Financial Aid Basics
By Kristi Vaughan
An estimated 70 percent of students attending college on a full-time basis receive some form of financial aid. Will you (or your child) be one of them? It takes just a little bit of work and research to increase that likelihood.
Financial aid comes in many forms. Depending on the source of aid, it is available to those without recognized need as well as those who meet the needs-based criteria of the federal government or individual colleges.
The three basic forms of financial aid are loans, grants and scholarships and work-study.
Loans
Loans are, by far, the easiest aid to obtain and the most commonly given of all student aid types. Loans are available to students or their parents, can be obtained in many cases without meeting need requirements and usually do not require students to have special interests or academic merit qualifications.
That said, the type of loan you get and the source from which you get it, are determined by specific criteria.
- Federal loan programs - The federal government offers several loan programs, most of which require proof of financial need.
- Federal Perkins Loans - Low interest loans made to undergraduate and graduate students with financial need. The school uses government funds to make the loans. Repayment is to the school. The maximum that could be borrowed for the 2004-2005 school year was $4,000.
- Stafford Loans - Stafford Loans are given to students who have need as well as those who don’t. The difference is whether or not the federal government subsidizes the loan by paying the interest while you are in school and for a period of time thereafter. The amount that can be borrowed increases depending on the year of study. In 2004-2005 the maximum was $2,625 for the first year and $5,500 for the third and fourth years.
- PLUS Loans - PLUS Loans are granted to parents of college students. The money must be used for educational expenses, the student must be enrolled at least halftime in an eligible program at an eligible school and parents must have an acceptable credit rating. PLUS Loans have the highest limit of all federal loans, allowing parents to borrow the full cost of attendance minus other financial aid.
- State loans - States also may have loan programs for residents or students attending college in their state. Check with the state Department of Education.
- Institutional loans - Many colleges have their own funds from which they can make loans. To learn if your college provides loans, contact the Financial Aid office.
Grants and scholarships
Grants and scholarships are money that does not have to be paid back. Many grants are need based but others are based on academic merit or special achievement. Federal grants and scholarships include:
- Federal Pell Grant - This is a need-based program for undergraduates. Grants are funded by the federal government but awarded by schools
- Federal Supplemental Educational Opportunity Grant - This grant is given to students with exceptional financial need. Priority is given to Federal Pell Grant recipients
- Robert C. Byrd Honors Scholarship - This is a federally funded, state administered grant to high-achieving high school seniors.
State grants vary by state. Check with the state Department of Education where you are attending college as well as your home state to see if there are grants for which you qualify.
Individual colleges also offer grants. Check with your Financial Aid office.
Scholarships can be given in many different amounts and for any number of reasons, including some that may seem a bit remote – unless of course you happen to meet the particular criteria of the grantor!
There are scholarships that are needs based; scholarships that require high academic standing; scholarships that require certain ethnic or religious backgrounds and scholarships that require special interests or abilities. Large companies such as Coca Cola, McDonalds, Tylenol and Kohl’s offer scholarships but so, too, do individuals who have special interests. With a bit of searching, you are bound to find a scholarship to which you can apply.
If you are a high school student, start with your college guidance office…and don’t forget to ask about local scholarships. Several Websites also can help in your scholarship search. Among these are Fastweb.com and the College Board’s Scholarship Search.
Work-study
The federal government and many states have work-study programs where college students are paid at least minimum wage for working at sponsored jobs on and off campus. Participation is usually determined by need.
Americorps also offers money in return for work. There is no financial need requirement but students must go through an interview and commit to working in AmeriCorps programs.
