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How Will I Pay for Grad School? Part 1: FASFA & Federal Loans

moneyWhen I first looked at applying to University of Maryland University College-Europe/Bowie State University, classes were 312 a credit hour. By the fall, they were 323. Even with the increase, if I were taking the classes as an out of state student at BSU I would pay about double for for the same education, plus books and mandatory fees such as student union, athletics, and parking. So I’m definitely glad I have UMUC-Europe’s discount. But, $15504 plus books is still a lot to come up with (and if I decide to try to squeeze in extra credits to make it a 60 credit degree, which some states require for licensure, it would be $19380). Plus I had three undergraduate level classes to take which added about $2000 to the bill. Even before I found I’m not eligible for MyCAA‘s $4000, I thought, how will I pay for this?

Obviously, in part, I could pay for it out of my job (while I had it), but realistically I could only expect to come up with enough to pay for two or three classes a semester if I wanted to avoid having to set up a payment plan (UMUC-Europe offers a no-interest plan, but it costs $30 to spread payments over 4-6 months). What I ended up doing was taking out federal loans and then putting about half of each paycheck toward paying them back to avoid accruing as much interest and looking for scholarships and other funding sources to offset the cost. Today I’ll tell you about applying for FASFA (the Free Application for Federal Student Aid) and federal loans.

The FASFA is the application you need to fill out for each school year in order to see if you qualify to receive federal student aid. You can find out about the different types of aid available, who qualifys for the aid, and more on this page. Today is actually the last day to apply for federal aid for the 2013-2014 school year, so if you haven’t filled it out and need to, get on it. (You can make updates and corrections to the application until September 21, 2013). The applications for the next school year start January 1st.

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Even if you don’t plan to use federal aid, it is still a good idea to fill out the FASFA because many states and schools use it in determining who is eligible for their financial aid, and I have seen a number of need-based private scholarships that use the FASFA to determine eligibility. To apply, you’ll need your school’s code if you already know what school you’re going to. UMUC-Europe/BSU uses the UMUC code 011644. FASFA’s site provides a tool to look up your school’s code if you don’t know it. You’ll also need income information for yourself and, if applicable, you spouse or parents. I used my husband’s and my own income. If you’re filling it out after you’ve done your tax return, they make it a little easier to input the information by pulling in that data. I’ve already filled out my FASFA for the year so I can’t give a walk-through, but FASFA provides info here to help you in applying, and there is a help and hints box that gives info as you’re going through the online application.

The kind of federal aid you may be eligible for depends on a few factors such as financial need and whether you are an undergraduate or graduate student. You can find out more about the types of aid available here. I was only eligible for direct unsubsidized loans which carry an interest rate of 6.8%. These don’t require financial need, are offered in amounts determined by the school you’re attending, and accrue interest from the time they are dispersed. Payments aren’t required while you’re at last half-time in school or for six months after you complete the degree or drop below half-time (6 credits a semester). However, it’s a good idea to make payments while you’re in school if you can to reduce the amount of interest you’ll pay.

mini graduation cap on money

My first loan package was $10500 for fall and the same amount again in the spring. UMUC-Europe gave me the opportunity to accept or decline the award and to adjust the amount, so I could just take what I needed. The other option was to take everything and then return (pay back) what I wasn’t going to need within 120 days of the time it was dispersed. Any amount returned within this time period got deducted from the total without accruing interest. You may notice that summer semester wasn’t include. What I did to make sure I could pay for the summer semester was to keep enough two pay for a couple summer classes from what I was offered for spring. I kept that in my savings account until it was time to register for summer classes.

While it’s a good idea to apply for FASFA regardless if you plan to take federal aid, federal aid isn’t the best option for everyone, especially if you’re in grad school. Obviously the better option is to get money you don’t have to pay back. Next time, I’ll tell you about applying for scholarships including a number of resources I use to find them.

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2 Thoughts on “How Will I Pay for Grad School? Part 1: FASFA & Federal Loans

  1. haha, I liked your last paragraph: “Obviously the better option is to get money you don’t have to pay back.” Yes, if American university were cheaper….
    $20,000 is actually not that bad. It’s still a lot but compared to what some of my friends paid for a crappier university (or one with less reputation) you are probably getting a pretty good “deal.”

    It is interesting that many school go with the FAFSA number, I didn’t know that but it makes sense as most schools want a somewhat reliable measure. It’s also good to know that you can take all the money and then return it within those 120 days.

    • Yeah it’s definitely a deal compared to some of the prices I’ve seen for master’s programs. Yeah it’s just to determine if you have financial need. Seems like less hassle than having everyone individually submit their info for the the school to have to verify. Yep, definitely check your loan terms if you get one but I think the federal ones are all like that.

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