Debunking the Common Myths of College Aid

Last updated: February 15, 2013 by Susan

So let’s say you’ve completed your FAFSA and that you qualified for a loan or a grant. Now you are looking at an award letter saying that you are eligible for financial aid. Hurray!

But do you know what’s what when it comes to the actual aid you just received?

Here are a few myths about college financial aid that you need to be aware of.

Awarded student aid is automatically deposited to your tuition.

FALSE! The loans/grants/scholarships all have terms that you must first agree upon. Once you have done this, you must then send a letter of acceptance (and anything else required of you) that is written according to the instructions laid out in your award letter.

Student loan aid lowers the cost of college.

FALSE! Loans are loans – they have no effect on the tuition you’ll pay off. The only time you get a free ride is if you are eligible for a grant and/or a scholarship – both of which have catches as well.

Awards are “the same” each year.

FALSE! The funds stipulated in the award letter you receive are enough to cover you for one school year at the most. You need to keep reapplying every year. You could even find yourself out of aid as early as the second year of college because many more colleges finance freshmen than those in the upper years.

You should take out as much student loans as you can afford.

FALSE! The maximum amount of money you should take out should be less than a year’s worth of your predicted annual salary. Take out more than that, and you will end up choking on debt that you can’t discharge with bankruptcy.

Lots of students get “free” college education.

Completely and utterly FALSE! The vast majority of students – 99.7% at the very least – still have to fork over some of their own money to pay for college. Only a meager 0.3% of all enrollees are eligible for grants and scholarships to cover their entire education.