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5 Costly Financial Aid Mistakes Community College Students Make

Kelsey Sheehy

Financial aid helps put college within reach for millions of students, but a few common mistakes and misconceptions can cost students thousands.

Community college students, who are more likely to be first-generation students and less likely to have college counseling before enrolling, are more susceptible to these errors.

Experts at community colleges and college counseling centers say these five mistakes are ones students often make on the road to financial aid.

[Find two-year schools in your state with the U.S. News Community College Directory.]

1. Procrastinating: The Free Application for Federal Student Aid, or FAFSA, is available Jan. 1, but students often don't apply until the last minute, says Matt Falduto, director of one stop student services at Kirkwood Community College in Iowa.

"So many students wait way up until a month before classes start, and that just doesn't give them enough time to complete the process and make sure everything is in place before the semester starts," he says.

Students who put off applying could also miss out on certain grants and scholarships that are awarded on a first-come, first-served basis, he says.

"The timing is really crucial," he says. "They really need to get a jump on it ahead of time."

2. Not applying for aid: "Many community college students, especially nontraditional students, don't take the time to apply for financial aid," says David Metz, director of financial aid at Columbus State Community College in Ohio.

Often, students simply don't know financial aid is an option, or they think they won't qualify because of their income.

More than 60 percent of full-time community college students worked at least part time during the 2011-2012 school year, according to the American Association of Community Colleges. That figure jumped to nearly 75 percent for part-time students, who accounted for 60 percent of all community college students in fall 2012.

Students who forgo the FAFSA could miss out on state and federal grants -- which don't need to be paid back. They may also miss out on low-interest loans that offer repayment protections rarely available with private bank loans.

[Learn how to avoid common FAFSA mistakes.]

3. Overlooking scholarships: Bypassing free money is rarely a wise move, yet many community college students do so on a regular basis, says Paula Dofat, director of college counseling at the Baltimore Leadership School for Young Women, an all-female charter school that focuses on math, science and technology.

"Students don't realize that there are numerous scholarships offered by their community college," Dofat says. "Usually it's just a matter of submitting a one-page essay and an unofficial copy of their transcript and thousands of dollars may become available to them."

Howard Community College in Maryland, for example, awarded just over $1.3 million in institutional grants and scholarships to students during the 2013 fiscal year, which students could use to cover tuition, books and transportation costs. The school plans to award an additional $2.5 million in grants and scholarships this fall, thanks to an influx of funding from the Howard County government, says Elizabeth Homan, with the school.

4. Borrowing too much: Community colleges are significantly less expensive than four-year universities, but students often borrow more than they have to.

Average annual tuition and fees for students attending public, two-year colleges in their communities were just $3,260 in 2013-2014, compared with nearly $8,900 for those enrolled as in-state students at four-year public universities, according to the American Association of Community Colleges' annual fact sheet.

[Get advice on how to maximize your savings while attending a community college.]

The lower cost, coupled with the fact that a majority of students are only enrolled part time, means students may be able to foot the bill for at least part of their education as they go.

If that's the case, students should reduce their loan amount, says Falduto, with Kirkwood Community College.

"We try to counsel students to only take what they need," he says. "We want to keep student debt down."

5. Taking more courses than they can handle: Community college students often need to be master jugglers, keeping balls for school, work and family in the air without crashing into one another. One of the quickest ways to drop one of those balls is overloading on courses simply to qualify for financial aid, Falduto says.

Students who overload on classes are more likely to drop a course down the road, which can affect their chances of getting financial aid in the future. They also won't get credit for the course and will have to pay for it all over again when they retake the class.

College students only need to be enrolled half-time to qualify for federal loans, and Pell Grants are adjusted based on the number of credit hours a low-income student is taking. That means students taking nine credit hours, which is considered 3/4 time at Kirkwood, would receive 75 percent of the Pell Grant amount they qualified for, Falduto says.

"You don't have to be full time to get financial aid, but students often think that and take a full load when they don't need to," Falduto says. "They are making decisions in order to get money when it should be the other way around."

Trying to fund your education at a two-year institution? Get tips, news and more in the U.S. News Paying for Community College center.

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