Federal Student Aid

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Federal Student Aid

If you're enrolled in a four-year or a two-year public or private institution, a career school or a trade school, you're most likely eligible for Federal Student Aid. Nearly all the federal aid available is need-based and covers school expenses such as tuition and fees, books and supplies, room and board, and even your transportation expenses to school and back home.

Types of Federal Student Aid

In general, there are three types of student aid offered through the federal government:

Work Study Programs
Federal Loan Programs
Federal Grants

Additional Resources

We're going to talk about each of these programs in turn so that you understand the differences and what each has to offer.

Federal Work Study

Work study is pretty self explanatory; basically the student would be paid to work around campus, with the money going towards educational expenses. Work study is not necessarily the same concept as college internships. And students need to be aware of how they get paid under these programs.

For example, some schools might take the money earned from a work study program and apply it directly to tuition costs or into an account this is strictly used to pay for the student's expenses.

Federal Student Loans

Just like a mortgage, a student loan is borrowed money that must be repaid with interest. Federal student aid in the form of student loans generally is part of the following three programs:

Federal Stafford Loans

Federal Stafford Loans are made to available to students as part of two loan programs - the William D. Ford Federal Direct Loan Program (Direct Loan) and the Federal Family Education Loan (FFEL) Program. There are two forms of Stafford loans, only one of which is based on demonstrated financial need:

Subsidized Stafford Loans - This type of loan is awarded based on financial need and no interest is charged until repayment of the loan begins.
Unsubsidized Stafford Loans - This loan is not based on demonstrated financial need and interest accumulates while the student is still in school.

Federal PLUS Loans

Federal PLUS Loans are unsubsidized student loans that are made to parents. Once again, the Federal PLUS Loan program comes in two forms:

Direct PLUS Loan - The student's parents must complete a Direct PLUS Loan application and promissory note to determine eligibility for this loan. This application is can be obtained from the student's financial aid office.
FFEL PLUS Loan - The student's parents must complete PLUS Loan application to determine eligibility for this loan. Again, this application is can be obtained from the student's financial aid office.

Federal Perkins Loans

Finally, we have Federal Perkins Loans which are low-interest loans that are available to both undergraduate and graduate students with demonstrated financial need. With Perkins Loans, repayment is made to the school, not the Department of Education or the federal government.

Depending on when the student applies, the level of need that is demonstrated and the level of the school's funding, the student may be able to:

Borrow up to $4,000 for each year of undergraduate study - the total amount the student can borrow as an undergraduate is $20,000.
Borrow up to $6,000 for each year of graduate or professional study. The total amount a student can borrow under this program is $40,000. That also includes any Federal Perkins Loans the student may have borrowed as an undergraduate.

Federal Grant Programs

Grants are a form of federal student aid that does not have to be repaid. Pell Grants and Federal Supplemental Educational Opportunity Grants (FSEOG) range from about $100 to $4,000. In most situations, grants are targeted to the undergraduate student and like loans, the size of the grant is determined by need, enrollment status but these programs also take into consideration the cost of attendance.

There are a total of about ten requirements a student must meet to be eligible for federal student aid, but the three most important requirements are:

US citizenship with a valid Social Security Number
Enrollment is an eligible program as a student seeking a degree or certificate and if you're a male between the ages of 18 and 25, you need to enroll with the Selective Service
Finally, the student must have a General Education Development certificate or have a high school diploma.

Applying for Federal Student Aid

There are three steps to follow when applying for Federal Student Aid:

First you must complete the Free Application for Federal Student Aid (FAFSA). You'll want to apply as early as you can because some states and higher educational institutions often set deadlines very early in the calendar year. You can find a FAFSA online at www.studentaid.ed.gov.

One to four weeks after you've submitted your FAFSA the government will send you a Student Aid Report or SAR. The SAR seeks to confirm the information you've reported on the FAFSA and will list your Expected Family Contribution or EFC. Your financial aid administrators at the schools you're applying to will use the EFC to determine how much federal aid you qualify for.

The final step in the process is a talk with the financial aid administrators at the schools you're considering attending. The administrator will review your SAR, and prepare a formal letter that outlines the size and forms of Federal Financial Aid that the school will offer to the student and parents.

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