Parent's Guide to Financial Aid
is extensive financial aid available to help fund the cost of
your child's college education, but the process of applying for
aid can be daunting. The financial aid forms you obtain from the
school your child wants to attend will help you through the application
process step by step.
The most important forms are the Free Application for Federal
Student Aid (the FAFSA) and the Financial Aid Form (FAF), which
have very strict deadlines. In addition, some colleges and lenders
require that you, rather than your child, fill out the forms.
In most cases, a good place to start the search is through your
childs high school guidance counselor or the college(s)
your child is thinking of attending. The following information
is designed to help you understand and research your financial
may want to begin your search for cash with grants, which cost
you nothing and do not have to be repaid. It is important to note
that if your child is awarded a grant or scholarship, the college
will deduct that amount from the financial aid it would otherwise
give your child.
Grants – These
constitute the largest of the government programs. Grants generally
range between $400 and $3,125. In general, families showing
financial need are eligible for grants, although families with
higher incomes may also be eligible under special circumstances.
Education Opportunity Grants (SEOG) – For
families exhibiting the greatest need, the SEOG offers grants
ranging from $100 to $4,000 a year. SEOG funds are limited,
so it is important to submit an application as early as possible.
Programs – Most states provide grants
based on a combination of merit and financial need. Contact
your childs high school guidance counselor or state office
of grants to learn what types of aid may be available and how
grants – Most
institutions offer several kinds of grants based on need, scholastic
achievement and/or talent in a special area. Some colleges give
cash grants, while others offer tuition discounts.
grants – Thousands
of grants and scholarship programs are available to students
with superior academic records, special interests and other
qualifying characteristics. Check with employers and local,
state and national organizations with which you or any member
of your family may be affiliated. The local library is also
an excellent reference.
federal government is by far the single largest source of financial
aid to college students, but there are also state government loans,
college- sponsored loans, and commercial lending institutions
that offer student loans. Qualifying for funding involves filling
out multiple forms and providing a detailed profile of your financial
situation to potential lenders. As with all financial aid applications,
it is important to fill out the forms completely and submit them
as soon as possible.
loans – Perkins
Loans are designed for undergraduates and graduate students
who have exceptional economic need. Perkins loans are extremely
popular because the interest rate is set at 5 percent. Repayment neednt
begin until nine months after the student graduates, leaves
school or drops below halftime status. Repayments can be stretched
out over ten years, with payments of as little as $30 a month.
Loan amounts range from $3000 per year for undergraduates, to
$5000 per year for graduate students.
Student Loans (formerly Guaranteed Student Loans) are available
to virtually all students. Students demonstrating financial
need may qualify for subsidized loans, meaning the government
will pay the interest on the loans while the student attends
school, as well as for a 6-month grace period after graduation.
If the loan is unsubsidized (not need-based), interest accrues
while your child attends school and repayment must begin immediately
after graduation. The typical repayment term is five to ten
years. Students can borrow up to $2,625 per year as freshman,
$3,500 as sophomores, and $5,500 a year as juniors and seniors.
For graduate students the maximum is $8,500 per year.
An important thing to remember about both the Perkins and
Stafford loans is that the students, not the parents, are
the borrowers and are therefore responsible for paying back
Loans to Undergraduate Students (PLUS) and Supplemental Loans
for Students (SLS) PLUS loans are made to parents. SLS loans
are made to undergraduate and graduate students, allowing
borrowing up to $4,000 per year as freshman and sophomores,
$5,000 per year as juniors and seniors, and $10,000 per year
as graduate students.
combined PLUS loans, SLS loans and other financial aid cannot
exceed the students cost of attending school. Repayment
of these loans must begin within 60 days of receiving the
loan proceeds, and the loans can be repaid in five to ten
years. Although repayment of SLS loans can be deferred while
a student attends school, interest continues to accrue.
(NOTE: Recent legislation will affect student loan programs
in several ways. Many loans that formerly were processed through
banks and other lending institutions are now granted directly
through the Department of Education. In addition, thousands
of students will be able to pay off their government loans
through work in a National Service Corporation, such as AmeriCorps
and the National Health Service Corps.
entering this program could pay off as much as $5,000 worth
of student loans for every year of service up to $10,000.
For the latest information on all of the federal loan programs
described here, call 800-4-FED-AID.)
loan programs – Most states offer their own
loan programs. The terms, interest rates, repayment schedules
and amounts of loans vary widely from state to state. For
a list of each states offerings, including descriptions
of some of the most innovative state programs, consult the
book Dont Miss Out: The Ambitious Students Guide
to Financial Aid, by Robert and Anna Leider.
loans – Most colleges, seeking to fill the gaps
created by federal and state programs, offer their own loan
programs. Ask a schools financial aid officer about specific
loans – Several commercial lenders specialize
in college lending. Some of the major players in this market
include the following: College Board , The Education
Resource Institute (TERI), Nellie Mae,
and Sallie Mae.
Work-Study Program (CWS)
The work-study program permits eligible students to work on campus to help offset educational expenses and reduce loan obligations. Students
from higher-income families have a better chance of getting a
part-time job under CWS than of getting most kinds of grants.