What is Self-Help Aid?
Unless you are sure that you can pay the yearly costs of every college you’re considering, you should plan to apply for financial aid by completing the required applications. Check the aid section of each college’s Web site to find what forms are required and when they are due – you do not want to miss the aid deadline.
Once your aid application is in, what kind of award can you expect from the college? The campus aid office will calculate how much it thinks you can afford to pay for the year and subtract that number from the cost of attendance. The result is your “need,” or the total amount of aid for which you are eligible.
At this point many families believe that they will receive enough grant (grants are gift aid, money that doesn’t have to be repaid) to cover their need. Unfortunately this is almost never the case, even at colleges with the most generous aid programs.The common practice in awarding need aid is to first “package” self-help – student loan and work-study job – before giving any grant aid. This is done for two reasons. First, building a base of self-help before awarding a grant allows the college to stretch limited aid dollars. The second reason is that colleges believe the student should have a stake in paying for college by taking on some of the financial burden.
This financial burden is commonly referred to as self-help. Aid applicants should understand the concept of self-help and be prepared to work and borrow to defray part of the total cost. The work portion of the self-help package consists of a “work-study” campus job, usually in the range of 12-15 hours per week. The student receives a paycheck and is responsible to use the money for educational expenses.
The need-based student loan is almost always for a larger amount than work-study, usually given up to the maximum allowed under federal rules. The main federal student loan program is called the Direct loan. When the Direct loan is given as part of a need-based award, you do not have to pay either principal or interest until after graduation. (There is also another federal loan program, Perkins, which may be given in addition to the Direct loan, thus increasing the overall permissible amount.)
If you have “maxed out” your eligibility for federal student loans, and feel you need to borrow even more, you may want to look into a loan from a non-federal source, called a private loan. Unlike the uniformity of federal student loans, the terms of private student loans can vary a great deal, so smart loan shopping is in order. One of the best sources of comparison shopping for private student loans is SimpleTuition.
The key thing for you to remember when taking out a student loan is that it is not “free money,” although it can appear that way because once you sign the promissory note, the loan is credited to your account just like a grant. Because the process is so effortless, it is very important to keep track of each and every loan you sign for. Then, at the end of each year, make an estimate of your total obligation as of graduation and the amount of monthly payment that will be due. You must know “what you are getting into” as overly burdensome student loan repayments can put you in a deep financial hole for years after leaving school.