only way to qualify for federal student aid, such a subsidized Stafford loan, SEOG (Supplemental Educational Opportunity Grant) or Pell Grant. Even if you don’t qualify for any grants, filling out a FAFSA will qualify you for unsubsidized Stafford loans and PLUS loans.

How do I apply for financial aid?
To apply for financial aid, you must fill out an application called the Free Application for Federal Student Aid, or FAFSA. If you are applying to a number of colleges, list those schools on your FAFSA form and it will be sent to the schools to which you’re applying. Many schools also have their own separate application forms that you must fill out – contact the school financial aid office at each school or check the school website to get all of the information you’ll need.

The information on your completed FAFSA will help your financial aid office determine your eligibility for both federal and school-specific aid programs. You must fill out a new FAFSA each year to receive financial aid. You can get a FAFSA form from your school’s financial aid office, online at, from your high school counselor, or even from a local community college.

You can also get a free copy of The Student Guide: Financial Aid from the US Department of Education:

800.FEDAID or 800.730.8913

Or write:
Federal Student Aid Info Center
P.O. Box 84
Washington D.C., 20044

How is my federal financial need determined? How much aid can I receive?
Your federal financial aid award is determined by reviewing the information reported on your Free Application for Federal Student Aid, or FAFSA. This form provides all the financial information that your school’s financial aid office needs to determine your financial need, including your eligibility for aid programs like the Pell Grant, Perkins and Subsidized Stafford loans, federal work-study aid, etc. The information on your FAFSA will also help your school determine how much institutional aid you qualify for.

Do I need to be admitted before I can apply for financial aid at a particular university?
Generally no. Once you fill out a FAFSA, your application information can be sent to multiple schools. Some schools will also request supplementary financial information, though you should verify this with your school’s admissions office.

Can I get financial aid if I’m a part-time student?
Yes – for the most part. You must be enrolled at least half-time to qualify for federal financial aid. However, some grants and scholarships require full-time enrollment. If you’re not enrolled at least half-time, you may qualify for some private or alternative student loans, or some scholarships, but you will not qualify for federal aid.

Do I need to advise my financial aid administrator that I have applied online for a federal student loan?
Your financial aid administrator will be working with you to help you apply for student loans, so they will be aware of all of your federal loan applications. You should not try to apply for any supplemental student loans without discussing it with your aid administrator first.

Are work-study earnings taxable?

What is a Free Application for Federal Student Aid form (FAFSA)?
The Free Application for Federal Student Aid on the Web (FAFSA) is just what it sounds like – an application for federal financial aid. In order to qualify for certain student loans, such as the Stafford and PLUS loans, you must fill out a FAFSA. You will need to have up-to-date financial information for you and your family in order to complete the FAFSA. Your school’s financial aid office uses this information, along with a formula determined by the federal government, to figure out how much money your family can be expected to contribute towards your education. Various student loan programs, grants, work-study aid and school-specific aid fill the gap between what you can pay and what your school costs.

Do I have to reapply for financial aid (FAFSA) every year?
Yes. Your family’s financial situation may change from year to year, so you are required to re-apply and submit the FAFSA every year if you’d still like to continue getting financial aid.

Where can I get a FAFSA form?
You can get a FAFSA form from one of several places:

  • Your financial aid office; local community college or high school guidance office
  • Directly from the Department of Education – 800-4-FED-AID (800-433-3243);
  • Or online at

Can I submit my financial aid application before January 1?
The FAFSA application is available starting January 1st every year. Several questions on the FAFSA form deal with your family’s financial situation for the previous year – requiring borrowers to wait until after January 1st to apply ensures that borrowers have access to complete financial information for the year in question. If you submit your FAFSA before you’ve filed your taxes – as many families do – you’ll be asked whether your answers to income-related questions are estimated. If they are, they will be verified once you do file your taxes. Remember, you will need to reapply for FAFSA every year if you would like to continue to receive financial aid.

What information do I need before I start my application for Federal Application for Free Financial Aid (FAFSA)?
You – and your parents, if you are a dependent student – need the following records to answer questions on the FAFSA:

  • Your Social Security card
  • Your driver’s license
  • Your Alien Registration Receipt Card (if applicable)
  • Your W-2 Forms and other records of money earned
  • Your latest income tax return (see the FAFSA instructions if you have not yet completed your latest tax return)
  • Records of untaxed income including Social Security, Temporary Assistance to Needy Families, welfare, and veterans benefits
  • Records of child support paid
  • Records of taxable earnings from Federal Work-Study or other need-based work programs
  • Records of student grant, scholarship, and fellowship aid, – including AmeriCorps awards – that were included in your (or your parents’) AGI (Adjusted Gross Income)
  • Stock, bond, and other investment records
  • Business and farm records
  • Current bank statements

If you are a dependent student, you will need all the records listed above from your parents except for their driver’s licenses.

What’s the difference between an independent and dependent student?
A student is considered independent if he or she meets one or more of the following criteria:

  • At least 24 by December 31 of award year
  • Orphan or ward of the court until he or she reached 18
  • Veteran of the US Armed Forces or serving active duty in the US Armed Forces or National Guard.
  • Student is a graduate or professional student (regardless of whether student is claimed as an income tax exemption by his or her parents)
  • Student is married
  • Student has legal dependents other than a spouse
  • Other special circumstances documented by financial aid administrator (very rare)

Can I go online to check the status of my FAFSA after I submit it?
You can check the status of your FAFSA and print a copy of your Student Aid Report at

What does Expected Family Contribution or EFC mean?
When the Department of Education calculates the amount of financial aid for which you qualify, they also figure out how much your family can be expected to pay for your education for that year. The Expected Family Contribution is the amount you and your family are “expected” to contribute from your and your family’s yearly earnings, under the assumption that they will remain consistent with last year’s total. So, for instance, if your school costs $40,000 this year, and your family can be expected to contribute $8,000, then you should qualify for $32,000 in loans, grants or other aid.

Cost of attendance $40,000
Expected Family Contribution -$8,000
Total Financial Aid Need =$32,000

What qualifies as “costs of attendance” for the purposes of financial aid?
Costs include tuition, fees, room, board, books, equipment, and other necessary expenses, such as transportation or professional certification.

What can I do if my family cannot pay the Expected Family Contribution (EFC)?
If your family cannot pay the EFC, you should work with your financial aid officer to explore other options. You may, for instance, be able to increase the number of federal work-study hours you work. Your parents might consider taking out a PLUS loan to help cover the cost of the EFC. If you are not borrowing the maximum amount in unsubsidized Stafford loans, you could consider increasing that loan amount. You could also apply for a private loan.

My credit rating is not good. Will this hurt my chances or my child’s chances of getting a student loan?
The eligibility for most federal student loans does not require a credit check. However, it may affect your ability or your graduate student’s ability to qualify for the Federal PLUS Loan for parents of Undergraduate Students and Graduate/Professional Students. In addition, most private loans require a satisfactory credit history and/or a credit-worthy adult as a co-borrower.

What is a promissory note?
A promissory note is a required piece of the loan application. It is a legally binding contract that you must sign when taking out a student loan. The promissory note essentially says that you understand the terms of the loan that you are taking out, and that you promise to repay the loan in full according to the loan repayment terms set forth by the lender.

What is a Master Promissory Note (MPN)?
The MPN is the common application for a Stafford loan for students. It is a contract between you and your lender. A signed MPN is required before a Stafford loan can be processed and can be used for multiple years.

As of July 1, 2000, all borrowers of Federal Stafford Loans must use the new Master Promissory Note (MPN), which replaces the previous Federal Stafford Loan Application Promissory Note (common application). The MPN is different from the old promissory note in several ways.

Multi-year Feature
The MPN has a multi-year feature that allows students to complete the note just once, and then take out new student loans each year during enrollment without completing additional paperwork. The Free Application for Federal Student Aid (FAFSA) serves as your loan application each year. The loan process begins when you answer “yes” to the FAFSA question of whether you are interested in student loans. With the multi-year feature, a freshman student can complete an MPN at a four-year college and receive a Stafford Loan each year without signing a new Promissory note. That student can go on to graduate school and continue to borrow with the same lender using the MPN she signed as a freshman. Some schools may not be authorized to use the multi-year feature of the MPN. For those schools, you would have to complete a new MPN for each loan. You also have to complete a new MPN if you change lenders.

Commitment to Repay
The MPN is a legally binding document that sets the terms of your loans. When you sign the MPN, you are promising to repay your student loans regardless of whether you graduate, drop out of school, are unsatisfied with your education, or can’t find a job.


  • If you do not take out a loan and no disbursements are made, the MPN will expire 12 months after you signed the note. If you do take out a loan and receive disbursements, the MPN expires ten years from the date it was signed.
  • You may revoke your MPN at any time by sending a written notice to the lender. You will still have to repay any loans disbursed on the MPN before it was revoked

Note: even if you sign a Master Promissory Note you must nevertheless re-apply for financial aid each year. The Master Promissory Note reduces paperwork for you and your school, but you still must fill out a new FAFSA each year.

What if I transfer schools? Will my student loans be transferred automatically?
Financial aid is not transferable. Although you may often qualify for the same types of aid once you transfer, you may not be eligible for the same amounts. You must apply at each college you attend since each campus receives an allocation of financial aid funds for their own institution to award. Because of these individual allocations and varying costs of education, your financial aid awards may vary from school to school. In order to figure out what you will be eligible for in student aid or to receive financial aid at your new school, contact FAFSA at 800.4.FED.AID (800.433.3243) and tell them which school you will now be attending. FAFSA will recalculate your need according the to cost of attendance at the new school. Within a few days a new award letter will be sent out.

Who is eligible for the student loan interest rate deduction?
Taxpayers who have taken out loans to pay the cost of attending an eligible educational institution for themselves, their spouse, or their dependents generally may deduct some of the interest they pay on their student loans (subject to certain income restrictions). Talk to your tax advisor or visit the IRS website for details.

How do I know how much interest I can deduct?
The loan must have been used to pay the costs of attendance at an eligible educational institution for a student enrolled in a program leading to a degree, certificate, or other recognized educational credential. The maximum deductible amount varies per tax year. In addition, there are income restrictions that may reduce the amount of interest you may deduct. Talk to your tax advisor or visit the IRS website for details.

In addition, there are income restrictions for the deduction. To claim the maximum deduction, a taxpayer must have modified adjusted gross income of $40,000 or less ($60,000 for married taxpayers filing jointly). The amount of the taxpayer’s deduction is gradually reduced for taxpayers with modified adjusted gross income between $40,000 and $55,000 (between $60,000 and $75,000 for married taxpayers filing jointly). Talk to your tax advisor or visit the IRS website for details.

What is a deferment?
A deferment allows you to temporarily postpone payments on your loan. All federal loans and many private loans are eligible for some form of deferment under certain conditions. Contact your educational finance provider to find out more about your particular situation.

What are the necessary conditions for deferment of Federal Student Loans?
A student loan borrower is eligible for federal deferment under the following conditions:

Deferment Condition Stafford Loan & Plus Loan Perkins Loan
Borrower is at least half-time study at a post-secondary school Yes Yes
Study in an approved graduate fellowship program or economic hardship training program Yes Yes
Unable to find full-time employment Up to 3 years Up to 3 years
Engaged in Loan Forgiveness Program No Yes

You may also qualify if:

  • You have dependents and are not able to meet their needs.
  • You have a temporary disability.
  • You are employed by the military or the police.

Note: If you are in default on any of your student loans, you cannot qualify for deferment.

Will I have to pay interest on my loans while in deferment?
If you have a federally subsidized loan, including Perkins loans & Stafford, you will not be charged interest during the deferment. For all other loans it is likely that interest will accrue during the deferment – although you are not required to make any payments. If you don’t pay the interest as it accrues, it will be capitalized and increase the amount you will have to repay, so if you can at least make interest payments while in deferment, it’s a good idea to do so.

How do I renew my deferment?
As the end of your deferment period approaches, contact your education finance provider (the organization that collects your loan payments) and request a new deferment application.

What is forbearance?
If you are temporarily unable to meet your repayment schedule but are not eligible for a deferment, you may contact your loan servicer to request forbearance for a limited and specified period. During forbearance, your payments are postponed or reduced. Whether your loans are subsidized or unsubsidized, you will be charged interest while in forbearance. If you don’t pay the interest as it accrues, it will be capitalized. Each individual situation is different and forbearance is not granted automatically or to everyone who requests it.

What can I do if I encounter an economic hardship that interferes with my ability to repay my loan?
If you encounter economic hardship during your loan repayment period, you have several options. Contact your loan servicer – the organization that collects your loan payments – and ask about loan deferment and forbearance programs. You may apply for economic hardship deferment, which will allow you to cease making loan payments for a certain period of time, usually one year. If you do not qualify for loan deferment, you should consider forbearance, which may enable you to reduce or eliminate loan payments for a certain period of time as determined by your education finance provider.

When should I fill out the FAFSA form?
Fill out the FAFSA and any other student financial aid applications as soon as possible after January 1. Since a large amount of financial aid is awarded on a first-come basis, the earlier the better. But don’t submit your application before January 1 – it won’t be considered.

Where do I get the FAFSA form?
You can get a paper FAFSA — in English or Spanish — from your local library or high school, the college you plan to attend, or from the U.S. Department of Education by calling 800.4.FED.AID (800.433.3243).

Is there a FAFSA form I can fill out online?
Yes. Just go to Completing the form electronically helps you make fewer mistakes, simplifies the application, provides faster processing — and you might even save a tree!

I want to fill out my FAFSA, but I don’t know how much money I made this year. I haven’t filed my tax return yet, so what should I do?
Estimate your income as accurately as possible and complete the relevant section.

My parents are divorced. Whose information do I include on my FAFSA form?
If you’re a dependent student, you’ll need to complete the FAFSA using information about the parent you lived with most of the time during the year prior to completing the application. If you didn’t live with either parent, or if you lived with each parent an equal number of days, use information from the parent who provided the greater financial support during the 12 months’ prior to filling out the FAFSA. Your step-parent’s financial information is also required on the FAFSA.

I finished the FAFSA. Now what? Should I give it to my Financial Aid Administrator?
No. Send your completed FAFSA form to the address indicated on the application.

What is the Student Aid Report (SAR) and Expected Family Contribution (EFC)?
The Department of Education will send you a report, called a Student Aid Report, or SAR, through the mail or the Internet. The SAR lists the information you reported on your FAFSA, and will tell you your Expected Family Contribution (EFC). They will also provide you with access information to your electronic Student Aid Report (SAR).

It is important to review your SAR when you receive it. Make sure all of your information is correct. Make any necessary changes or provide additional information.

How much aid do I get?
Your EFC, along with the rest of your FAFSA information, is made available to all the schools you list in Step Six of the FAFSA. The schools use your EFC to prepare a financial aid package to help you meet your financial need. Financial need is the difference between your EFC and your school’s cost of attendance (which can include living expenses), as determined by the school.

If you or your family have special circumstances that should be taken into account, contact your school’s financial aid office. Some examples of special circumstances are: unusual medical or dental expenses, or a large change in income from last year to this year.

What is the difference between loans and grants?
The simple answer is that you don’t have to repay grants, and you do have to repay loans.

How will the proposed budget cuts affect Cal Grants for students?
The CalGrant program will remain an entitlement for students who qualify. Through this program, students receive thousands of dollars toward tuition and fees at nearly every California college – public and private – including vocational schools and community colleges.

  • Especially for lower income students, the CalGrant program will remain virtually unchanged.

  • The money does not have to be paid back. But to receive a CalGrant award, qualified students must submit their applications by March of each year. That’s why it’s crucial for students and their parents to file the FAFSA as soon as possible after January 1st.

  • Students who have completed the FAFSA will be able to apply for federal financial aid including Pell Grants, student loans, and work study grants. So even if they think they will not qualify for a CalGrant, it’s important for students to file the FAFSA.

  • For financially needy students attending community colleges, fees will be waived, even if the fees are increased.

Do I have to fill out the FAFSA every single year?
After you’ve applied for the first time, you might be able to apply more quickly and easily next time with the Renewal FAFSA. This form lets you fill out only the info that’s changed from the previous award year. You can also complete the Renewal FAFSA online.

I sent in my FAFSA already, but I haven’t heard anything yet. Is there any other way to figure out what my family is going to have to pay?
You can estimate your Expected Family Contribution with our easy-to-use calculator.

This entire thing is making me crazy with anxiety. I still need help!
Relax. The Department of Education website is a great resource for help. Check out its Before Completing the FAFSA section, or FAQs for more answers to frequently asked questions. You can also call the Federal Student Aid Information Center at 800.4.FED.AID (800.433.3243).


The Free Application for Federal Student Aid


It’s been validated by the U.S. Census Bureau that college graduates actually earn more during their lifetimes–as much as $1 million more–than students who don’t go beyond high school. For the majority of college-bound students, federal aid is available. Filing the Free Application for Federal Student Aid (FAFSA) is the first step to discovering how much aid is available to you.

Here’s what you need to know.

Getting started.
The cost of going to college has risen over 40 percent in just ten years. For the majority of students and their families, education loans–whether private or federal–will be an essential source of college funding. In fact, low-cost federal loans account for nearly 70 percent of all financial aid dollars. How can you find out just how much you’ll receive? There’s only one way–by filing the Free Application for Federal Student Aid, or FAFSA for short.

Why submitting the FAFSA is important.
Don’t make any assumptions about how much aid you will receive. Just go ahead and file. And even if you think you’ve got your college expenses covered, filing the FAFSA allows you to keep your options open, just in case you decide to apply for federal and state funding.

This form determines your eligibility for federal aid, as well as for state and institutional grants, loans, and work-study programs. The Student Aid Report (SAR) that you receive after filing is your ticket to federal funding. While you can submit the FAFSA anytime during the school year, you will need your SAR to apply for free money from programs such as CalGrants. The CalGrants application deadline is March 2, and funds from this California program are allocated on a first come, first served basis. That means you should file the FAFSA as soon as possible after January 1st. Even before you know where you’ll be attending college, having your SAR in hand increases your chances for receiving both free money and financial aid.

Your financial aid options

What’s the difference between a grant and a loan?
The simple answer is that you don’t have to repay grants, and you do have to repay loans. If you want more information, read on.

Federal loans
Generous federal aid is available to you through programs such as the Pell Grants, Federal Family Education Loan Program (FFELP), including the low rate Stafford or PLUS Loans, for which anyone can apply. Using federal money for your education offers several advantages. Besides their primary purpose of helping you pay for college, handling student loans responsibly can help you establish good credit for future purchases, such as a home mortgage or automobile. Federal student loans also offer low interest rates, possible tax benefits, and repayment options–such as deferring payments while you’re in school–that high interest credit cards do not.

If you are a California resident planning to attend a qualifying California college, you could receive thousands of dollars a year in free money for your college expenses from CalGrants. This requires only that you be a high school senior or recent graduate, have a 2.0 minimum GPA, meet the eligibility and financial requirements, and submit two forms by the March 2nd, deadline. To establish your eligibility, you must first file the FAFSA. Get all the details at You can also go to for help in filling out these forms and to find out where free “Cash for College” workshops are offered in California.

Additional Information Cal Grant Awards:

Apply for a Cal Grant by March 2nd*
To apply for a Cal Grant, students must do two things: submit a Free Application for Federal Student Aid (FAFSA); and file a Grade Point Average (GPA) Verification form, or make sure their high school has filed the GPA on their behalf. Both forms must be submitted, or postmarked, no later than March 2*.

Cal Grant Awards guaranteed for students who qualify
College is now more affordable than ever for students with good grades and financial need. The best part is that Cal Grants cost nothing to apply for and do not have to be repaid!

Students who meet the following criteria are guaranteed grants:

Cal Grant A Entitlement Awards
Requirements include financial and basic eligibility (see box below), a minimum 3.0 grade point average (GPA), and graduation from high school. This Entitlement Award provides for full fees at the California State University and the University of California, as well as tuition support at private California colleges and universities.

Cal Grant B Entitlement Awards
Requirements include financial and basic eligibility, a minimum 2.0 GPA, and graduation from high school. This Entitlement Award provides up to $1,551 for books and living expenses for the first year. Beginning with the second year of Cal Grant B benefits, this award also helps pay for tuition and fees at public or private four-year colleges or other qualifying institutions.

Basic Cal Grant eligibility requirements:

All Cal Grant applications must:

  • Be California residents
  • Be U.S. citizens or eligible non-citizens
  • Meet U.S. Selective Service requirements
  • Attend a qualifying California postsecondary institution
  • Be enrolled at least half-time
  • Maintain satisfactory academic progress as defined at the school of attendance
  • Have family income and assets below the established ceilings

For additional information about Cal Grant eligibility requirements, please visit the California Student Aid Commission Web site at Contact the Commission’s Customer Service staff at 888-224-7268 (888-CA-GRANT) or by email at

Federal grants
Eligibility and award amounts for Pell Grants, the largest federal grant program, are based on established federal guidelines and determined by the college. Generally, Pell Grants are awarded only to undergraduate students who have not earned a bachelor’s or professional degree. (A professional degree is earned after earning a bachelor’s degree in a field such as medicine, law, or dentistry.) In some cases, students may receive a Pell Grant for attending a post-graduate teacher certification program. For many students, Pell Grants provide a foundation of financial aid to which other aid may be added.

Getting Started with filing the FAFSA
While the process may look complicated, we want to make it easier for you. Here’s how to get started:

  1. Before completing your FAFSA online, we recommend that you first complete the non-submittable Web Pre-Application Worksheet and/or the paper FAFSA form. As you fill out this document, you’ll become familiar with the answers, documents, and information you’ll need to complete the online application. Then, you can just transfer your entries to the online version.
  2. At the FAFSA site,, you’ll find more specifics about what is needed to file, as well as how to file by mail or online. Once you’ve established your PIN, you’ll be able to access and sign your FAFSA electronically.

    • Each January 1 starts the application period when students can file a FAFSA online at or file a paper FAFSA. Students may obtain a paper FAFSA from their high school counselor or college financial aid office.
    • Get a FAFSA PIN Now!
      To file a FAFSA online, students need a PIN and a parent needs a PIN too.

      Students may log onto the Internet from a computer and go to Then click on the “Getting Started” button and follow the prompts. It’s quick and easy.

  3. Submitting your application online has several important advantages.

    • Because your answers are edited automatically, you can avoid mistakes.
    • The online FAFSA automatically skips questions that don’t apply to you.
    • Clear, step-by-step instructions streamline the process.
    • You’ll receive your SAR much sooner than if you use the paper application.

More FAFSA Facts
Below are more tips follow for streamlining your filing process.

  • Start now – Fill out the FAFSA as soon as possible after January 1st. Federal, state, and institutional aid (the money from your college) is distributed on a first come, first served basis. Be sure to check the application deadlines for other aid for which you may be eligible. The earlier you file your FAFSA, the sooner you can submit these other forms, and get your slice of this year’s aid. To view State Aid deadlines.

  • Know the language – Financial aid has its own specialized terminology. You can find a guide to terms such as EFC (Estimated Family Contribution), Subsidized and Unsubsidized Loans at the Department of Education Web site. The Resources section of our Web site also contains an excellent Glossary.

  • Keep a copy of your FAFSA – It is important to keep clear, accessible records of all your financial aid material. A copy of your FAFSA will come in handy when you receive your SAR, and also when it comes time for filing a renewal FAFSA to continue receiving federal aid during subsequent college years. It will also make it easier to complete any additional financial aid forms that your school may require.

  • Applying for the FAFSA is free – You don’t have to pay a fee to apply for the FAFSA. Some Web sites, such as,, and, charge to help with filling out the online form. The Department of Education site provides free FAFSA forms, and offers the most comprehensive information available about applying for federal aid. It is also the only site where you can submit your online FAFSA form officially.

  • Help is available – Keep a list of your questions, and when you’ve gone through your Web Pre-Application Worksheet, you can call for help from the Federal Student Aid Information Center, 800.4.FED.AID (800.433.3243). Information is provided in both English and Spanish.

The Information you’ll need up front.
To make filling out your FAFSA easier, gather the documents you need to reference before you answer any questions. Start by searching for these things:

  • Social Security card
  • Driver’s license
  • Alien Registration Card (if applicable)
  • Current bank statement and mortgage information
  • Completed 2004 federal income tax returns, including W-2s and 1099s forms (or an accurate estimate of your income if you can’t file early with the IRS)
  • Records of untaxed income, such as Social Security income, welfare, AFDC (Aid for Dependent Children), and veterans’ benefits
  • If applicable, records that relate to any unusual family circumstances (for example, medical and dental bills not covered by health insurance, unusually high child support costs or loss of employment)
  • Records of your family’s assets and investments, not including your primary residence
  • Business and farm records (if applicable)

Dependent and Independent
When applying for financial aid, you’ll need to determine whether you’re a “dependent” or an “independent” student.

Most graduate and adult students are considered independent. Independent students are required to report only their personal financial information on the FAFSA form (and their spouse’s if applicable).

Most students entering college right from high school are considered dependent. Dependent students must report both their own financial information and their parents’ financial information on the FAFSA.

In certain circumstances, a Financial Aid Administrator might determine that a student should be considered independent. You may also be considered an independent student if you meet any of the following criteria:

  • You were born before January 1, 1980
  • You’re married
  • You have children who receive more than half of their support from you
  • You have dependents (other than your children or spouse) who live with you, who receive more than half of their support from you now, and who will continue to receive more than half of their support from you
  • You’re an orphan or a ward of the court (or were a ward of the court until age 18)
  • You’re a veteran of the U.S. armed forces

The FAFSA helps the U.S. Department of Education and the Financial Aid Administrators at your school determine if you qualify for various types of financial aid. Eligibility for federal aid is based on financial need and several other factors. To receive help from these programs you must:

  • Demonstrate financial need (except for certain loans)
  • Have a high school diploma or General Education Development (GED) certificate or pass a test approved by the U.S. Department of Education
  • Be working toward a degree or certificate
  • Be enrolled in an eligible program
  • Be a U.S. citizen or eligible non-citizen
  • Have a valid Social Security number
  • Register with the Selective Service if required
  • Maintain satisfactory academic progress once you’re in school

The Fastest FAFSA
You’ve obviously got a handle on this computer stuff. Why not try the online FAFSA form? Here are just some of the advantages to applying online:

Online FAFSA

  • Fewer mistakes – With the online FAFSA, answers are automatically edited as you input them. That means you’ll have a better chance of answering all the questions correctly the first time. You can avoid time-consuming corrections, having to resubmit your application and missing important financial aid deadlines, too. Plus, if corrections are needed, fixing them is faster and easier online.
  • Simpler application – The online FAFSA only asks questions that are relevant to your situation. The online FAFSA automatically skips questions that don’t apply to you.
  • Online help is available – The online FAFSA comes with clear, step-by-step instructions to ensure that you understand each question, and get them right the first time.
  • Faster processing – With the online FAFSA, you receive the results of your application seven to 14 days faster than if you use the paper application.

FAFSA Checklist
So, you’ve decided not to go with the online FAFSA, that’s okay. There’s still plenty of help available for filling out the traditional paper FAFSA. Here are some tips to ensure that your paper FAFSA is completed correctly:

  • Make a copy of the FAFSA to use for a practice run
  • Use a ballpoint pen with dark ink or a number 2 pencil
  • Print neatly and carefully, using CAPITAL letters
  • Don’t use liquid white – out: if you need to correct an entry, draw a single line through the mistake and initial the correction
  • Fill in the ovals completely
  • Complete all sections: if the instructions tell you to skip a question, leave it blank; if your answer is none or zero, enter “0”
  • Write your name exactly as it appears on your Social Security card
  • Write numbers below 10 with a zero in front; for example, the month of May should be written as 05
  • Round all dollar amounts to the nearest whole dollar
  • Double-check all your entries
  • Make a copy of your completed FAFSA and all documentation used.
  • Keep all copies in a folder so you can find the information when you need it
  • Make sure all required signatures are on the application
  • Don’t mail your tax return or any other documents with your FAFSA – they will be destroyed

After all your hard work, you certainly don’t want to miss out on the opportunity to obtain financial aid because of a missed deadline. Here are the deadline requirements you need to keep in mind:

  • Fill out the FAFSA and any other student financial aid applications as soon after January 1 as possible. While the federal deadline to submit the FAFSA is June 30, many states require you to submit the FAFSA no later than March 1, and some have a February 15 deadline. Ask your Financial Aid Administrator for details.
  • Don’t submit your FAFSA application before January 1; it won’t be processed. If you submit the application before the first of the year, you’ll be required to resubmit it.
  • To ensure accuracy on the FAFSA, file your tax returns as soon as possible after January 1. If you can’t file early, don’t delay completing your FAFSA. Simply estimate your income as accurately as possible to complete the relevant sections.
  • If you find that you have missed the FAFSA submission deadline, you will need to wait until January 1 of the following year.

File On-Line and File On-Time!

State Aid Deadline 
AR  For State Grant – April 1, 2005 For Workforce Grant – July 1, 2005 (date received) 
AZ  June 30, 2005 (date received) 
*^  CA  For initial awards – March 2, 2005 For additional community college awards – September 2, 2005 (date postmarked) 
DC  June 28, 2005 (date received by state) 
DE  April 15, 2005 (date received) 
FL  May 15, 2005 (date processed) 
IA  July 1, 2005 (date received) 
IL  First-time applicants – September 30, 2005 Continuing applicants – August 15, 2005 (date received) 
IN  March 10, 2005 (date received) 
#*  KS  April 1, 2005 (date received) 
KY  March 15, 2005 (date received) 
#^  LA  May 1, 2005 Final deadline – July 1, 2005 (date received) 
#^  MA  May 1, 2005 (date received) 
MD  March 1, 2005 (date postmarked) 
ME  May 1, 2005 (date received) 
MI  March 1, 2005 (date received) 
MN  14 days after term starts (dated received) 
MO  April 1, 2005 (date received) 
MT  March 1, 2005 (date processed) 
NC  March 15, 2005 (date received) 
ND  March 15, 2005 (date received) 
NH  May 1, 2005 (date received) 
NJ  June 1, 2005 if you received a Tuition Aid Grant in 2004-2005 All other applicants: •  October 1, 2005 fall & spring term •  March 1, 2006, spring term only (date received) 
*^  NY  May 1, 2005 (date postmarked) 
OH  October 1, 2005 (date received) 
OK  April 30, 2005 Final deadline – June 30, 2005 (date received) 
PA  All 2004-2005 State Grant recipients & all non-2004-2005 State Grant recipients in degree programs – May 1, 2005 All other applicants – August 1, 2005 (date received) 
PR  May 2, 2005 (date application signed) 
RI  March 1, 2005 (date received) 
SC  June 30, 2005 (date received) 
TN  May 1, 2005 (date processed) 
*^  WV  March 1, 2005 (date received) 

Check with your financial aid administrator for these states: AK, AL, *AS, *CT, CO, *FM, GA, *GU, *HI, ID, *MH, *MP, MS, *NE, *NM, *NV, OR, *PW, *SD, *TX, UT, *VA, *VI, *VT, WA, WI, and *WY.

# For priority consideration, submit application by date specified.
^ Applicants encouraged to obtain proof of mailing.
* Additional form may be required

When your Federal Aid is not enough.
While you are filing your FAFSA for federal and state aid, we recommend that you look for scholarship opportunities. We provides scholarships to students of all backgrounds, and offers access to over $7.5 billion in additional scholarship funds through a scholarship search database.

For educational expenses not covered by scholarships or traditional financing, you can also look into private loans. We can offer you and your parents a variety of private loans with flexible repayment options and competitive variable interest rates. Along with tuition and fees, these loans can be used to cover room and board, books and equipment.

Withdrawals from an IRA for college expenses

On or after January 1, 1998, an individual can make withdrawals from his/her IRA to pay for qualified higher education expenses for academic periods beginning on or after January 1, 1998, without paying the 10 percent early withdrawal tax. The 10 percent early withdrawal tax does not apply to a distribution from an IRA to the extent that the amount of the distribution does not exceed the qualified higher education expenses for the taxpayer, the taxpayer’s spouse, and the child or grandchild of the taxpayer or the taxpayer’s spouse at an eligible educational institution.

For purposes of this rule, the term “qualified higher education expenses” means tuition, fees, books, supplies and equipment required for the enrollment or attendance of the student at an eligible educational institution. Qualified higher education expenses also include room and board if the student is enrolled at least half-time. Qualified higher education expenses paid with an individual’s earnings, a loan, a gift, an inheritance given to the student or the individual claiming the credit, or personal savings (including savings from a qualified state tuition program) are included in determining the amount of the IRA withdrawal which is not subject to the 10 percent early withdrawal tax. Qualified higher education expenses paid with a Pell Grant or other tax-free scholarship, a tax-free distribution from an Education IRA, or tax-free employer-provided educational assistance are excluded.

How much tax credit can I claim for the Hope Scholarship?

Taxpayers may be eligible to claim a nonrefundable Hope Scholarship Credit against their federal income taxes. The Hope Scholarship Credit may be claimed for the qualified tuition and related expenses of eachstudent in the taxpayer’s family (i.e., the taxpayer, the taxpayer’s spouse, or an eligible dependent) who is enrolled at least half-time in one of the first two years of postsecondary education and who is enrolled in a program leading to a degree, certificate, or other recognized educational credential. The amount that may be claimed as a credit is generally equal to: (1) 100 percent of the first $1,000 of the taxpayer’s out-of-pocket expenses for each student’s qualified tuition and related expenses, plus (2) 50 percent of the next $1,000 of the taxpayer’s out-of-pocket expenses for each student’s qualified tuition and related expenses. Thus, the maximum credit a taxpayer may claim for a taxable year is $1,500 multiplied by the number of students in the family who meet the enrollment criteria described above.

The amount a taxpayer may claim as a Hope Scholarship Credit is gradually reduced for taxpayers who have modified adjusted gross income between $40,000 ($80,000 for married taxpayers filing jointly) and $50,000 ($100,000 for married taxpayers filing jointly). Taxpayers with modified adjusted gross income over $50,000 ($100,000 for married taxpayers filing jointly) may not claim the Hope Scholarship Credit. Both the dollar limitation on the expenses for which the credit may be claimed and the modified adjusted gross income limitation will be indexed for inflation in 2002 and years thereafter. The Hope Scholarship Credit may be claimed for payments of qualified tuition and related expenses made on or after January 1, 1998, for academic periods beginning on or after January 1, 1998. Therefore, the first time taxpayers will be able to claim the credit is when they file their 1998 tax returns in 1999.

Lifetime Learning Tax Credit

Taxpayers may be eligible to claim a nonrefundable Lifetime Learning Credit against their federal income taxes. The Lifetime Learning Credit may be claimed for the qualified tuition and related expenses of the students in the taxpayer’s family who are enrolled in eligible educational institutions. Through 2002, the amount that may be claimed as a credit is equal to 20 percent of the taxpayer’s first $5,000 of out-of-pocket qualified tuition and related expenses for all the students in the family. After 2002, the credit amount is equal to 20 percent of the taxpayer’s first $10,000 of out-of-pocket qualified tuition and related expenses.

Loan Consolidation Overview

A Consolidation Loan is designed to help student and parent borrowers simplify loan repayment by allowing the borrower to combine several types of federal student loans with various repayment schedules into one loan. You can even consolidate just one loan into a Direct Consolidation Loan, in order to get benefits such as flexible repayment options. If you have more than one loan, a Consolidation Loan simplifies the repayment process because you make only one payment a month. Also, the interest rate on the Consolidation Loan might be lower than what you’re currently paying on one or more of your loans.

Both the Direct Loan Program and the FFEL Program offer Consolidation Loans. Direct Consolidation Loans are available from the U.S. Department of Education. FFEL Consolidation Loans are available from participating lenders such as banks, credit unions, and savings and loan associations.

Plus Loan Overview

PLUS Loans enable parents who do not have an adverse credit history to borrow to pay the education expenses of each child who is a dependent undergraduate student enrolled at least half time. PLUS Loans are available through both the Direct Loan and FFEL programs. Most of the benefits to parent borrowers are identical in the two programs.

The yearly limit on a PLUS Loan is equal to your cost of attendance minus any other financial aid you receive. For example, if your cost of attendance is $6,000 and you receive $4,000 in other financial aid, your parents could borrow up to-but no more than-$2,000.

The interest rate could change each year of repayment, but, by law, it will never exceed 9 percent. The interest rate for PLUS Loans in repayment from July 1, 2001 to June 30, 2002, was calculated at 6.79 percent. The interest rate is adjusted each year on July 1. Interest is charged on the loan from the date that the first disbursement is made until the loan is paid in full.

Federal Plus Loan capsule:

  • Available to parents of undergraduate students.
  • As noted above, parents must be credit worthy.
  • Parents have up to 10 years to repay.
  • Payments usually begin after the first disbursement.
  • The variable interest rate is capped at 9.00%
  • Parents can borrow up to the Cost of Attendance minus any financial aid, including other loans received.

When can you first make a withdrawal from an IRA to pay for higher education expenses?

On or after January 1, 1998, an individual can make withdrawals from his/her IRA to pay for qualified higher education expenses for academic periods beginning on or after January 1, 1998, without paying the 10 percent early withdrawal tax. The 10 percent early withdrawal tax does not apply to a distribution from an IRA to the extent that the amount of the distribution does not exceed the qualified higher education expenses for the taxpayer, the taxpayer’s spouse, and the child or grandchild of the taxpayer or the taxpayer’s spouse at an eligible educational institution. For purposes of this rule, the term “qualified higher education expenses” means tuition, fees, books, supplies and equipment required for the enrollment or attendance of the student at an eligible educational institution. Qualified higher education expenses also include room and board if the student is enrolled at least half-time. Qualified higher education expenses paid with an individual’s earnings, a loan, a gift, an inheritance given to the student or the individual claiming the credit, or personal savings (including savings from a qualified state tuition program) are included in determining the amount of the IRA withdrawal which is not subject to the 10 percent early withdrawal tax. Qualified higher education expenses paid with a Pell Grant or other tax-free scholarship, a tax-free distribution from an Education IRA, or tax-free employer-provided educational assistance are excluded.