Appealing a Financial Aid Offer – Can it be Done?

For most families, the act of opening the financial aid offer letter is a harrowing one. In just a few short sentences they will see how much a college or university is willing to offer in the way of student loans and scholarships. But what happens when that figure is too low?

Believe it or not, a student aid package that offered less than expected does not necessarily mean the end of the road. In some cases, a borrower can appeal to the school for more money. So how can this be done?

For starters, strike the word “negotiate” from your vocabulary. If you call a financial aid office and tell them you want to negotiate your student loan package, it will be a very short phone call.  You are not negotiating. You are “appealing.” There is a difference. The first step is to call the financial aid office and inquire about the process of submitting an appeal. Most likely, you will be asked to write a letter explaining, in detail, why you feel the aid package should be reconsidered.

Your appeal letter will explain, in brief, the grounds on which you are appealing the financial aid offer. You should decide early on whether this an appeal for need or for merit, or for both. If it is an appeal for need, you must demonstrate to the school that your federal aid package simply isn’t enough for you to afford attending the school. More than likely, a successful appeal based on need will cover a recent change in your financial situation, such as a series of expensive medical bills or a parent losing his or her job. You will need evidence to back up your claim, including copies of bills and pay stubs.

You may also appeal on the grounds of merit. An exceptional student may be eligible for various scholarships or grants. Look into the criteria for these awards. The best evidence to appeal on these grounds is a stronger scholarship offer from a similar school.

So, now that you know when you can appeal, another critical aspect is how. Writing your appeal letter can (in some cases) make or break your appeal. It’s important to remember that whoever reads your letter is a real person, and you should write for them, respectfully. So here are some tips to help you craft an excellent appeal letter.

Address it to the right person- Starting a letter “To whom it may concern” may be practical (as you might not always know who’s reading your letter), however, when possible, find a name to address it to. Typically, A financial aid officer will sign a student’s award letter, so this would be the name to use. If you can’t find a name here, check the school’s website. Adding a personal greeting might seem small, but personal touches go a long way.Get your facts straight- Before asking for more aid, it’s important to understand why you received the amount you did. Familiarize yourself with the school’s financial aid policy so that you do not seem uninformed, or worse, accusatory. For example, federal award standards are often different from an individual school’s. Before accusing the office of awarding an incorrect amount of money, make sure your calculations are based on the same information.Don’t be rude- This falls in line with what I said in tip one, but it’s important nonetheless. So let’s jump back to high school English class for a second and talk about tone. The tone in which you write your letter is very important, as it conveys the message you are trying to send. Do not write as if the school owes you something- because they don’t. Instead, respectfully ask that your case be reviewed based on reasons x,y, and z. Having someone else read over the letter before you send it can also really help if you are unsure of how it comes across to others. And remember, you are not negotiating- be polite!

If you keep these tips in mind while drafting your letter, then hopefully your appeal process will go off without a hitch. Just remember, a school cannot grant appeals in every case, and there is a limit to how much an institution can help. If after going through the process you still come up short, you should consider taking out a private student loan.

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When do I Receive my Stafford Loan?

I become very, very impatient when someone owes me money. I don’t even like the 10 seconds it takes for an ATM to spit out my cash- feels like an eternity. And I am extra diligent about much larger sums of money, like my student loans. If you’re like me, you might be on pins and needles wondering when you actually receive your Stafford loan.

Your lender (in the case of federal loans, this would be the Department of Education) will disburse your Stafford Loan funds directly to your college or university. The disbursement will occur in two installments – typically in the fall and winter/spring semesters. Your school will take the money and apply it toward what you owe in tuition and fees. If there is any money leftover, the excess funds will either be used to credit your account or paid to you directly. Keep in mind that loans are not free money. They collect interest and need to be repaid, so it’s usually best that if you don’t need them, don’t use them! Contact your financial aid office for information on your school’s specific policy.

If summer classes are a regular part of your course-load, chances are your school divided your Stafford funds up to cover you. If you are taking extra summer classes, your Stafford Loans may not cover them. Be sure to contact your financial aid office for more information.

If your school disburses your funds in October, but you need money for September (to pay for off-campus housing, for example), consider a private student loan to cover any expenses you may have in the meantime. You can even compare private loans to find the best deal for you!

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The Lowdown on Co-Signing

There are a lot of things to consider when you take out a private student loan. Of these, whether or not to apply with a co-signer tends to be a popular question among students and young professionals.

A co-signer is an individual that agrees to be your backup in the event that you cannot make payments on your loan or credit account. They are especially important if you do not have an established credit history or have negative credit report / low credit score. For most students, the first case is quite normal; you’re likely young, so credit products have not been available to you long enough to build up any substantial amount of credit history.

If you’re worried about being approved for a loan, who you choose as your co-signer can have a huge impact. That being said, there are a few solid rules to follow in selecting a co-signer that will greatly increase your chance of being approved with a low interest rate:

They need to have a long credit history. You want at least 5-8 years of positive, non-delinquent records.The higher their credit score, the better.The lower their debt to income ratio, the better.

#3 can actually consist of a lot of different things. For credit cards, they should carry less than 50% of their credit limit at any given time on each of their accounts. More than 50% indicates a lack of ability to repay their debt and weakens their ability to be a creditworthy co-signer. For long term debt, they need to be in a position where they aren’t stretching every dollar to pay their mortgage every month. That doesn’t mean rich, it just means living within their means.

Lastly, you should make sure that the person you select is trustworthy, and trusts you in return. This is a big decision and going into it without full confidence in the other is never a good idea.

If you use those criteria, you should be in a much better place to be approved for a loan. Also, keep in mind that a co-signer does not have to be an immediate family member; if you have a generous friend that is willing to help out, they could certainly be a co-signer on most types of loans.

Finding a co-signer may not always be easy because they might be worried about the “what ifs” such as “what if the holder can no longer pay due to injury or death?” While these situations are rare, they do happen. Currently, there is no private loan co-signer discharge in the event of the holder’s death or permanent disability. Federal loans offer a complete loan discharge for the co-signer, but private loans have yet to jump on board. So what can you do? Many lenders now offer co-signer releases. If the primary loan holder completes school and makes a certain amount of on-time payments, then they can apply to have their co-signer released from all responsibility.

Last but not least, some useful reading: Reluctant Cosigner? There’s a solution for that.

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