Funding Your Education: Financial Aid for College
Federal Student Loans
What is a federal student loan?
A federal student loan allows students to borrow money to help pay for college through loan programs supported by the federal government. They usually have low interest rates and offer attractive repayment terms, benefits and options. Generally, repayment of a federal loan does not begin until after the student leaves school. Federal student loans can be used to pay school expenses such as tuition and fees, room and board, books, supplies and transportation.
Why are federal student loans a better option for paying for college?
Federal student loans offer borrowers many benefits not typically found in private loans. These include low fixed interest rates, income-based repayment plans, loan forgiveness and deferment (postponement) options, including deferment of loan payments when a student returns to school. For these reasons, students should always exhaust federal student loan options before considering a private loan.
How do I get a federal student loan?
To get a federal student loan, you must complete the Free Application for Federal Student Aid (FAFSA). The easiest way to complete the FAFSA is online. Here, you identify schools that you are interested in attending. When your FAFSA is processed, the schools you have identified will receive your information. The school will then tell you how much financial aid is available, including grants, scholarships, work opportunities and federal student loans. Should you choose a federal student loan, your school will provide you with instructions on next steps.
How much money can I borrow in federal student loans?
Undergraduate student loan limits range from $5,500 to $12,500 per year depending on certain factors, including the student’s year in college. Graduate students can borrow up to $20,500 each year. Parents can also get federal student loans to help pay the remainder of college costs that are not covered by their children’s other financial aid. These are called PLUS loans. In addition, graduate students may obtain PLUS loans to help pay for their own education.
How do I apply?
You may choose any of these methods to file a Free Application for Federal Student Aid (FAFSA):
- Login to apply online (Recommended)
- Complete a PDF FAFSA (Note: PDF FAFSAs must be mailed for processing) The PDF FAFSA is available for you to print and fill out manually or is screen-fillable. Screen-fillable means you can enter your data on the screen before printing. Please note that if you choose this option you will not be able to save your data to your PC.
- Request a paper FAFSA by calling us at 1-800-4-FED-AID (1-800-433-3243) or 319-337-5665. If you are hearing impaired, please contact the TTY line at 1-800-730-8913.
Tips To Help You Apply For A Federal Student Loan
- Apply online using http://www.fafsa.ed.gov/.
- Check deadlines. Be aware of your state’s and your school’s application deadlines. While there is no deadline for applying for federal student aid, you should apply as early as possible after January 1 of each year that you will attend college. Some state and school aid is awarded on a first-come, first-served basis.
- Check Californiaʼs current deadlines here: http://www.fafsa.ed.gov/deadlines.htm
- Collect the information you need to complete the FAFSA:
- Your Social Security number and your parents’ Social Security numbers;
- Your driver’s license number, if you have one;
- Your alien registration number, if you are not a U.S. citizen; and
- Your federal tax returns and income information
- Check your FAFSA. After you complete the FAFSA, you will receive a Student Aid Report (SAR). Review the information carefully and make any necessary corrections.
- Respond immediately to any request from your school for additional information.
Hundreds of thousands of scholarships are available through community organizations, foundations, religious organizations and businesses, as well as professional and trade organizations. Scholarship is money given to students for college, provided by a college or outside source, that does not need to be repaid. College sponsored scholarships are often designated for students who fit a particular profile (from the college’s home state, holding a specified grade average, enrolling in a particular major, or bringing special talent in athletics, music, and the like). Other scholarships may be granted based on the same criteria or based on parent information.
Use the free scholarship directories and search engines on the Web:
- Fast Web
- Mach 25
- Student Scholarship Search
- CollegeBoard Pay for College
- Student Aid Scholarship Database
Other places to check:
- Your school will have a list of scholarships offered by local community organizations, such as Rotary International, 4-H and others, as well as those provided by neighborhood businesses.
- Ask your teachers, counselors or coaches about scholarships for students with your talents.
- Check magazines or Web sites devoted to your interests or skills.
- Contact your parents’ employers or labor unions, as well as the personnel offices of large companies in your area.
- Be prepared: You may need to write letters and essays or be interviewed as part of the application process.
Applying for a Scholarship
The most important thing to do to apply for scholarships is to get accurate information up front:
- What are the qualifications for applicants?
- Where do you get forms and how do you apply (online, by mail, etc.)?
- Are additional interviews or references required?
- What are the deadlines?
Once you have the information in hand, you can make a chart of what’s due and when (use the Scholarship Checklist), and follow through. Taking small steps throughout the process will help ensure you will meet all the requirements on time. Then, you get to sit back while the sponsors make their decisions. Remember, most scholarship funding comes directly from the colleges themselves, so focus on making your college applications as strong as possible.
Grants, unlike loans, do not have to be repaid.
Federal Pell Grant
A Federal Pell Grant, unlike a loan, does not have to be repaid. Pell Grants are awarded usually only to undergraduate students who have not earned a bachelor’s or a professional degree. (In some cases, however, a student enrolled in a postbaccalaureate teacher certification program might receive a Pell Grant.) Pell Grants are considered a foundation of federal financial aid, to which aid from other federal and nonfederal sources might be added.
How much can I get?
The maximum Pell Grant award for the 2011-12 award year (July 1, 2011 to June 30, 2012) is $5,550. The amount you get, though, will depend not only on your financial need, but also on your costs to attend school, your status as a full-time or part-time student, and your plans to attend school for a full academic year or less.
The maximum award amount is given for any Pell Grant eligible student whose parent or guardian died as a result of military service in Iraq or Afghanistan after Sept.11, 2001. You must be under 24 years old or enrolled at least part-time in college at the time of your parent’s or guardian’s death.
Note: Fiscal Year 2011 appropriations eliminated the allowance of receiving up to two consecutive Pell Grant awards during a single award year. Beginning with the 2011-12 award year, you may receive only one Pell Grant award during a single award year.
If you received a Pell Grant for the first time on or after July 1, 2008, you can only receive the Pell Grant for up to 18 semesters or the equivalent.
If I am eligible, how will I get the Pell Grant money?
Your school can apply Pell Grant funds to your school costs, pay you directly (usually by check), or combine these methods. The school must tell you in writing how much your award will be and how and when you’ll be paid. Schools must disburse funds at least once per term (semester, trimester, or quarter). Schools that do not use semesters, trimesters, or quarters must disburse funds at least twice per academic year.
Federal Supplemental Educational Opportunity Grant (FSEOG)
The Federal Supplemental Educational Opportunity Grant (FSEOG) program is for undergraduates with exceptional financial need. Pell Grant recipients with the lowest expected family contributions (EFCs) will be considered first for a FSEOG. Just like Pell Grants, the FSEOG does not have to be repaid.
How much can I get?
You can receive between $100 and $4,000 a year, depending on when you apply, your financial need, the funding at the school you’re attending, and the policies of the financial aid office at your school.
If I am eligible, how will I get the FSEOG money?
If you’re eligible, your school will credit your account, pay you directly (usually by check), or combine these methods. Your school must pay you at least once per term (semester, trimester, or quarter). Schools that do not use semesters, trimesters, or quarters must disburse funds at least twice per academic year.
Teach Grant Program
Through the College Cost Reduction and Access Act of 2007, Congress created the Teacher Education Assistance for College and Higher Education (TEACH) Grant Program that provides grants of up to $4,000 per year to students who intend to teach in a public or private elementary or secondary school that serves students from low income families. If, after reading all of the information on this fact sheet, you are interested in learning more about the TEACH Grant Program, you should contact the financial aid office at the college where you will be enrolled.
What is a Cal Grant?
Cal Grants are funded by the State of California with a small portion of funding from the Federal Government through the Leveraging Educational Assistance Partnership Program (LEAP).
The awards do not have to be paid back.
How to apply for a Cal Grant
- Complete and submit the online Free Application for Federal Student Aid (FAFSA) the FAFSA form is a federal form that must be filed by any student who wants to be considered for college financial aid. For a Cal Grant, the FAFSA must be completed and filed with the federal processor by March 2* of each year. Get a federal personal identification number, or PIN, to electronically sign the FAFSA on the Web. If youʼre a dependent student, your parents can also get a PIN to e-sign your FAFSA.
- You can also download a PDF version of the FAFSA which you will need to mail for processing. Or call toll free 800.433.3243 to have a paper FAFSA sent to you. If youʼll be mailing the FAFSA or the Cal Grant GPA Verification Form, be sure to make a copy for your records and obtain a Certificate of Mailing ($1.15 in addition to postage) from the Post Office so that you can verify the date you mailed your forms.
- *Missed the March 2 deadline? There is a secondary deadline, specifically for California Community College students, September 2. Submit the required forms before the September 2 deadline to be considered for this specific Cal Grant. There is a limited number available.
- File a verified grade point average (GPA) with the California Student Aid Commission by no later than March 2*.
- Some high schools and colleges automatically file their studentsʼ verified GPAs with the Commission. Some do not. You must confirm whether your school will file your GPA for you, or obtain a Cal Grant GPA Verification Form, get it certified by a school official and mail it yourself.
Colleges provide institutional grants to help make up the difference between college costs and what a family can be expected to contribute through income, savings, loans, and student earnings.
Other institutional grants, known as merit awards or merit scholarships, are awarded on the basis of academic achievement. Some merit awards are offered only to students whose families demonstrate financial need; others are awarded without regard to a family’s finances.
Some grants come with special privileges or obligations. You’ll want to find out about the types of grants awarded by each college you are considering.
The Federal Supplemental Educational Opportunity Grant (FSEOG), Federal Work-Study (FWS), and Federal Perkins Loan programs are called campus-based programs because they’re administered directly by the financial aid office at each participating school. Not all schools participate in all three programs. Check with your school’s financial aid office to find out which programs they participate in.
How much aid you receive from each of these programs depends on your financial need, on the amount of other aid you receive, and on the availability of funds at your college or career school. Unlike the Federal Pell Grant Program, which provides funds to every eligible student, the campus-based programs provide a certain amount of funds for each participating school to administer each year. When the money for a program is gone, no more awards can be made from that program for that year. So, make sure you apply for federal student aid as early as you can. Each school sets its own deadlines for campus-based funds, and those deadlines are usually earlier than the Department of Education’s deadline for filing a FAFSA.
Federal Work-Study (FWS) provides part-time jobs for undergraduate and graduate students with financial need, allowing them to earn money to help pay education expenses. The program encourages community service work and work related to the recipient’s course of study.
Will I be paid the same as I would in any other job?
You’ll be paid by the hour if you’re an undergraduate. No FWS student may be paid by commission or fee. Your school must pay you directly (unless you direct otherwise) and at least monthly. Wages for the program must equal at least the current federal minimum wage but might be higher, depending on the type of work you do and the skills required. The amount you earn can’t exceed your total FWS award. When assigning work hours, your employer or financial aid administrator will consider your award amount, your class schedule, and your academic progress.
What kinds of jobs are there in Federal Work-Study?
If you work on campus, you’ll usually work for your school. If you work off campus, your employer will usually be a private nonprofit organization or a public agency, and the work performed must be in the public interest.
Your school might have agreements with private for-profit employers for Federal Work-Study jobs. This type of job must be relevant to your course of study (to the maximum extent possible). If you attend a career school, there might be further restrictions on the jobs you can be assigned.
Federal Perkins Loans
A Federal Perkins Loan is a low-interest (5 percent) loan for both undergraduate and graduate students with exceptional financial need. Federal Perkins Loans are made through a school’s financial aid office. Your school is your lender, and the loan is made with government funds. You must repay this loan to your school.
Your school will either pay you directly (usually by check) or apply your loan to your school charges. You’ll receive the loan in at least two payments during the academic year.
How much can I borrow?
You can borrow up to $5,500 for each year of undergraduate study (the total you can borrow as an undergraduate is $27,500). For graduate studies, you can borrow up to $8,000 per year (the total you can borrow as a graduate is $60,000 which includes amounts borrowed as an undergraduate). The amount you receive depends on when you apply, your financial need, and the funding level at the school.
Other than interest, is there a charge for this loan?
No, there are no other charges. However, if you skip a payment, if it’s late, or if you make less than a full payment, you might have to pay a late charge plus any collection costs.
When do I pay it back?
If you’re attending school at least half time, you have nine months after you graduate, leave school, or drop below half-time status before you must begin repayment. This is called “grace period.” If you’re attending less than half time, check with your college or career school to find out how long your grace period will be.
Direct Stafford Loans
Direct Stafford Loans, from the William D. Ford Federal Direct Loan (Direct Loan) Program, are low-interest loans for eligible students to help cover the cost of higher education at a four-year college or university, community college, or trade, career, or technical school. Eligible students borrow directly from the U.S. Department of Education (the Department) at participating schools.
Direct Stafford Loans include the following types of loans:
- Direct Subsidized Loans—Direct Subsidized Loans are for students with financial need. Your school will review the results of your Free Application for Federal Student Aid (FAFSASM) and determine the amount you can borrow. You are not charged interest while youʼre in school at least half-time and during grace periods and deferment periods.
- Direct Unsubsidized Loans—You are not required to demonstrate financial need to receive a Direct Unsubsidized Loan. Like subsidized loans, your school will determine the amount you can borrow. Interest accrues (accumulates) on an unsubsidized loan from the time itʼs first paid out. You can pay the interest while you are in school and during grace periods and deferment or forbearance periods, or you can allow it to accrue and be capitalized (that is, added to the principal amount of your loan). If you choose not to pay the interest as it accrues, this will increase the total amount you have to repay because you will be charged interest on a higher principal amount.
For more detailed information, click here.
Financial Help for Older Students
Many scholarship and fellowship programs do not have age restrictions, and there are no age restrictions on eligibility for federal student financial aid. Older students should conduct a search for aid just like younger students.
The FastWeb scholarship database includes more than 50 awards that have a minimum age requirement of 30 years old. There are more than 230 awards with a minimum age requirement of 25 years or older. There are more than 1,800 awards with no age restrictions whatsoever.
One of the best-known scholarships specifically designed for older students is the Osher Re-entry Scholarship, which gives scholarships to students who dropped out of college more than five years ago and who now want to complete their degree. The scholarship is available for students age 25 to 50 who demonstrate financial need, and is currently available at selected institutions across the U.S.
Unemployed workers receiving unemployment benefits may qualify for special assistance in paying for education and training. The Web site www.opportunity.gov is designed to help unemployed Americans of all ages who want to return to school. The site covers grants and loans and has useful information about various other educational programs.
To decide what type of education or training best meets your needs, you may want to visit www.careeronestop.org, or visit your local community college or One Stop Career Center for help in identifying potential opportunities. To locate the nearest One Stop Career Center, you can visit www.servicelocator.org, or call the toll-free number: 1.877.872.5627.
Another helpful resource is www.finaid.org. If youʼre a “non-traditional” student—generally, over 30 years old—type “older students” into the search box for advice onobtaining financial aid.
30 Ways to Reduce College Costs
- Most colleges and universities offer merit or non-need-based scholarships to academically talented students. Students should check with each school in which they’re interested for the criteria for merit scholarships.
- The National Merit Scholarship Program awards scholarships to students based upon academic merit. The awards can be applied to any college or university to meet educational expenses at that school.
- Many states offer scholarship assistance to academically talented students. Students should obtain the eligibility criteria from their state’s education office.
- Some colleges and universities offer special grants or scholarships to students with particular talents. Music, journalism, and drama are a few categories for which these awards are made.
- Some students choose to attend a community college for 1 or 2 years, and then transfer to a 4-year school. Tuition costs are substantially lower at community colleges than at 4-year institutions.
- Some parents may be financially able to purchase a house while their child is in school. If other students rent rooms in the house, the income may offset monthly mortgage payments. Families should make certain, however, that the property they purchase meets all of the requirements of rental property. If you have any questions, consult a tax professional.
- Commuting is another way for students to reduce college costs. A student living at home can save as much as $6,000 per year.
- Many schools provide lists of housing opportunities that provide free room and board to students in exchange for a certain number of hours of work each week.
- Cooperative education programs allow students to alternate between working full time and studying full time. This type of employment program is not based upon financial need, and students can earn as much as $7,000 per year.
- Another way to reduce college costs is to take fewer credits. Students should find out their school’s policy regarding the Advanced Placement Program (APP), the College-Level Examination Program (CLEP), and the Provenience Examination Program (PEP). Under these programs, a student takes an examination in a particular subject and, if the score is high enough, receives college credit.
- Some colleges give credit for life experiences, thereby reducing the number of credits needed for graduation. Students should check with the college for further information. You can also write to Distance Education and Training Council at 1601 18th Street, NW, Washington, DC 20009, or call (202) 234-5100.
- Most schools charge one price for a specific number of credits taken in a semester. If academically possible, students should take the maximum number of credits allowed. This strategy reduces the amount of time needed to graduate.
- In many cases, summer college courses can be taken at a less expensive school and the credits transferred to the full-time school. Students should check with their academic advisor, however, to be certain that any course taken at another school is transferable.
- Most schools have placement offices that help students find employment, and all schools have personnel offices that hire students to work on campus. These employment programs are not based upon financial need, and working is an excellent way to meet college expenses.
- Most colleges and universities offer their employees a tuition reduction plan or tuition waiver program. Under this type of arrangement, the school employee and family members can attend classes at a reduced cost or no cost at all. This type of program is based not upon financial need, but rather on college employment.
- Most colleges and universities sponsor resident advisor programs that offer financial assistance to students in the form of reduced tuition or reduced room and board costs in exchange for work in resident halls.
- The Reserve Officers Training Corps (ROTC) Scholarship Program pays all tuition fees, and textbook costs, as well as providing a monthly living stipend. Students should be certain, however, that they want this type of program before signing up because there is a service commitment after graduation.
- Service Academy Scholarships are offered each year to qualified students to attend the U.S. Military Academy, the U.S. Air Force Academy, the U.S. Naval Academy, the U.S. Merchant Marine Academy, or the U.S. Coast Guard Academy. The scholarships are competitive and are based upon a number of factors, including high school grades, SAT or ACT scores, leadership qualities, and athletic ability. Students receive their undergraduate education at one of the service academies. They pay no tuition or fees, but there is a service commitment after graduation.
- One of the most obvious ways of reducing college costs is to attend a low-cost school, either public or private. There are many colleges and universities with affordable tuition and generous financial assistance. Students should investigate all schools that meet their academic and financial needs.
- Some schools offer combined degree programs or 3-year programs that allow students to take all of the courses needed for graduation in 3 years, instead of 4, thereby eliminating 1 year’s educational expenses.
- Partial tuition remission for the children of alumni is a common practice. Parents and students should investigate their alma mater’s tuition discount policy for graduates.
- Some colleges and universities offer special discounts if more than one child from the same family is enrolled.
- Some schools offer a tuition discount to student government leaders or to the editors of college newspapers or yearbooks.
- Some colleges offer bargain tuition rates to older students.
- Some colleges and universities convert non-federal school loans into non-federal grants if the student remains in school and graduates.
- Some schools offer reduced tuition rates to families if the major wage earner is unemployed.
- Some colleges and universities have special funds set aside for families who do not qualify for federal or state funding.
- Some private colleges will match the tuition of out-of-state institutions for certain students. Check with your college to determine whether you qualify for this option.
- Some companies offer tuition assistance to the children of employees. Parents and students should check with the personnel office for information.
- Students should try to buy used textbooks.
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