What to Know About the 3 Main Types of US Financial Aid

admin — Tue, 28 Apr 2009 11:19:55 +0000

Financial Aids are assistances in the form of money, gift, or employment. These are programs that help finance your education, from different sources including the federal and state governments.

Education is one of the most important investments. However, financing one’s own education can be difficult. A lot of students are getting financial help to assist them in paying the cost of tuition fees in college or their choice of vocation.

Financial programs generally come from these sources:

? Federal government

? State government

? School and

? other public and private sources

Students are given financial assistance to pursue their education through need-based aid. The principle of need-based aid is simple. Students and families pay the educational expenses based on their abilities.

The 3 Main Types of College Financial Aids are:

1.GRANTS – These are gift assistances that do not have to be paid back. Every year the Department of Education in the U.S. determines the qualified students for this grant. Some examples of grants:

? Federal Pell Grant

Award Year 2008 – 2009

The minimum grant for one year for an eligible student is $523. The maximum grant is $4,731.

? Federal Supplemental Educational Opportunity Grant or FSEOG – This grant comes from a limited fund given to students dire financial needs. Students granted FSEOG are with the lowest Expected Family Contribution based on the standard of U.S. Department of Education.

? Academic Competitiveness Grant (ACG) – A student must be a freshman or sophomore to avail of the ACG Grant. It should be his first time to avail of ACG, and must be a citizen of the United States. He must have graduated on or after January 1, 2005, and must have passed a federally defined rigorous high school program.

The maximum ACG grant for 2008 – 2009 is:

- $750 – for first year students

- $1300 – for second year students

A high school transcript is required before this award is considered.

2. LOANS – Loans are borrowed money from a lending company. These have to be paid back with interest.

Examples of loans are:

? Subsidized Federal Stafford Student Loan

This student loan program has a low interest rate. A student’s eligibility for this subsidy is determined using federal methodology. A student should attend at least 6 units per quarter. This loan does not accumulate interests. Payments can be made six months after graduation, in minimum of $50 per month. Loan must be paid in full within ten years. Borrowers with outstanding balance can still be eligible for the loan and can consolidate their payments.

? Unsubsidized Federal Stafford Student Loan.

This loan program is eligible to students who did not pass the full or partial loan. The Unsubsidized Federal Loan is based on financial need and requires 6 credits per quarter in attendance. A fixed interest rate of 6.8% is given for loans distributed on or before July 1, 2006, after which the fixed interest rate is reduced to only 6%.

? Parent Plus Federal Loan

This is a credit-based loan. Parent Plus Federal Loan is for parents who want additional assistance on top of their income. Applications for this type of loan are available in banks.

3. WORK-STUDY

This program gives students a chance of paying partly their expenses. They can work part-time with at least minimum wage salary. Priority is given to qualified students with below average economic conditions. Once approved, students are required to work with the Career Service Department in no more than 20 hours a week.

College Bound? Don’t Forget to Apply for Federal Financial Aid

admin — Sat, 01 Dec 2007 07:18:44 +0000

It’s a good idea to start thinking about financial aid as early as possible in your last year of high school if you’re considering college or career school after you graduate. While most of us probably think first of an academic scholarship to fund a college degree, it pays not to overlook another possibility: Federal financial aid.

According to studentaid.ed.gov, a student aid portal run by the U.S. Department of Education, the Federal government remains the single biggest source of student aid in America. The three main student aid programs – grants, work-study programs and loans – pay out more than 80 billion dollars each year in aid to high school grads who are willing to learn first in order to earn more later.

Having a good grasp of the trio of aid options available from the Federal government is an essential prerequisite for completing the FAFSA, also called the Free Application for Federal Student Aid. All high school grads must complete and submit their FAFSA application as part of the qualifying process for Federal student financial aid.

Student aid from the Federal government comes in three basic forms: grants, work-study programs, and loans. The different types of financial assistance differ in the dollar value of the aid you receive and whether or not the financial aid has to be repaid. Grants do not require repayment, nor do work-study programs, which pay a wage or salary for work performed. Loans, however, must be repaid, just like a car loan or home mortgage, over a period that ranges from 10 to 25 years.

There are several types of grant and loan programs within this general three-tiered framework of Federal financial aid. Many people have heard of a specific type of grant, the Federal Pell Grant, which is generally regarded as the foundation of the Federal student aid program. Other less familiar grants include the Federal Supplemental Educational Opportunity Grant (FSEOG), the Academic Competitiveness Grant (ACG), and the National Science and Mathematics Access to Retain Talent Grant, a long name that is usually shortened to the National SMART Grant.

There are different loan formats, too. The direct Stafford loan, in which the lender is the Department of Education, is probably the best-known example of this type of Federal student aid. Depending on the amount of their loan and the payment plan they select, recipients of a direct Stafford loan have between ten and twenty-five years to repay the government.

With only a pair of exceptions, the amount of Federal student aid you can receive is determined by your financial need. The amount is determined by subtracting your Expected Family Contribution, or EFC, from the cost of attendance at a college or career school. Using factors you supply on your FAFSA ? including family income, family assets and benefits like unemployment and Social Security ? your EFC is calculated according to a formula laid down in Federal law. The Department of Education notifies you of your EFC on your Student Aid Report, or SAR. You’ll receive your SAR after the government has completed its review of your FAFSA application.

If all this sounds confusing, the government has a number of extremely useful resources to help you cut through the clutter. One exceptional resource is the website mentioned at the beginning of this article, studentaid.ed.gov. Another is “Funding Education Beyond High School”, a free 60-page document available in PDF format at www.fafsa.ed.gov. Be sure to delve into these resources as early as possible during your senior year of high school to have the best possible chance of receiving Federal student aid.

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What to Know About the 3 Main Types of US Financial Aid

College Bound? Don’t Forget to Apply for Federal Financial Aid