An Overview of Federal Student Aid. Federal Student Aid (FSA) is provided by the US Department of...
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Transcript of An Overview of Federal Student Aid. Federal Student Aid (FSA) is provided by the US Department of...
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 1st 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.
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