Every year, more than 20 million students apply for federal financial aid to help pay for college. Five years ago, Mandy Stango was one of them.
To get there, though, Stango felt confused and woefully unprepared. That confusion started with the very first step in the process, as she and her family had to fill out the Free Application for Federal Student Aid. The FAFSA.
"I sat there, I read the directions, and crossed my fingers and hoped I was doing the right thing," says Stango, who's now 23.
The form has more than 100 questions that determine eligibility for federal aid, from Pell grants to Stafford loans. And it is famous for not being user-friendly. Like millions of others, Stango and her family found the process intimidating and bewildering.
"It was asking for all sorts of terminologies that, as an 18-year-old, I hadn't encountered and didn't really understand," says Stango, who graduated this year with her master's degree in English and creative writing from Pennsylvania State University. "I remember just putting things in the different boxes based on what they instructed me to do, and just being like, well, I hope this is right."
Stango ended up taking out out federal loans to pay for college. She isn't sure of the exact total, but believes she has around $60,000 to $75,000 in debt, all from federal loans.
She's not the only one. Amid all the national concerns about mounting student debt, a consistent thread is the confusion many students have about the process and a lack of understanding about the debt they're about to take on.
What To Know
Federal aid is awarded on a first-come, first-served basis. In short: The sooner you fill out the FAFSA, the better.
To do that, students need a long list of financial information, including details on assets, investments and taxable and non-taxable income (both for themselves and their parents). As long as the student is a dependent, parental information must be included.
Also, to calculate an expected family's contribution, the FAFSA asks questions about a student's household: how many people in the family, how many children are already in college, etc.
Once the form is filled out, students might want to cross their fingers, hoping they filled it out correctly. If not, there can be serious consequences.
"I didn't actually get anything," says Meredith Moon, a senior at Indiana University.
Moon's family, like so many others, was new to the FAFSA. Due to a slip-up with her stepfather's tax information, Moon got no financial aid her freshman year.
"I was really worried I was going to have to drop out of school," she says. "That was an honest mistake, and it almost had me out of school the first semester."
When families fill out the FAFSA for the first time, they commonly leave out important information or mislabel it. Just this year, tens of thousands of applicants made a decimal-point error that could affect their chances of getting a Pell grant.
Moon says these financial forms and the implications of taking on student-loan debt weren't discussed at her high school.
"They were like, 'This is your parents' responsibility, this is something your parents should do.' " Moon says. "But when your parents haven't done this before? They tell you to do this, do this, do this, but they don't tell you what information you need or why."
Although her high school didn't offer the information, her college did. Moon enrolled in a personal finance class, where she wasn't the only one confused.
"I had many students that came in and said, 'All I know about money is that it makes my parents fight all the time,' " says Kim Fatten, who taught Moon's Personal Finance, Planning and Investing class at Indiana University in 2012.
Fatten, who currently works at Eastern Illinois University, found the majority of her students didn't understand money because their parents never talked about it. Without these conversations, students were lost when it came to making hard financial decisions on their own.
"A trillion dollars [of student loan debt] is a little shameful for the United States, I think," Fatten says. "[It's this] enormous Sallie Mae ball and chain they're dragging behind them for so many years."
Why the FAFSA?
After receiving federal financial aid, students are required to complete an online education program about those loans. But the program isn't available until after they've filed the FAFSA and have been approved. And while there are classes available in college, very few high schools have financial literacy programs to walk graduation seniors through the process.
"No one tells you when you're in high school, 'These are the types of loans you have available and this is what it's going to do to you in 30 years,' " says Moon.
The fact is, the FAFSA might be confusing and unintelligible at times but it's your best shot at receiving a manageable amount of aid. Federal loan interest rates range from 4 to 8 percent, whereas some private loans start at 15 percent. But if students don't understand the FAFSA well enough to get that money in the first place, they're stuck. And if their high schools don't offer them the information, it may seem hopeless.
Fortunately, it's not. There is a plethora of research and advice out there on how to take out student loans. The Consumer Financial Protection Bureau has jargon-free guides that explain the difference between federal and private loans, what to consider when deciding to borrow money and information on how to repay after graduation.
The Federal Student Aid office has online resources to help explain the college process, from applying to paying off loans. It can take some serious digging to find all of the information, but the website has handy videos and FAQs to explain the process. Even the FAFSA twitter account recently had "office hours," where they answered questions about student loans.