Financial Aid for Online College: Everything You Need to Know and Do

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Planning to attend an online college? Consider yourself lucky. The federal government gives out hundreds of millions of dollars in grants to students just like you every year. We’ll tell you exactly how to get real money to pay for your virtual education.

But first, a quick explanation on why you’re so lucky. If this was 2005, you’d have a pretty hard time getting federal financial aid. That’s because, once upon a time, Congress limited financial aid only to those schools providing more than 50% of education in a traditional classroom setting. The policy left online college students out in the cold.

That meant that if you were hoping to take classes while working a job, if you were living in a remote rural region, if you were deployed on military assignment, if you lacked the means for housing or transportation, your options for higher education were limited. The US government lifted its financial aid restrictions in 2006, creating a whole new set of pathways to online higher education. For people with geographical, economic, or practical obstacles to access, and for those who simply desired an online college experience, this was a welcome change.

Today, aspiring online college students largely enjoy the same financial aid options as those attending college the old fashioned way. You just need to take the proper steps to secure your funding. So if you’re looking for financial aid to attend an online college, you’ve come to the right place.

Hereafter, we’ll tell you everything you need to know, including how to:

. . . we’ll do our best to simplify a process that can be bureaucratic, confusing and even a little scary by laying out the steps you’ll need to take and what you can expect along the way.

Check out our Online Colleges Source for a more comprehensive look at online college opportunities and how you can pursue them.

Online College Accreditation

Before diving into the specifics on obtaining financial aid, make sure you understand the concept of accreditation. This is an important subject all-around when it comes to colleges, but takes on even greater importance on the online landscape. Accreditation is the stamp of quality assurance given to colleges and universities that meet a preexisting set of standards. Accreditation is determined by accreditation agencies. Six of these agencies are regional and several others operate at the national level. Regional accreditation agencies are largely viewed as the most credible.

To learn more about accreditation, what it means, and which agencies are considered most trustworthy, check out Accreditation of Colleges and Universities: Who’s Accrediting the Accreditors?

All of this is particularly important when you’re dealing with online colleges. While online education has a great deal more credibility today than in the past, this education sector still remains uniquely susceptible to the entry of degree mills with shoddy standards and meaningless credentials. Consider accreditation the first measure of defense against choosing the wrong online college. It should help to know that any college lacking proper accreditation is not eligible for federal financial aid, so before you send in your application, make sure your chosen school has all the proper accreditation.

If it doesn’t, your bid for financial aid ends right here, and that would be a shame because we have all kinds of great tips below.

Notes of Caution

Accreditation isn’t the only determinant of online college quality. It’s just the first thing you need to look at. According to US News & World Report, though accreditation has traditionally been a solid indicator that your credits are transferrable from one institution to another, some schools are beginning to rethink this policy. The inconsistent standards at many online schools — particularly those of the for-profit persuasion — have inclined some schools to reject credit transfers even from accredited online colleges.

Find out if credits from your selected online college can be transferred. Save time, money and aggravation by avoiding credits that have no value to the outside world. Usually, the ease or difficulty with which credits can be transferred to a traditional institution is a good indication of the program’s quality.

So too are indicators like graduation rate, debt level, student loan default rates and net cost, according to US News & World Report. Online colleges tend to perform collectively worse than their brick and mortar counterparts in these categories. This means that you have to be particularly careful when seeking out an online college where you can get your money’s worth. The Department of Education’s College Navigator offers statistics on these indicators and can help you to objectively evaluate whether your online college is worth your money regardless of accreditation status.

Eligibility Restrictions

US News & World Report notes one other restriction specific to online college. Though federal student aid can be used in certain cases to help pay for selected foreign schools, this does not extend to even a single online class. Any federal aid for education abroad must be spent in the traditional classroom setting.

Also, as with traditional college, your eligibility will depend on your status as a full-time student. This is noteworthy for online students, primarily because so many choose online college for its scheduling flexibility. In many instances, this flexibility is especially important for those who work part- or full-time, who are raising families, or who are deployed on military assignment. If these conditions limit your enrollment status to part-time, you may not be eligible for federal financial aid.

All of this is to say, there are some perils and particulars out there which are unique to the online college landscape. Bear these conditions in mind as you proceed. That said, assuming you’ve done your homework and you are preparing to attend a properly accredited and reputable online college, let’s get you some financial assistance!

FAFSA Facts

The first thing to know about the federal financial aid process for attending online colleges is that it’s virtually identical to the financial aid process for traditional colleges.

This means that your very first move is to complete your Free Application for Federal Student Aid (FAFSA). Whether you’re going to a traditional college, attending online classes, or both, everything starts with your Free Application.

The FAFSA is a form that both current and prospective online college students must fill out annually to determine individual eligibility for student financial aid. This means that you’ll fill out a FAFSA not just at the start of your college career but for every year thereafter as well, so get to know it.

The FAFSA is made available by the Department of Education. All students seeking assistance for undergraduate or graduate studies have the right to fill it out. In fact, you should complete your FAFSA even if you don’t think you’ll be eligible for a need-based loan. There are unsubsidized loans which are available to all, regardless of income.

Notable Student Aid Deadlines

FAFSA Deadline

You can fill out a FAFSA for the 2017–18 school year between Oct. 1, 2016 and June 30, 2018. That said, the sooner your complete your FAFSA, the better. This is especially true for online college students, who are more likely to attend colleges which aren’t restrained by traditional semester calendars. This means that the sooner you get your application in, the sooner you can begin your online education. It also bears noting that some federal student aid programs have limited funds, and therefore distribute these funds on a first come-first served basis. Get yours while supplies last.

State-Specific Deadlines

Many states also offer their own financial aid packages. You’ll definitely want to explore this option as well. Bear in mind that many states will have specific policies relating to online colleges. Funding is more readily available in some states than others. States will also have different policies regarding financial aid for state residents who will attend an online college out of state. The National Association of Student Financial Aid Administrators (NASFAA) offers a portal that allows you to view state-by-state financial aid opportunities, along with contact information. Reach out to somebody in your individual state to learn more.

You can also check out FAFSA’s inventory of state-specific deadlines. Here, you can enter your state of legal residency and the school year for which you are applying to find out about relevant deadlines and to learn more about online college specific conditions.

College-Specific Deadlines

Colleges may also have their own FAFSA submission deadlines for the coming school year and increasingly, online colleges are offering both financial aid and scholarship grants. Be sure to mark your school’s deadlines on your calendar as you prepare your financial aid information. Know the cutoff date for your college(s) of choice and be sure to get your FAFSA completed accordingly.

Selecting Colleges to Receive Your FAFSA

You can select to have your FAFSA information submitted to up to 10 colleges or universities, both traditional and online. For every college you enter beyond 10, you will need to eliminate one of your original selections. Each college is identified by a Federal School Code. The FAFSA application site provides a Federal School Code Search tool. In addition to providing you with the School Codes you’ll need to complete your FAFSA, this tool provides detailed information on selected colleges including tuition, fees, and graduation rates. The tool also allows you to compare information for up to 10 colleges at a time.

For even more detailed information about college costs, graduation data and post-college earnings — all particularly important indicators for evaluating the quality of your online college — check out the College Scorecard, a school-by-school assessment of college performance provided by the Department of Education.

Eligibility for Aid

Before you fill out your FAFSA, you should also be aware of the conditions for eligibility. In addition to the eligibility of your chosen school for financial aid, your eligibility to receive a loan of any kind is based on the following criteria:

Forecasting Your Aid Package

Before you prepare your FAFSA, you can take an at-a-glance look at the likely student loan packages available to you. The Office of Federal Student Aid provides an instrument called the FAFSA4caster. Use this to estimate the aid for which you are likely to be eligible. This free calculator can help you plan not just for this year of college but for the years ahead, by projecting the amount of assistance you are likely to receive for the duration of your studies.

Preparing Your FAFSA

Now that you’ve got the lay of the land, it’s time to fill out your FAFSA. Don’t sweat it though. We’re still here to guide you. Let’s start with your filing options:

Options for Filing Your FAFSA

Beginning in the 2017–18 academic year and going forward, the FAFSA will be made available to the public on October 1st of the preceding year. Stated more clearly, the FAFSA for 2017–18 was released in October of 2016. The FAFSA for 2018–19 will be made available in October 2017, and so on. If you’re into boring history trivia, the annual FAFSA release date used to be January 1st. The decision to make the FAFSA available to applicants three months earlier was done to more closely coordinate the timing of the federal financial aid application process with the timing for the typical college admission application process.

But that doesn’t really effect you. All you need to know is that you can start the application for the coming school year as early as October 1st.

When you do get started, you will have the option of preparing your FAFSA through any of the following channels:

Receiving Your Student Aid Report (SAR)

So now that you’ve clicked “submit,” or alternately slapped a stamp on your envelope and dropped it in the mail slot, what’s next?

Next, you’ll receive a Student Aid Report (SAR).

When Will You Receive Your SAR?

Depending on how you submitted your FAFSA, you will receive your SAR either by paper document or electronic mail. The SAR contains a review of the information you provided on your FAFSA as well as some basic information about your eligibility for federal student aid. You should receive an email link to your SAR within a week of submission or, if you elect to receive a hard copy by mail, one to three weeks.

Naturally, you will receive your SAR faster if you elect to have it sent by electronic mail. If you do elect to receive your SAR by email, the Federal Student Aid office advises that you add the email address FederalStuentAidFAFSA@cpsemail.ed.gov to your contact list so that your SAR doesn’t wind up in your SPAM folder.

What’s in Your SAR?

Your Student Aid Report will include your Expected Family Contribution (EFC), a legally established formula measuring your family’s financial strength based on taxed and untaxed income, assets, and benefits like unemployment or Social Security. Your EFC will display in the upper right-hand corner of your SAR. If your FAFSA was incomplete, your EFC will not appear but your form will provide instructions on what is required of you to resolve the issue.

Your SAR will also include your Data Release Number (DRN). This is also included in the upper right hand corner on your paper SAR. For electronic SARs, the DRN appears in the Application Receipt date box, just below your EFC. This DRN will be necessary if you choose to allow your chosen college to alter information on your FAFSA.

Making Corrections to Your FAFSA

Your SAR also gives you the opportunity to make any necessary corrections to your FAFSA. The first thing you should do when you receive your SAR is review the document for accuracy. If there is any information which is inaccurate or which has changed since your submission, you may log in to fafsa.gov to submit your corrections.

It is important that you do so promptly because the online colleges that you’ve listed on your FAFSA form will have electronic access to your SAR within a day of its processing. Corrections may be made under the following circumstances:

You made a mistake

You have the ability to correct most factual errors. However, the Office of Federal Student Aid notes that an incorrect Social Security Number usually cannot be corrected. In this case, you’ll want to contact the financial aid office of the school you plan to attend to find out if you can correct this error or if you simply must start a brand new FAFSA. Most other errors can be readily corrected through the fafsa.gov page.

Your Situation Has Changed

You can update certain items on your FAFSA in the event that information has changed. This may include a new mailing address, email address, dependency status, marital status, change in the number of family members in a household, or a change in the number of people in your household who are in college. The latter two will typically only require correction when verification is requested by your school’s financial aid office.

Some information can’t be altered. For instance, it’s possible that you wouldn’t be permitted to update information regarding changes in your family’s savings or income. In the event that there are significant changes to your financial outlook which cannot be corrected or reported on a FAFSA, your best move is to contact your school’s financial aid office to seek advice.

You Wish to Add or Delete a School

You may add additional online schools to (or remove schools from) your FAFSA even after submission by using the “FAFSA Corrections” option. As with your original filing, you can locate any prospective schools by using the Federal School Code tool provided by the fafsa.gov website.

And once again, you may include up to ten schools at once. For every college you enter beyond ten, you will need to eliminate one of your original selections.

Filing Your Corrections

If you have corrections to make that fall under any of the preceding three categories, follow the instructions here below to file your corrections:

If you wish to make corrections and you’ve elected to receive a paper copy of your SAR, write your corrections and updates directly on the document, sign it, and mail it to the address provided.

Your online college of choice might also be able to make changes to your FAFSA. If you have already selected to attend a specific college, you might be able to contact the financial aid office for assistance in correcting or updating information.

Common Grant and Loan Types

Ok, by now, you’ve probably read “FAFSA” so many times that the word has lost all meaning. I can’t promise you it’s the last time we’ll mention it. (Actually, I can pretty much guarantee it won’t be). But at least you’re done filling it out. Now we can move on to the subject of grants and loans.

To review, your SAR will indicate your Expected Family Contribution (EFC). Your EFC determines the grants or loans for which you are eligible. Eligibility for certain common grant and loan types will vary depending upon your needs, qualifications, and expenses. All of the loans and grants listed below are accessible to both traditional and online college applicants.

Pell Grant

The Pell Grant is awarded to students with demonstrated financial need. The Pell Grant is an award with a maximum amount of $5,815, (though it bears noting that the number does increase every few years depending on legislation and federal budgetary allocation). If you have already earned a bachelor’s degree, you are likely not eligible for a Pell Grant, though exceptions may apply to some baccalaureate programs. Technically, the Pell Grant is not a loan as the recipient is not responsible for paying back the borrowed sum. Your EFC will determine whether or not you are eligible for this grant. After completing your FAFSA, you will receive emailed or written notification indicating whether or not you are eligible for a Pell Grant.

Stafford Loan

The Stafford Loan is a Federal Direct loan with a fixed interest rate of 4.29% (as of the 2015–2016 academic year). The Stafford is available in both subsidized and unsubsidized forms. For subsidized loans, which are granted on the basis of financial need, the interest on the loan is paid by the federal government as long as the student is enrolled in college at least half-time. The borrower becomes responsible for repayment of interest upon leaving or completing his or her studies. For unsubsidized loans, the interest amount accrues while the student is enrolled, and must be repaid along with the principal loan balance after a student leaves school, graduates, or drops below half-time enrollment. There are several options for how to structure the repayment process which may include some deferment period (typically a grace period of six months following departure from school).

Federal Perkins Loan

Similar to the Stafford Loan in most regards, the primary difference is that the Federal Perkins Loan is lent directly by Title IV-eligible schools (as opposed to the Federal Government) and must be repaid at a fixed interest rate of 5%. It also bears noting that because financial eligibility requirements for Perkins loans vary from school to school, your eligibility for this type of loan won’t be determined until you receive your financial aid package from your specific school of choice.

Federal Supplemental Educational Opportunity Grant (FSEOG)

The Federal Supplemental Educational Opportunity Grant (FSEOG), like the Pell Grant, is awarded on the basis of financial need and repayment is not required. However, like the Perkins Loan, this is one that you must apply for directly though the financial aid office of the university you plan to attend. The FSEOG is reserved for those students with the greatest level of financial need and the disbursement amount will depend on the depth of that need. The amount may vary between $100 and $4,000.

Federal Work-Study Program

The Federal Work-Study Program gives eligible students an opportunity to do part-time, on-campus work to help offset the cost of tuition. Typically, half of the student’s wage will by paid by the federal government while the other half is funded by the school itself. Every college has a different set of working opportunities from which applicants can choose. Consult your colleges of choice to learn more about such opportunities.

TEACH Grant

The Teacher Education Assistance for College and Higher Education (TEACH) Grant is distinct among federal student grants because it requires you to take a specific set of classes to get your grant and it subsequently requires you to keep a certain type of job in order to prevent the grant from turning into a loan. As long as you adhere to the courses and career path specified, the TEACH Grant need not be repaid. The maximum TEACH Grant award is $4,000 and you must sign a TEACH Grant Agreement to Serve which indicates your committment to teach in a high-need field, at a low-income school and for at least four academic years within eight years of completing or ceasing enrollment in the course of study for which you received your grant.

Service Grant

The Service Grant is specifically intended for those applicants who are not financially eligible for a Pell Grant but who lost a parent or guardian to military combat in Iraq or Afghanistan following the 9/11 terrorist attacks. You must have been under twenty-four years old or enrolled in college at least part-time at the time of your parent or guardian’s death to be eligible. The maximum Service Grant award typically mirrors the Pell Grant. This means that, at the time of writing, the maximum Service Grant award would be in the amount of $5,815. This number will fluctuate in direct correspondence to changes in the maximum Pell Grant amount.

PLUS Loan

The PLUS Loan is a student loan granted to the parent of the enrolled student. The PLUS Loan has some similarities to the Stafford or Federal Perkins Loan, including its repayment schedule, which usually begins roughly six months after the completion or cessation of one’s studies. (Note: This only applies to loans granted after 2008. Repayment for PLUS Loans from prior to 2008 must begin within sixty days of final disbursement). By contrast to Stafford and Perkins Loans, the PLUS Loan is granted with a fixed 7.9% interest rate. Also of note, the granting of such loans is subject to credit review, which is not the case for Stafford loans. You can apply for a PLUS Loan directly here.

Consolidation Loans

Under the terms of the Federal Direct Student Loan Program, a borrower may consolidate Stafford Loans, PLUS Loans and Federal Perkins Loans into a single debt, reducing monthly payments and applying a single fixed interest rate to one lump sum. If possible, consolidation is always advisable as it can reduce the complexity of the repayment process and, ultimately, reduce the long-term cost of repayment.

You may also have the option of refinancing your loans through a private lender. While this can be a good way to secure a favorable interest rate or improve the terms of your repayment process, this is an area where you really must proceed with caution. Some private lenders have been know to engage in predatory practices. If you’ve done any research on student loans at all, your social media pages have probably been infiltrated with pop-up ads hawking all kinds of loan refinance deals. Should you decide to refinance, deal only with reputable lenders. Check out our list of the Ten Best Student Loan Refinance Deals for more.

Supplementing with Private Loans

As with federal, state and financial aid, private loans typically demand that your online college of choice be accredited. Presuming that you’ve only gotten this far because your college is accredited, feel free to proceed. Typically used to supplement standard aid loans like a Pell Grant or Stafford Loan, a private loan generally lacks many of the protections that come with those provided through the federal government. These commercially advertised loans may sometimes (though not always) lack forbearance, deferment and financial hardship protections and there is no ceiling to interest charges, meaning the cost of repayment will often be higher. If you do need to supplement your federal or state loans with some private assistance, it’s a good idea to shop around for the loan that suits your needs best.

According to SimpleTuition.com, the following are the ten largest student lenders so this is probably a good place to start your search:

Scholarships

All the various loans, aid packages, grants, and more may only go so far. To cross that final impediment and reach your higher education funding goals, consider a scholarship.

A sum of money awarded by a school, a company, an organization, an agency, or even a private citizen for the purposes of funding your college education, a scholarship is essentially free money. You never need to pay it back.

Whether you’re a star athlete, an academic standout, a member of a unique cultural tradition, a spiritually observant student, an individual in need of economic assistance, or a hobbyist with a niche set of skills and interests, a scholarship out there may have your name on it.

An inescapable fact: if you apply for more scholarships, your chances of gaining that free money improve. Rules, eligibility requirements, application instructions, submission deadlines, and standards for maintenance vary from one scholarship to another. But to determine how these conditions apply to each individual scholarship, you’ll need to immerse yourself in our exhaustive database of linked scholarship opportunities.

Because, as they say, the best things in life are free.

What Now?

Congratulations! You’ve completed the loan application process. Now all you have to do is graduate college, find a good job and pay back your loan. No pressure!

But again, don’t sweat it. We’re here to help you every step of the way. Now that you know everything you need to about applying for your online college loan, learn about the risks and how you can avoid some of the most common pitfalls.

For more about these pitfalls and about financial aid in general, visit our comprehensive Student Financial Aid One-Stop Source.

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