How Will the Economy Affect Your Financial Aid?

Lauren Bayne Anderson

The stock market’s plummeting. Congress is bailing out Fannie Mae and Freddie Mac. And student loans are getting tougher to come by.

But you’re not sure how — or if— any of it affects you. Chances are it will. And while you may not be feeling the effects of it yet, that’s simply because it hasn’t trickled down yet.

When it comes to financial aid, some know the scope of the industry better than others. Mark Kantrowitz is one of those people. The author of our own, FastWeb College Gold, A Step-by-Step Guide to Paying for College, and a slew of other financial aid resources including FinAid.org , Kantrowitz sheds light on what today’s economy means for you.

Who is affected most by the credit crunch?
Kantrowitz says: Students at community and technical colleges, especially institutions that are for-profit, are having the toughest time because they are more likely to receive private loans. Also, lenders under profit pressure are less willing to write loans for shorter, one- and two-year programs -especially at schools with historically high default rates. —Time

I’m leaving for college next year, is it worth it to start saving just now?
Kantrowitz says: Save whatever you can. Something is better than nothing. If you wind up having to borrow the cash, you’ll pay for it in interest. Either you could save a certain amount of money before college, or pay back twice as much after college. —First 30 Days

Is it worth it to going back to school in lieu of the tough job market?
Kantrowitz says: Prospective students should keep in mind that student loans may be more difficult to come by these days. "Lenders have tightened criteria," he said. "If you have a bad or marginal credit score, you are going to have a harder time obtaining a student loan." —Red Orbit

How will the financial crisis affect my ability to pay my student loans?
Kantrowitz says: Interest rates on many loans are likely to jump by 2 percent within the next month. "Interest rates on these loans will increase as the lenders pass on their increased cost of funds," he said. —New York Times

How do I select the best student loan for me?
Kantrowitz says: Choosing a loan comes down to who offers the cheapest interest rates and fees. The Perkins loan is the most beneficial federal loan, followed by the Stafford loan. Families of undergraduate students can take advantage of a current phased-in interest rate reduction that Congress passed. But only for a while! “As in everything Congress does, it has five years and then it reverts to the status quo because of federal budgetary constraints." —Chronogram

For more advice from Kantrowitz, check out FinAid.com !

What Makes a Highly Successful Scholarship Winner?

Review the following habits of scholarship winners for tips on how you can
make your scholarship quest successful.

1.Successful students always remember the five P’s – Prior
preparation prevents poor performance. Prepare for the scholarship
search early. Do not wait until your senior year

2.Successful students do not rely on their parents to do all the work.

3.Successful students vigorously avoid mistakes on their essays and
applications. They always spell-check, proofread, and allow one
other person to proofread their applications and essay for errors.

4. Successful students do not ignore scholarships that may be local or
those for small amounts. Scholarship amounts, even as small as
$50, can add up.

5. Successful students do not rely on only one source such as the
Internet for their scholarship search. They use many resources.
Many scholarships on the Internet or in the free scholarship
searches that you find on the World Wide Web are nationally known
and are harder to win due to greater competition. Local and regional
scholarships are not found as easily through an Internet search,
although they may be easier to win because the applicant pool is
smaller. You have to use a combination of resources to find as
many scholarships to apply for as possible.

6. Successful students market themselves well. In their applications,
they highlight positive aspects about their lives, especially
community involvement.

7. Successful students do not apply to one or two scholarships and
wait for the best. They apply for all scholarships they are eligible to
win. They keep applying until the total they have won exceeds what
they need to pay for the college they want to attend or until they
graduate with a degree.

8. Successful students are organized. They keep track of deadlines
and materials required to complete an application.

9. Successful students are well rounded. They participate in
extracurricular and community activities. They write about these
activities in scholarship and college essays in a descriptive
manner. They try to benefit others as well as themselves with the
extracurricular and community activities in which they are involved.

10. Successful students understand that SAT scores and grades alone
do not win most scholarships. Scholarship programs look at many
factors such as community activities, leadership, presentation of
your application package, special or unusual talents or skills, etc.

11. Successful students do not look for the easy way out. It is harder for
them to believe in a scholarship scam that promises to do all the
work for them. They understand that those things for which we work
hardest often bring the greatest rewards. Hard work in the
scholarship process as a high school student could result in an
easy college life without work later, or a loan-free life after college.