Federal Financial Aid Options for College Students
Part of the Free $ For College For Dummies Cheat Sheet
If you’re a soon-to-be college student looking for free money, you may want to familiarize yourself with the major categories of federal student aid. The following list describes the forms you fill out, the form you receive and some of the forms of aid available:
FAFSA: Completing the Free Application for Federal Student Aid (FAFSA) is the first step in getting financial aid. Not only is the FAFSA a requirement for all federal aid, but it is also mandatory for most state and college aid as well.
The amount of your Pell Grant is calculated by the information you provide on your FAFSA. You typically submit an initial FAFSA at the beginning of your senior year (after January 1 and before June 30 in the year you plan to attend). Each school year thereafter, you send in a FAFSA renewal outlining your current financial condition.
Unless you send in your renewal, you won’t be eligible for federal student aid (and, possibly state aid as well) for the particular year.
The information you provide on the FAFSA is used to calculate your expected family contribution (EFC). In turn, your EFC determines your eligibility for numerous other need-based aid programs, including other federal programs, state-based programs, and college-based aid. You can complete the FAFSA online or use the paper version available from your high school counselor or the Department of Education.
SAR: You’ll receive a form called the Student Aid Report (SAR) a few weeks after you submit your FAFSA. The SAR gives you a chance to correct, change, or fine-tune the answers you provided in your FAFSA. The SAR also notes your EFC.
The lower your EFC, the better your chances for financial aid. Your Pell Grant amount is noted on your SAR. If your financial situation has materially changed since you originally applied — whether it has improved or worsened — you’re required to update your information and send it back to the government so that it can generate a new EFC and possibly adjust your Pell Grant amount.
FSEOG: If you have extreme need (a particularly low EFC), you may be eligible for a Federal Supplemental Educational Opportunity Grant (FSEOG). Unlike Pell Grants, which are guaranteed to be available to all eligible students by the U.S. government, FSEOG money is limited on a most-needed, first-come-first-served basis.
Not all colleges participate in the FSEOG program. Whether it’s simply more administrative hassle for the college or the changeable nature of FSEOG funding (causing periodic crises), many schools don’t offer FSEOG-based funds. Find out well ahead of aid deadlines whether each college on your wish list offers FSEOG money.
Consolidation loans: Like Stafford and PLUS Loans, federal consolidation loans are available in two different varieties: Direct Consolidation Loans and FFEL Consolidation Loans. Consolidation loans help students (and parents) streamline college loans by combining several types of loans — sometimes even if they have different re-payment schedules — into one, easy-to-understand, and (hopefully) easy-to-repay loan.
Federal Perkins Loans: Campus-based, Federal Perkins Loans are low-interest loans that are available to both undergraduate and graduate students. Undergraduates can borrow up to $4,000 for each year of undergraduate study, and graduate students can borrow up to $6,000 per year.
Federal Work-Study: This campus-based program provides on-campus jobs for undergraduate and graduate students with demonstrated financial need. Ideally, your college tries to find you a job that’s related to your academic program.
PLUS Loans: PLUS Loans are loans to parents, and these loans come in two varieties: Direct PLUS Loans and FFEL PLUS Loans. PLUS Loans let parents who have a good credit history borrow enough money to pay the education expenses of their dependent children.
Stafford Loans: Stafford Loans (in the form of Direct Stafford Loans and FFEL Stafford Loans) are a major source of financial aid for students attending college. As you can probably guess from the word loan, Stafford Loans are supposed to be repaid — although, sometimes, repayment can be postponed or, in certain cases, the entire loan can be completely discharged or cancelled.