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Published byMervin Fitzgerald Modified over 8 years ago
An Overview of Federal Student Aid
Federal Student Aid (FSA) is provided by the US Department of Education and helps students pay for expenses at post-secondary institutions FSA covers expenses such as tuition, room and board, books and supplies, transportation, computers, and dependent care There is more than $150BN worth of FSA available to qualifying students FSA is granted to students that meet basic eligibility requirements FSA falls into one of three categories: grants, loans, or work-study The FAFSA (Free Application for Federal Student Aid) must be completed in order to qualify for FSA (~22MM FAFSAs are submitted each year) The FAFSA is available beginning January 1 st of the year that the student plans to enroll in school Visit www.fafsa.gov to fill out the FAFSA form and begin the financial aid process.www.fafsa.gov What is Federal Student Aid?
A high school diploma or a General Educational Development (GED) certificate A valid social security number Must be a US citizen or eligible non-citizen Must meet satisfactory academic progress requirements Compliance with Selective Service registration Must be enrolled or accepted as a student and be on the path to a degree or certificate in an eligible program Prerequisites to Receiving Federal Student Aid
Grants : Funds that are not required to be repaid Loans : Funds that are borrowed from the school and must be paid back with interest Work-Study: Funds that a student earns by working part-time while attending school Types of Federal Student Aid
Federal Pell Grants: Available almost exclusively to undergraduates (UG’s) Federal Supplemental Educational Opportunity Grant (FSEOG): Available to UG’s that have a very low estimated financial contribution (EFC) Teacher Education Assistance for College and Higher Education Grant (TEACH): For UG’s, post baccalaureates, and graduate students that are willing to teach full-time in designated teacher shortage areas for four (4) years after graduation Iraq and Afghanistan Service Grant: Available to non Pell-eligible students whose parent/guardian died as a result of military service in Iraq or Afghanistan after the events of 9/11; and who, at the time of death, were younger than 24 years of age and/or enrolled at least part-time at an institution of higher education Federal Grant Programs
A federal loan is supported by the federal government and allows students to borrow money to help pay for school Benefits of a federal loan include: low-fixed interest rates, income- based repayment plans, cancellations for certain employment, and deferment options There are two (2) types of federal loan programs: The Federal Perkins Loan Program and The Direct Loan Program A private student loan is a non-federal loan issued by a lender such as a bank or a credit union and commonly requires a credit check Federal vs. Private Loans
Federal Perkins loans are low interest loans that help need-based undergraduate and graduate students finance the cost of post-secondary education School is the lender; approximately 1700 schools participate Interest rate = 5% Amount received depends on financial need, amount of other aid, and availability of funds at school Repaying a Federal Perkins Loan begins after the grace period has expired. The grace period begins on the day that the student graduates and lasts for nine (9) months During the grace period, the student does not pay principal and is not charged interest. If a student is attending school less than half-time (typically defined as less than six (6) credit hours), his/her grace period may be affected A student has up to ten (10) years to repay a Federal Perkins loan Federal Perkins Loan Program
The Direct Loan Program is the largest federal student loan program available with four (4) types of direct loans: Direct Subsidized Loan (DSL): For UG’s; US Department of Education pays interest while borrower is in school and during grace and/or deferment periods; student must be attending at least half-time and have financial need. IR = 6.8% Direct Unsubsidized Loan (DUL): For UG’s and graduate students; borrower is responsible for all interest; student must be enrolled at least half-time; financial need is not required; US Department of Education is the lender. IR = 6.8% Direct PLUS Loan (DPL) : For parents of dependent UG’s and also graduate and professional students; student must be enrolled at least half-time; financial need is not required. Borrower is responsible for all interest; US Department of Education is the lender; graduate student/parent cannot have a negative credit history. IR = 7.9% Direct Consolidation Loan (DCL): Allows student or parent to combine multiple federal education loans into one loan with one (1) monthly payment Direct Loan Program
Lender is the US Department of Education Direct loans have a fixed interest rate that varies depending on the loan type Amount that can be borrowed varies based on whether the student is enrolled in an undergraduate or graduate program The grace period is six (6) months for DSL’s and DUL’s. DPL’s do not have a grace period, but can defer for up to six (6) months On average, students have between 10 - 30 years to repay a loan Must be enrolled at least half-time (typically defined as six (6) credit hours) to qualify To take out a Direct Loan, student must complete a Master Promissory Note (MPN). This is a legally binding agreement to repay loan Direct Loan Program (cont.)
Federal Work-Study (FWS) provides part-time employment for undergraduate and graduate students with financial need, thus allowing them to earn money to help pay education expenses FWS encourages community service and work related to the recipient’s area of study Undergraduate students are paid by the hour and will receive at least federal minimum wage The amount earned cannot exceed the FWS award amount FWS employment may be on-campus or off-campus When assigning work hours, the student’s employer or financial aid administrator will consider award amount, class schedule, and academic progress Federal Work-Study Program
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