It’s time to break down the Free Application for Federal Student Aid (FAFSA) and show you what the form and its 107 questions is asking for, and give you a bit of advice along the way.

The current version of the FAFSA covers July 1, 2010–June 30, 2011, so seniors in high school and those already in college will complete the form this year.

The following information covers Step One (questions 1–32). This section is the easiest to complete as it's primarily demographic information about the student. All questions that say “you” or “your” refer to the student. Students should leave blank any questions that do not apply to them (the online form gives you the option to say “not applicable”).

Questions

1. Last name

2. First name

3. Middle Initial

4.–7. Permanent mailing address

8. Social Security number

9. Date of birth

10. Permanent telephone number

11-12. Driver's license number and state if applicable.

13. Email address
If you provide an email address you will be notified when the form is processed. Note: The email address you provide will be shared with your state and the colleges you list on the FAFSA. Provide an email address that you check often so you can access your Student Aid Report (SAR) when it’s completed (3–5 days).

14. Are you a U.S. citizen?
If yes you can skip to question 16. If no and you are an eligible non-citizen, complete question 15, which asks for your alien registration number.

15. Alien registration number

16. What is your marital status?
Options include Single, Married, Remarried, Separated, Divorced, or Widowed. If you are separated but not yet divorced, you will be considered married on the dependency verification questions that appear later.

17. Month and year you were married, separated, divorced, or widowed

18. State of legal residence

19. Did you become a legal resident of this state before January 1, 2005?
States have varying criteria for determining if you are a resident for purposes of state financial aid (and in-state tuition). If you established a true, fixed, and permanent home in any state more than four years ago, you meet its residency criteria, according to the U.S. Department of Education.

20. If you answered NO to question 19, give the date you became a resident

21. Gender
If female skip to questions 23

22. If you are male, age 18–25, and not registered with Selective Service, you can select to be registered through the FAFSA

23. Have you been convicted for possession or sale of illegal drugs for an offense that occurred while you were receiving federal student aid?
If you answer yes (and are completing the online FAFSA) you will automatically be presented with an online Student Eligibility Worksheet to complete. Once you complete the worksheet, you will receive your current eligibility status immediately.

24. Highest school your father completed

25. Highest school your mother completed

26. When you begin college what will be your high school completion status?
Choices include high school diploma, GED, Home schooled, None of above.

27. Will you have your first bachelor’s degree before July 1, 2010?

28. When you begin the 2010–2011 school year, what will be your grade level

29. When you begin the 2010–2011 school year, what degree or certificate will you be working on?

30. When you begin the 2010–2011 school year, what do you expect your enrollment status to be?
Full-time enrollment status generally is 12 credit hours, 3/4-time is generally 9 hours, and half-time is generally at least 6 hours.

31. In addition to grants, are you interested in being considered for Work-Study or student loans?
Answers can be Work-study, Student Loans, Both or Neither. I suggest saying yes even if you may not be interested in these options. You can always say no after you receive your award letter.

32. Are you planning to complete course work necessary to become an elementary or secondary school teacher, either now or in the future?
The Teacher Education Assistance for College and Higher Education (TEACH) Grant program provides grants to students enrolled in participating colleges who intend to teach in a public or private elementary or secondary school that serves students from low-income families. Answering yes to this question will get you more information on the TEACH Grant. See information at www.teachgrant.ed.gov.

We got through the first step of the FAFSA! It wasn’t that bad, was it?

Next we will start Step Two. This section is financial-data heavy, but we will walk through each question so you understand what is needed. See you soon!

Did you know you may be able to avoid out-of-state tuition rates in a neighboring state through reciprocity agreements? These pacts between states offer each other's residents discounted or in-state tuition rates!

The Western Undergraduate Exchange provides reduced tuition rates for two- and four-year schools for out-of-state students in 15 western states, including Alaska, California, Hawaii, Idaho, Nevada, Washington, and more! Through the program, residents are eligible for scholarships that allow them to pay 150% of the in-state tuition rate — an incredible savings!

Similarly, Minnesota, North Dakota, South Dakota, and Wisconsin have a reciprocity agreement that reduces or eliminates nonresident fees for students living in these states.

The Midwest Student Exchange Program provides discounts to students in Indiana, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, and Wisconsin. With more than 140 participating colleges and universities, public institutions agree to charge students no more than 150% of the in-state resident tuition rate for specific programs, and private institutions offer a 10% reduction on their tuition rates. Participating students will typically realize savings between $500 and $3,000 annually, which can make a huge difference!

Before you resign yourself to a second- or third-choice school that's in-state, talk to your guidance counselor or a financial aid officer and find out what options you have!

While it’s always great to focus solely on your studies during college, it’s not always a possibility. Higher education, while worth it, can be pricey and sometimes you need that extra cash flow! Consider getting a job in school: There are some great benefits, such as learning to manage your time and money and fleshing out your resume!

Consider first the two types of employment during your college years: on- and off-campus jobs. On-campus jobs take your class schedule into account and eliminate a commute. There’s always a variety of opportunities, from entertainment planning to aerobics instruction. I recommend looking in your department first for extra resume boosting!

Depending on where you go to school, there can be more or less opportunities with an off-campus job. If your school is in a big city, you will probably find many positions in your career path for experience in your chosen field. But it’s important to be clear about your class schedule and time restrictions.

No matter where you work, keep your education a priority and don’t try to take on too many hours. You may find yourself wanting to accommodate more than you can handle, but you can’t please everyone! “Learning and Earning: Working in College,” a 2001 study by Upromise, shows that students who work more than 20 hours a week while attending school full-time experience more stress and have a larger chance of dropping out of school. The study also finds that students who work continuously take somewhat longer to graduate than non-workers: Student workers took an average of 9.2 semesters to graduate, compared to 8.9 semesters for those who have at least one non-working semester.

If having a job causes you to retake classes, take more time to graduate, or even drop out, you may have lost money in the long run. Make sure you do the math! Be honest with your boss and, most importantly, yourself over what will enhance (not hinder) your college experience.

Whether applying to schools or starting a job search, people usually remember to present themselves professionally in person. But I cannot stress the importance of managing your online presence as well!

Social media has become a part of many of our lives, a way to stay in touch with friends, find people with similar hobbies, and hear the latest news. But it’s also become a way for schools and companies to research possible candidates. While some schools have a policy of not checking personal websites or profiles unless invited, a report by the National Association for College Admission Counseling finds that 26% of colleges are using search engines to research potential students and 21% are using social networking sites!

Have you asked yourself how your online presence would affect your application? Are your photos and comments appropriate? Or do you list your interests as “partying ‘till I pass out, all day every day?”

To make sure your account(s) are ready for their close-up, I highly recommend managing your privacy settings! When possible make your account private and restrict access to photo albums, wall posts, and pictures tagged of you. Facebook is very customizable, letting you specify what friends are allowed to view what!

Even after personalizing your security settings, I recommend erring on the side of caution. Perhaps only your best friend has access to view that scandalous picture, but if you uploaded that photo, then it exists somewhere besides your computer… who knows where it’ll turn up?

And don’t assume you’re in the clear once the application process is over! Many people have been suspended or fired due to their social media activity — everything from angry tweets about admission officers, to calling in sick while your status says you’re really at a concert, sharing company secrets, or photos of you participating in illegal activity. In fact, according to a recent study by Proofpoint, 8% of US companies have fired an employee over social media!

So use common sense in your online activities and remember that Internet does NOT equal anonymous!

Mistake #1: Not realizing that you’ll have a life-long “report card” called a credit report. You know the drill: Your performance in school is evaluated and graded. No secret there.

But did you know that throughout your adult life you’ll be graded in another area altogether, one that has nothing to do with exams, term papers, and homework assignments? It has to do with how well you manage money or, more specifically, how well you manage money that you borrow. Three major credit reporting agencies compile data on you and maintain it in a credit report. And you get evaluated. Just like in school. 

Your Money Management “Grade”
Your money management grade is called a credit score. It’s often referred to as a FICO^® score (since many credit bureaus calculate scores using the software developed by Fair Isaac and Company), although each of the credit bureaus has its own name for it. The scale ranges from 300 to 850, and the higher your score…the better.

Mistake #2: Being clueless about why a good credit score matters…and the ways you can earn “top marks.” Good grades in school can open doors (like to the college of your choice). A good credit score opens up possibilities, too.

• A really bad score can keep you from getting the loan you want. You’ll probably need to borrow money for a car or, eventually, a home. You’ll need an acceptable score for that to happen.
• If your score is mediocre (so-so, like a “C”), you’ll probably be able to borrow money but will have to pay more in interest. That’s because you’re more of a “risk” (meaning you might not pay them back!), so lenders will charge you more to make up for it.
• And finally, just like poor grades can keep you from getting into your first-choice college, a poor credit score can hurt your chances of landing a job or even getting an apartment. Because, yes, employers and landlords can (and often do) check your credit score.

Mistake #3: Not understanding the difference between what you NEED and what you WANT. It’s never too early to learn to first buy the things you need and then, and only then (and only if can you afford it), you buy the things you’d love to have. 

Becoming aware.
Before you’re able to change any bad habits, you have to be aware of them. As you fill in your budget info, ask yourself whether the item was something you really needed (e.g., lunch at the cafeteria) or wanted (a new digital camera). A pattern should emerge, and you’ll see how much money you spend on “optional” items. If you have the money to afford them, fine. If not, you’ve got to make smart choices: Needs first. Then wants. Do that, and you’ll be ahead of some 40-year-olds we know…and well on the way to solid financial footing!

Mistake #4: Not knowing how much money you have to spend…or how you spend it. It sounds simple enough, doesn’t it? Don’t spend more than you can afford, and you won’t run into money problems. End of story. But it’s often easier said than done. That’s why, especially during your college years when your income will be modest, you need to develop…and stick with…a budget. 

Budget: It’s not a dirty word.
Think of your budget as a personal spending plan. It’s simply a way for you to understand where your money goes and to make sure you don’t absent-mindedly buy things you don’t really need. That way, you will have the money for a concert or club or a restaurant. It’s all in the planning.

The first cell phone I (Gen) ever bought was “free.” At least that’s what the advertisement declared in big bold print. But as I was signing the contract, I noticed in fine print notices about taxes, activation fees, early termination penalties, overage and roaming charges, and insurance for lost or broken phones. So while the phone was indeed included in the monthly service fee, if I was not careful, I could also be on the hook for hundreds of dollars of additional charges.

It may surprise you to learn that paying for college is very similar. Ask any college student (or parent of one) and they will all agree that tuition is only the most obvious expense. So let’s explore some of the unforeseen costs of going to college.

Student fees. Like sales tax, various “student fees” are often added on top of tuition. Depending on the school these can be up to several hundred dollars. Some of these fees are mandatory and are used to fund student activities. Sometimes, however, there are fees for optional services — such as a pass to all of the college’s sporting events — that are simply bundled in for convenience. It’s important to read the fine print to know which of the fees are required. However, don’t be too quick to opt out of all optional fees. Even though I (Kelly) had absolutely zero interest in sports, I was happy that I coughed up the optional fee for athletic tickets. I have to be honest, Harvard is not known for its athletic prowess, but we did know how to turn a sporting event into a social event. A football game can be a lot of fun when you don’t care what’s happening on the field.

Health insurance. President Obama may be tackling universal health insurance, but colleges already require every student to have insurance. In fact, almost every college will include a charge for health insurance automatically in your bill. You’ll need to pay this if you don’t already have insurance. However, many students are covered under their parent’s plan until a certain age — often 20 or 21. Don’t pay for insurance you don’t need.

Textbooks. I (Gen) remember the first week of freshman year going to the bookstore armed with a list of required reading for the classes I was planning to take. When the cashier rang up the bill I was shocked: The total was for $600 and that was only for a semester! Not only that, but, as a Humanities major, my books were considered cheap by my friends in the sciences who were dropping $100 or more for just one textbook. To trim this expense, try buying used at the bookstore or online, sharing with a classmate, or borrowing the books from the campus library. It can be a hassle, but you can save a small fortune!

Technology. A laptop, printer, and cell phone are virtual necessities for college students. Shop around for the best prices on these by looking for student discounts and sales at retail stores. Don’t forget to check out the academic pricing at your school’s bookstore. Save by forgoing a land line — how much time will you really spend in your room anyway? And with high-speed Internet standard on campus you may even be able to ditch the cable bill and watch all of your shows online.

Entertainment. Here’s another area where you can save by buying only what you need and sticking to cheap entertainment. That probably won’t be a problem since most college students have limited funds. Check out the entertainment on campus. Plays and concerts, second-run movies, and athletic events are usually cheap nights out. There are also the things you don’t even think about. Being from Hawaii, I (Gen) was used to a year-round wardrobe of t-shirts, shorts and flip flops. During my first winter in Boston, I had to unexpectedly spend my “entertainment budget” on winter clothes. Fortunately my roommate from North Dakota introduced me to the miracles of duck boots and Gore-tex.

Room and board. Accounting for 42% of their college budget, room and board are the largest average expenses for four-year public college students according to the College Board. Carefully explore costs in this area. Many students discover that living with roommates off campus is cheaper. However, this is not always the case. In expensive urban areas it may be cheaper to live in the dorms. Another area to look at is the meal plan. Many schools offer you a three-meal-a-day plan. While that looks good on paper, very few college students wake up early enough to eat breakfast. You may discover that you can easily survive on a granola bar in the morning and a two-meal-a-day plan that will save you a lot of money.

As you can see, tuition is only the beginning of paying for college. There are a lot of additional expenses that you need to budget for. At the same time, you also need to be a smart shopper and realize that you have some control over these expenses. Don’t assume that you must pay for everything the college recommends. Use your judgment and try to only pay for what you will actually use. And when you do need to pay for something, shop around and consider the alternatives before you plunk down your hard-earned cash.

Got some money saving tips of your own? Please share them in the comments!

It’s that time of year again: College-bound students and their families are getting financial aid award letters from the colleges where they were accepted. While the letter might seem simple to understand, parents and students should take a close look at its contents.

The financial aid jargon can confuse the most prepared families. Financial aid award letters show students and their families the type and amount of aid they are eligible for, funding sources, and conditions of the award. The type and amount of federal aid awarded depends on many factors, including the cost of education, family information provided on the Free Application for Federal Student Aid (FAFSA), and the availability of funds.

The letters generally include information on some of the more common financial aid sources, such as:

• Federal Pell Grant: Students who meet federal criteria for financial need automatically receive this grant, which does not require repayment.
• Federal SEOG (Supplemental Educational Opportunity Grant): This grant is awarded to low-income students based on availability of funds at the college and does not require repayment.
• College or University Grant: Individual colleges or universities determine eligibility for this award. The college funds this grant and does not require repayment. 
• Federal Work-Study: This program is awarded to students with financial need. Students work part time to earn this award and are responsible for tuition payment. Work-study funds are not credited directly to students’ school accounts. 
• Federal Perkins Loan: This low-interest-rate (5%) loan is for students with exceptional financial need and is based on the school’s loan pool. Repayment is required. After the school disburses the loan funds and students sign a promissory note, funds are credited to their college accounts. 
• Federal Stafford Loans: These low-interest-rate student loans must be repaid. Annual borrowing limits vary depending on a student’s year in college; freshmen receive a maximum of $5,500. Students must follow their college’s guidelines receiving the loan. After students sign a promissory note, the lender disburses the loan funds to the college. Two types of Stafford loans are available:
  Subsidized: These loans are awarded to students with financial need. The federal government pays the interest on the loan while students are in college and during deferment and grace periods.
  Unsubsidized: These loans are awarded to students regardless of family income. Borrowers pay interest while attending college or may defer payment and allow interest to accrue.

If the award letter is not enough to cover all college expenses, parents should consider applying for the federal PLUS Loan, which is available to parents of undergraduate dependent students and is not based on income or assets.

More than 11 million students — about 44% of all undergraduate students — attend community college in the United States. They can provide a bridge from high school to college, offering courses that can be transferred toward a bachelor's degree at a four-year school.

What community colleges can offer:

• Lower tuition: Costs are often significantly lower than public and private four-year colleges and universities.
• Convenient locations: Many students attend while living at home, saving on campus-living costs.
• Small class size: Students receive personal attention from their instructors. The average class at a community college has fewer than 30 students.
• Flexible class schedules: Classes are offered during the day, evening, and weekends to accommodate work schedules. More than 80% of community college students work part- or full-time jobs and many have family responsibilities.
• Transfer to a four-year college or university: Students frequently begin their undergraduate studies at community colleges and finish at four-year schools.
• Professors concentrate on teaching: The instructors focus on teaching students and tend not to be distracted by research and publishing. Professors also have extensive practical experience in the subjects they teach. Full-time community college faculty spend more hours in the classroom than faculty in any other sector of higher education.
• Direction for high school students still seeking a career path: At a community college, you can explore different subject areas before committing to a program or enrolling in a certificate program in preparation for a specific career, trade, or profession.
• Promote skill building and job advancement: You can take continuing education courses to meet specific needs and interests for job advancement, job placement, and personal development.

Community colleges offer continuing education at any point in your life that's close to home and at an affordable price.

When it's time to pay for school, there is a simple way to cut through all the financial information. It's as easy as "get the cheapest money first." And that's as easy as Sallie Mae's 1-2-3 approach to paying for college.^SM

1. Get the free money first. Scholarships and grants are funds that don't have to be paid back. Ask around, visit Sallie Mae's free scholarship search, and get all the "free money" you can.
2. Apply for federal student loans. Step two is federal student loans. They generally have below-market interest rates and more flexible repayment options. Even if you think you are not eligible for federal student loans, you can't be sure until you try. Submit the FAFSA and start the process.
3. Fill any gap with private loans. After you've exhausted free and federal money, private student loans can make up the difference. There are a variety of private student loans, each with its own requirements and features.