January 24, 2013

How a School Counselor Can Steer Students in the Right Direction Financially

Jan. 24, 2013 at 10:16 AM | By Katherine Pilnick | Comment Count

School counselors play a large role in students’ lives, but their support doesn’t stop at helping students decide on majors, choose classes and deal with personal and academic stress.

As a school counselor, you can also help students by preparing them for future financial responsibilities. You can guide them about how best to pay for college, and how to create a solid financial foundation that will benefit them the rest of their lives.

This can be accomplished through sound advice in a number of areas: making them aware of scholarships and grants; advising them about other financial-aid opportunities; counseling them about jobs; and convincing them of the importance of internships.

Scholarships and Grants

Scholarships and grants are best way to get through school with minimal financial impact on mom and dad and also on the student. That's because they represent free money – they don't need to be repaid.

Naviance contains scholarship resources to help students find money for school. The Sallie Mae national scholarship database within Naviance contains over 3 million scholarships worth over $13 billion. Educators can also add local scholarships and track the students who have applied and been awarded the scholarship over the years.

Some key bits of information about scholarships and grants:

Do your research. There are all kinds of grants and scholarships. Some high schools have them. Towns, cities and counties have them. So do states. And so do a number of local companies. Look at all of them.
Start early. Although thousands of scholarships are awarded every year, funds are limited. The more grants and scholarships students can apply for, the better their chances.
Think long-term. Some of them are awarded only for one year. Others cover all four years.

Private Loans and Federal Student Aid

Many students will need financial help beyond scholarships and grants. That's often where student loans come in. Taking on a student loan is a long-term financial commitment.

Make sure students know about the FAFSA (Free Application for Federal Student Aid). This is a form students can file to learn if they are eligible for need-based financial aid. Print and online filing is available, and students should file between Jan. 1 and March 15 of their senior year.

Loans defer the cost of college but also set students up for job pressures upon graduation. Federal loans have better loan terms than private loans (interest rates and repayment terms), but loans must be repaid.

Another option for students is private school loans. These can be obtained from banks, credit union and similar lenders. There are pros and cons to going the private loan route.

Pros include:

The loan application process is easier than it is for federal aid. Sometimes it can be done over the phone.
A FAFSA form is not usually necessary.
There is no deadline. Students apply when they decide they have a financial need.
Students can pick their lender and the competition could get them more favorable terms.
Loans generally do not include prepayment penalties or fees.
Co-signers are usually allowed.
Interest payments from the loan may be tax-deductible.

Some cons:

Interest rates are typically higher for private loans than federal loans.
Students probably will have to pass a credit check.
Students may only be able to apply for one year at a time, and there are no guarantees that multiple years of loans will be approved.

Private loans for school represent a significant financial decision for any student. Getting guidance is strongly recommended.

Jobs and Internships

Many students must work to pay for tuition, books and/or a place to live. That can make it hard to keep one's grades up, but setting up a structured daily and weekly schedule that builds in reading, writing and study time around work and school hours will help. Working while going to school is more beneficial if the job relates to a student's future degree or profession.

Likewise, internships should always be encouraged even if they are unpaid. Someone with even a little experience has a leg up in the entry level workforce over someone without experience.

For more information and tips on student finances, visit Debt.org’s student section.

Katherine Pilnick is a personal finance writer, blogger and editor for Debt.org, a financial help website.