Crossing the Line: Improve Academic Standing for Financial Aid

CrossingtheLine_ImpAcademStnding

Good grades and test scores typically mean more scholarship opportunities. Did you also know that a small margin can sometimes push you over the line for eligibility, or even for higher awards? Here’s a look at how small improvements matter.

PSAT/NMSQT

The Preliminary SAT (PSAT) is also the National Merit Scholarship Qualifying Test (NMSQT). If you take the PSAT as a junior, you’re automatically screened for the National Merit Scholarship Program. The top scorers in each state receive special recognition.

  • About two-thirds receive Letters of Commendation and become eligible for special scholarships sponsored by corporations and businesses.
  • About one-third become Semifinalists, and most of those complete several steps to become Finalists. Finalists are eligible for:
    • Merit Scholarships from the National Merit Scholarship Corporation, corporations and colleges.
    • Special scholarships up to and beyond full tuition from certain colleges.

The difference between a Commended student’s score and a Semifinalist’s score could be a single point in a metric called the “Selection Index,” which is based on your PSAT scores.

How to Cross the Line

Preparation is key for the PSAT.

  • Take the PSAT 10 as a sophomore to become familiar with the test format and see where your strengths and weaknesses lie to better prepare yourself for the PSAT as a junior.
  • Use practice tests to review the test concepts and learn which answers are considered correct or incorrect and why.
  • Be sure to practice in timed test-taking situations.

ACT and SAT

Most colleges require you to attain a specific minimum score on either the ACT or SAT before admittance. Once you have narrowed down your college choices, review their scholarships pages. Many academic scholarships are based either entirely or partly on those test scores, and one or two more points may push you into a category for a more substantial award.

How to Cross the Line

Many of the same techniques above for the PSAT apply when taking other standardized tests like the SAT and ACT. Keep these additional pointers in mind:

  • While the PSAT and SAT are both offered by College Board and have many similarities, the ACT comes from another provider and the format and content areas may be quite different. Use specific practice tests for the SAT or the ACT, depending on which test you plan to take.
  • Check to see if the colleges you’re applying to require or recommend that you take the optional essay portion.
  • You may retake either the SAT or ACT to try to improve your score.
    • Concentrate on preparing for the areas in which you want to improve, but continue to practice all parts of the test so your other section scores don’t fall.
    • Consider your options for sharing your scores with colleges. You may want to wait to see your new score before you submit it to a college, but an additional fee could be required.
    • If your score improves in some parts of the test, but you have a lower composite score because of lower scores in other sections, see whether your college will superscore, or consider your best score for each section of the test separately.

High School Grades

While you’re checking the test score requirements for scholarships, pay attention to the required high school GPA as well. Will bumping up your overall GPA a fraction of a point move you into another scholarship category and make you eligible for hundreds or thousands of additional dollars?

Increasing your GPA may also make you eligible for increased money from outside scholarship sponsors. When you search for scholarships, try a search with an additional 0.1 or 0.15 added to your actual GPA to see if you get more results. (Don’t lie on scholarship applications; improve your GPA before you apply.)

How to Cross the Line

Increasing your GPA may take some extra effort, but if it nets you additional cash for college, it’s worth the work.

  • Don’t wait. Take steps to improve a specific grade early in the semester or year. Later, you’ll have fewer opportunities to earn points, and a perfect final test can only offset so many earlier mistakes.
  • Take advantage of every extra credit opportunity.
  • Ask your teachers how you can improve your grade. Some may be willing to provide credit for an extra project or paper if you explain why you need the grade boost. (This is most effective if you’re an engaged student who generally completes all work on time, even if you don’t always get an A.)
  • Improve your study habits. See these tips for studying smarter.

By: Iowa Student Loan

Getting Involved: 9 Reasons Why

Opportunities to become involved in extracurricular activities, athletics, and work activities abound. Here are nine reasons high school students should take advantage of at least a few of those opportunities.

1. Discover new possibilities.

Involvement in an activity could spur a lifelong passion, introduce career options and help define identity. For example, many students first find a love for debate or technology through school activities

2. Ease transitions.

Moving from elementary to middle school, or from middle to high school, can be a big change in routine, relationships and environment. Continuing or discovering activities can help make the change go more smoothly.

3. Relieve boredom.

Being involved in an activity often means hours of practice, preparation and, sometimes, travel, which leaves less time for boredom or less-desirable activities.

4. Relieve academic pressure.

As the school work load increases, it may seem counterintuitive to spend more time on other activities, but the outlet is often a needed break from homework and studying.

5. Increase academic performance.

Education Next reports being involved in activities outside the classroom may play a role in improving grades and standardized test scores.

6. Build important skills.

No matter what the future brings, skills like teamwork, cooperation, creative problem-solving, decision-making and leadership will always be important. Many extracurricular activities allow the development of these skills that are transferrable to school, family and future life.

7. Make connections.

Whether it’s a coach, a teammate, a parent or an event judge, involvement in many extracurriculars brings students into contact with others who may become valuable connections later.

8. Improve college applications.

If college is the next step after high school, a record of involvement over several years can demonstrate a continued interest in a particular cause, activity or event. Colleges and universities appreciate seeing applicants who demonstrate that they are successful outside the classroom and will become active members of their academic communities.

9. Find others with similar interests.

A variety of activities are available for students of all backgrounds and circumstances, including:

  • School, club or community sports teams
  • Special interest clubs like card or chess clubs
  • Academic-related activities such as competitive math or science teams
  • Fine arts groups, like newspaper or social media, drama, dance or music
  • Student government
  • Volunteering for nonprofit and service organizations
  • Career-related internships and jobs
  • Other jobs such as retail, babysitting and tutoring

By: Iowa Student Loan

How Working Can Help Your College Student

Wking-Help-College-Student

The financial, networking and training benefits of working part-time while in college can seem pretty obvious. Students earn cash that can be used to offset loans, pay college costs and fund other expenses. They learn to value money and to budget. They can connect with professionals who may be able to help them locate and succeed in future jobs. They learn how to navigate the workplace, gain skills they can use in their careers and put classroom lessons into practical use.

What may not be so obvious is how working part-time during the academic year can also boost a student’s grades. Although a student’s first job is performing well in school, working for pay a few hours a week may help the student achieve more academically.

The most recent data available from the National Center for Education Statistics (NCES) demonstrates that the academic performance of students who work 1–19 hours a week was better than all other students’ performance, including those who worked more or less and those who didn’t work at all.

According to 2016 NCES data:
  • The average GPA for all full-time college students is 2.94.
  • Those who worked 10–19 hours per week earned an average GPA of 3.02.
  • Those who worked 1–9 hours per week earned an average GPA of 3.08.
  • Those who did not work earned an average GPA of 2.94.

GPA Per Hours Worked

Estimated Hours Worked Per Week

Average GPA

0–40+ (overall) 2.94
0 2.94
1–9 3.08
10–19 3.02
20–29 2.88
30–39 2.86
40+ 2.95
Source: U.S. Department of Education, National Center for Education Statistics, 2015–2016 National Postsecondary Student Aid Study (NPSAS: 16)

Why Working Works

The reasons for the grade boost may vary widely by student, job and college, but researchers often conclude that the busier schedule forces students to better manage their available time.

Hanna, a graduate of an Iowa high school attending Kansas State University, agrees. “Having the extra responsibility of a part-time job forces me to study more efficiently,” she said. “I know I won’t have the time to keep procrastinating.”

Another possible reason for the higher average GPA may be that students who work to pay for part of their education expenses are more invested in the outcome. Students who are likely to succeed because of their own goals and motivation may also be more likely to look for and obtain part-time work.

By: Iowa Student Loan

Big Money Savers for College Students

College expenses encompass more than tuition and room and board. Items like transportation, fees, books and supplies, and personal expenses are often rolled into the total cost of attendance, or COA. If you’re looking to reduce your overall cost, and the amount you need to borrow to pay for college, here are some large-ticket items to consider.

Big Money Savers for College Students

Each of the following strategies can save hundreds of dollars each semester.

Books and Supplies

The traditional advice of buying used textbooks instead of new still applies, but you also have other options. Consider the following example for the same textbook with a list price of $257.60.

 

Buy new from university bookstore: $173.40
Buy used from university bookstore: $81.75
Rent new from university bookstore: $164.40
Rent electronic version from university bookstore: $47.57
Buy new online: $110.00
Buy used online $96.00
Rent online: $30.49
Rent electronic version online: $29.99
Use library copy as needed: $0.00

As you weigh your text book options, keep these tips in mind.

  • Think about whether you are likely to want to use the book again after the class is over.
  • Talk to your professor and students who previously took the same class to see how much the text is used. Online reviews and college sites can help you make an informed decision about whether you even need a copy.
  • Ask your professor if an older edition of the same textbook would provide the information needed for the class.
  • Many textbooks now come with access codes or supplements that are not available or not guaranteed in certain formats. These may sometimes be purchased separately.
  • While college libraries generally stock copies of required textbooks, remember that availability may be limited during crucial times.
  • If you decide to rent books, pay careful attention to usage and return guidelines as you may be required to pay full price for books not returned on time.

Lower costs more by purchasing needed supplies in late summer and early fall when discount stores stock up for back-to-school. Compare this list of similar supplies. (Opting for generic items saves even more.)

Item University bookstore Big box retailer
2” ring binder $6.99 $3.55
5 one-subject wirebound notebooks $14.95 $1.25
300 3×5 Index cards $9.00 $1.24
4-pack dry erase markers $8.00 $2.63

Transportation

If you can possibly get by without a car on campus by using public transportation, catching rides home and biking or walking to class, you save in multiple ways.

  • Car insurance. Check with your insurance provider on resident student or occasional driver discounts for college students who don’t have a car on campus and attend college at least 100 miles from home. Discounts can vary but may be as high as 35%. Also consider whether you will be driving while at home over breaks and how that might affect your coverage.
  • Parking fees. The cost of a student parking permit can be well over $100 per year. Add to that the cost of any tickets for parking in unpermitted spaces or exceeding time limits, as well as the cost of metered parking.
  • Fuel and maintenance. Besides the cost of gas, which increases the more you drive, think about the cost of oil changes, tire repairs and other maintenance costs.

Health

Some college and universities charge students a fee for health or dental coverage while they attend school. Carefully review your billing statement or contact your financial services or cashier’s office to see if you’re paying for this insurance. Then, speak with your parents or guardians about any existing coverage to compare cost and benefits.

In addition, cut habits like smoking, vaping or drinking. These products are expensive to purchase and may result in additional costs for doctor visits, fines and more.

Classes

If you took advanced classes in high school or are otherwise academically prepared, check out the testing options. You may be able to test out of or transfer credit for required general education courses, saving you the cost of tuition for those classes.

Also work with your academic adviser to stay on track academically. Repeating classes or taking unnecessary ones costs you money for every credit hour.

In addition, streamlining your coursework can help you leave college earlier, allowing you to save on housing and other costs associated with attending school.

Daily Expenses

Avoiding or reducing daily expenses can also save you upwards of $100 per academic year.

By: Iowa Student Loan

Parents’ Guide to College Prep (Infographic)

Download this infographic as a PDF.

Knowing your student is prepared can help ease your anxiety as they make the move away. Use these tips to help ensure they’re ready for daily life on their own.

Plan for medical emergencies

You are not automatically granted access to your student’s health information or permitted to make medical decisions if he or she is 18 or older and becomes incapacitated, even if you carry the insurance and pay the bills. You may want to have your student properly complete, sign and have notarized official power of attorney and medical information release forms that you can carry on your phone or otherwise easily access in case of emergency. Some colleges have law offices or students available to help undergraduate students with legal needs for reduced or no fees.

In addition, your student should understand when an illness or injury requires self-treatment, a visit to the health center or a specialist, or a trip to the emergency room.

Prepare for other medical events

Check with your student’s college to see if you’re being charged for health insurance and if you can waive it if your plan already covers your child.

You may find your student needs vaccinations or boosters, as well as a regular physical, dental cleaning or vision check before college or soon after arriving on campus. Encourage your student to schedule appointments, complete the appropriate paperwork and fill or refill a prescription for upcoming visits with your help so it’s not all new for later appointments. In addition, provide your child with copies of the pertinent medical, prescription, vision and dental insurance cards.

With your student, put together a basic medical kit for the dorm room with pain reliever, bandages and other health items you normally keep at home.

Set up a financial system

If you will be helping your student financially, ensure you can easily transfer money to him or her, perhaps through a student checking account that also carries your name. Check for financial institutions that have a branch or no-fee ATMs on or near campus.

Adding your student to a credit card account also makes financial transactions simpler. Because a college student’s card could be easily lost or stolen, you may want to set up a new card or account number to avoid problems with your own purchases.

Attend an orientation

Besides actually signing up for an orientation date, your student may need to take online placement tests and training or safety courses before attending. In addition, if he or she will be signing up for classes at orientation, suggest that your student look through the course catalog for entry-level required classes and come up with a preferred and alternate schedule. If your student didn’t attend a summer orientation, look for opportunities with the start of classes.

Get ready for classes

If your student hasn’t yet attended orientation or signed up for classes, suggest that he or she look through the course catalog for entry-level required classes and come up with a preferred and alternate schedule. Besides attending orientation itself, your student may need to take online placement tests and training or safety courses before arriving on campus.

Plan the big move

Decide if it makes sense to purchase items now or wait until you get on campus, depending on planned transportation and availability. Some department store chains allow you to select items at one location or online and pick up at a location close to campus. In general, understand that dorm rooms are small, students will probably only need half or less of their original packing list and they can usually pick up or order items they forgot later.

Make needed reservations

If you plan to attend parents weekend or other upcoming special events with your student, check hotel and transportation availability early. Especially in smaller college communities, nearby rooms and rental vehicles may be booked quickly. If your student will fly home and back to school during high-traffic times like Thanksgiving or Christmas, you may also want to book those flights early.

Get the car college-ready

If your student will be taking a car to campus, help him or her set up any appointments for needed maintenance or repairs over the summer. Discuss an appropriate schedule and possible locations for service they may need close to campus. You might consider a AAA membership with towing services if the student will be driving far, and you may also need to let your car insurance provider know. Finally make sure your student knows what to do in case of a car accident, such as whom to call and what to say to another party.

If your student won’t be taking a car to campus but normally drives under your car insurance policy, contact your provider about possible savings and reduced coverage.

Take care of any additional paperwork

If your student may need an updated passport or their Social Security card or birth certificate, help him or her locate those and discuss how important it is to keep these documents safe. If your child relies on his or her cell phone contact list for phone numbers for you and other important contacts, suggest a printed or electronic list in case the phone is broken, lost or stolen.

If your student will have valuables on campus, consider dorm insurance or check your homeowner’s policy for coverage.

By: Iowa Student Loan

Contacting a Student Loan Servicer (Infographic)

ContactStudentLoanServicer-inforgraphicDownload this infographic as a PDF.

Once you know who your student loan servicer is, you need to know your servicer is there to help you successfully repay your loans at no additional cost. It’s important contact your student loan servicer for any of the reasons listed below.

1. Your contact information has changed.

If you have a new mailing address, phone number or email, or if your name other demographic information has changed, you need to advise your loan servicer. Remember that you are responsible for repaying your student loan debt, even if you don’t receive bills because your servicer does not have your current contact information.

2. You want to make extra or reduced payments.

Your ability to pay may change according to your circumstances. Work with your servicer to make sure extra payments are achieving your goal or that you don’t face unnecessary penalties for reduced payments.

3. You want to apply your payments in a specific way.

If you have several loans with the same servicer, you may want payments to apply more heavily to certain loans within your account, such as those with higher interest rates. Find out your servicer’s policy for payment application across loans and how to direct payments differently.

4. You don’t understand your billing statement or the way previous payments were applied.

If you don’t understand how your payments are being applied to your account, any fees you are charged or have other billing questions, ask your servicer for an explanation as soon as possible. This will help you better understand the most beneficial way to make future payments.

5. You have fallen behind on your payments.

Student loan servicers may report late payments to the national consumer reporting agencies, and nonpayment will eventually lead to default. If you are not able to make your full monthly payment, work with your servicer to determine your options and see if you can avoid negative credit reporting or default.

6. You want to understand borrower benefits.

You may be eligible for benefits, such as a reduced interest rate for making automatic electronic payments. Talk to your servicer about potential benefits as soon as possible to learn how to maintain eligibility.

7. You want to consolidate your student loans.

Your ability to consolidate your loans depends on your servicer and the types of loans you have. You cannot include private student loans in a federal student loan consolidation under federal loan programs, although private lenders may allow you to combine both types of loans in one consolidation. Some private servicers offer consolidation while others don’t. If you’re considering consolidation, work with your servicers to determine your best options. If you are considering consolidating federal loans into a private loan consolidation, be sure you understand what important federal loan benefits you may lose before applying.

8. You want to align your payment dates.

If you have several different loans or more than one servicer, your payment due dates may be different as well. If it’s easier for you to manage a single due date, call your servicers for information.

9. You are close to paying your loans in full.

Because student loans accrue interest every day, your principal balance does not equal a payoff amount. If you want to pay your loans in full, contact your servicer for an accurate payoff amount and date to avoid any surprises.

10. You have any additional questions.

Each borrower’s circumstances are unique, and you may not be able to find accurate, updated information from your specific servicer online. If you have any questions, call your servicer directly. Your servicer is invested in your ability to successfully repay your loan and wants to help you.

By: Iowa Student Loan

How to Conquer Student Loans with Extra Payments (Infographic)

Infographic titled how to conquer student loans with extra payments

Download this infographic as a PDF.

Many student loans have a standard 10-year repayment plan, where borrowers make a set monthly payment that is applied to interest and principal to pay the loan in full at the end of 10 years. If you are able to make extra payments, though, you may be able cut your repayment period in half and save money along the way.

The following examples are based on average debt from the College Board Trends in Student Aid 2017 report for three types of degrees, and assuming loans with a 10-year repayment term, a 6% interest rate and extra payments beginning with the first payment.

Master’s Degree

With debt totaling $41,300 to obtain a master’s degree, a borrower who pays an extra $100 each month will save approximately $3,329 on interest payments and repay the debt in seven years and nine months.

A borrower who pays an extra $200 each month on the same $41,300 will save about $5,341 on interest and pay off the loans in six years and four months.

Bachelor’s Degree

The average total debt to obtain a bachelor’s degree is $28,400. An extra $100 payment each month will save the borrower approximately $2,994 in interest and repay the loan amount in seven years.

Paying an extra $200 a month on the $28,400 debt will save a borrower about $4,530 in interest and pay off the loan amount in five years and five months.

Associate’s Degree

An associate’s degree holder with the average debt of $13,000 making an extra $100 payment per month will save about $2,168 in interest and pay the debt off in five years and three months.

Making an extra $200 payment each month on that $13,000 will save approximately $2,876 in interest and pay off the debt in three years and six months.

By: Iowa Student Loan

Grand Prize Winners Announced in College Funding Forecaster Giveaway

Eighteen new Iowa high school graduates and three younger students recently received monetary awards to help cover educational expenses after they or their families completed a free online tool to estimate the total cost of a four-year undergraduate degree.

Iowa high school students, and their parents or guardians, were able to enter their information for the drawings after completing the College Funding Forecaster between March 5 and May 11, 2018. This free consumer education tool provided by Iowa Student Loan® uses information from students’ freshman year financial aid award packets, as well as outside scholarships and grants and family savings and earnings, to project estimated costs, funding gaps and potential student loan debt over four years.

“We really feel this tool is vital to help families plan for a complete undergraduate education,” said Christine Hensley, chair of the Iowa Student Loan board of directors. “We use the Giveaway contest to draw attention and expose families to the tool’s features, which help them estimate total costs over four years as part of an overall plan to minimize student loan debt. We are pleased to see so many families entering after going through the module this year.”

More than 900 qualifying entries were received from all over the state, representing nearly 280 Iowa high schools.

Sixteen 2018 Iowa high school graduates met the requirements to each claim an award of $250 for education expenses after having their names randomly chosen in weekly drawings. They are:

Student Name High School
Everett Willson Burlington High School
Jordan Larson Gehlen Catholic High School
Sadie Brockett Gladbrook-Reinbeck High School
Nathan Butler Highland High School
Madison Sommers Indianola High School
Rachel Strang Iowa City High School
Aaron Howe MOC-Floyd Valley High School
Owen Meyer North Cedar High School
Erin Goraczkowski North Union High School
Erech Hazen Norwalk High School
Abby Crowner Notre Dame High School
Andraya Sowers Pleasantville High School
Reece Suter Rock Valley High School
Nicholas Resch Spirit Lake High School
Madeline Moen Vinton-Shellsburg High School
Renee Kerr Wilton High School

Three younger students also fulfilled the requirements to claim one of the weekly drawing awards.

Student Name High School
Bethany Kallio (high school class of 2021) Ballard High School
Grace Reekers (high school class of 2021) Belle Plaine High School
Dahlyn Ott (high school class of 2019) South Winneshiek High School

In addition, two high school seniors’ names were randomly drawn by an independent third party to each receive a $1,500 scholarship award to the colleges they will attend this fall.

Student Name High School
Marissa Tunning Carroll High School
Drake Beller Sioux City North High School

The College Funding Forecaster is available online at www.IowaStudentLoan.org/Forecaster. The tool allows families to customize both expenses and available funding to adjust results for changes in students’ situations over the four years. The results show yearly and total estimated costs of attendance, available funding and projected funding gaps. The tool also provides informational tips on how to reduce costs and potential debt.

By: Iowa Student Loan

Before Applying for a Student Loan

So, awarded financial aid isn’t enough to cover the full cost of attendance and you know you or your student will need additional student loans to pay for college. Before filling out loan applications, consider future repayment for any loans. Here’s what you need to know.

Federal student loans are limited.

Undergraduate students can take out only so much in federal student loans each year. If additional student loans above that limit are required, you may need to consider private student loans or parent loans.

Undergraduates need adult assistance.

Students need to have a creditworthy cosigner for any private student loans, unless they can meet underwriting criteria on their own. If parents are willing to consider a federal Parent PLUS Loan, the parents will need to borrow that money and be responsible for paying it back themselves.

The debt will need to be repaid.

Student loans are not usually dischargeable for bankruptcy or other financial hardship. When you think about a future repayment amount, remember:

  • The repayment amount will be more than the original loan amount. Student loans accrue interest on a daily basis. At certain times, unpaid accrued interest may be capitalized, or added to the principal balance, and begin accruing interest as well.
  • Payments may come from a limited income. Carefully consider how much a graduate with the same major can realistically expect to make in an entry-level position. Add anticipated student loan payments for all the undergraduate years, including any federal loans in the financial aid package, to anticipated expenses for a realistic budget based on a starting salary. If all your expenses can’t be covered with a realistic starting salary, student loan debt may need to be reconsidered.

Interest and other payments can be made during college.

Most lenders allow early or extra payments on student loans at any time without penalty. In addition, paying interest as it accrues during school can reduce the amount of interest that will need to be repaid after graduation.

Private student loans vary.

Every lender has its own underwriting criteria, qualification requirements, loan terms and repayment schedules. Before you sign for a loan, research your options. Consider:

  • Variable vs. fixed interest rates. A variable rate may go up or down according to market conditions, while a fixed rate remains the same throughout the loan term. A low variable rate is often appealing, but remember that it may change drastically over the loan term.
  • Actual interest rate. Many lenders offer different rates based on the applicants’ and cosigners’ credit. If you are unable to determine your rate upfront, consider the highest rates.
  • Repayment assistance and benefits. Some lenders or loan servicers offer assistance if a borrower is unable to make required monthly payments. Some loans also offer special benefits, such as a reduced interest rate for making automatic electronic payments. Consider these features carefully.
  • Managing repayment. Will additional loans be needed for future years? Should all loans be obtained from a single or limited number of lenders to make repayment easier? Will consolidating multiple loans later be important, and does the lender offer that option?

College choices matter.

If you find that you or your student cannot afford to take on enough debt to pay the full cost of attendance, a new plan might be essential. Some options students have include:

  • Earning more. Increase the ability to pay college costs as they occur by earning more income during school terms and on breaks.
  • Reducing expenses. The full cost of attendance may include expenses that can be cut. Can living off campus without a meal plan save money? Are the book and fees and transportation costs realistic for you or your student?
  • Asking for help. Are relatives willing to help pay for college? Are additional scholarships, either through the school or outside entities, available?
  • Attending a less-expensive school. If the cost of attendance is still not affordable without taking on unmanageable debt, you may need to consider attending a less-expensive school, at least for a year or two.

Visit Student Loan Game Plan for more information and tips.

By: Iowa Student Loan

Maximizing Summer Earnings for College

MaximizingSummerEarnings-College

About this time of year, panic tends to set in for new high school graduates looking at their upcoming college costs. If you’re planning to work this summer to offset some of your college expenses, consider these tips.

1. Know How Earnings Affect Your Financial Aid

Although your financial aid has already been determined for the upcoming year, your annual income can affect future aid.

The Free Application for Federal Student Aid, or FAFSA, provides an income protection allowance — the amount you can earn during a calendar year before your financial aid package is affected. For the 2015–2016 year, this amount was $6,400.

You shouldn’t necessarily try to limit your annual income to less than the income protection allowance, however. The income tax you pay on your earnings is also taken into account, and the type of aid you receive makes a difference. Offsetting student loans with income is beneficial, while earning enough to reduce need-based grants isn’t so great.

If you have questions about how your earnings will affect your future aid, talk with a financial aid officer.

2. Make a Plan for Your Earnings

The amount you need to save from each summer paycheck is determined by your goals. Are you planning to offset specific expenses, such as clothing, books or entertainment, for the school year? Are you planning to earn enough to make interest payments on student loans?

Use your goals to determine a percentage of each paycheck to put into savings. Don’t forget that you may need to use part of each paycheck to cover current expenses, such as work clothes, gas and car insurance, and that you will have taxes and other deductions removed from each check. You may also want to plan on spending a little each month on summer entertainment as well.

3. Simplify Your Saving

It’s often tempting to use cash in hand, and sometimes students find they’ve spent the money they intended to save without really thinking about it. Avoid the cash crunch by:

  • Depositing your pay right away. If you have the option to have your check direct-deposited into a checking account, take advantage of it. If not, or if you are paid in cash, deposit it directly after you receive it to avoid unnecessary spending.
  • Automating your savings. Set up an automatic transfer from your checking account to your savings account that corresponds with your pay date. For example, if you are paid by direct deposit every other Friday morning, have an amount equal to the percent of your check you want to save automatically transferred to your savings account on those Friday afternoons. Time the transfer as close to the deposit as you can without risking overdrawing your checking account.

4. Stick to Your Goals

Once school starts in the fall, remember what you worked so hard for over the summer. If you intended to use your summer earnings for books, don’t let the desire for new clothes or evenings out distract you from your goal. If you haven’t already considered it, think about a part-time job during the school year to pay for other items you want or need.

By: Iowa Student Loan

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