FINANCIAL AID INFORMATION
Financial Aid is available to help meet both direct educational costs (tuition, fees, books) and personal living expenses, such as food, housing, and transportation. Today, students are at an advantage when looking for a good aid package. The pool of potential college students has been decreasing in numbers over the past few years, and many colleges are now using attractive financial aid packages as a way of recruiting students who meet their standards, but may not qualify for traditional financial aid packages.
Do not rule out a college with a high price tag immediately. If you meet their admission standards, there are many creative ways that colleges can "find" money to meet your needs. Wait until you have received the financial aid packages from your top choice schools before making a decision. Even then, it your top choice school does not have the best package, you can use the other school's better package as a bargaining tool with your top choice. Many times colleges adjust their packages to keep a good student. Public supported schools tend to offer less aid since their tuition is already lower due to help from state tax money.
Once you apply for financial aid (submit the FAFSA), your application should be processed in three to four weeks. If you apply on line, the turn-around time is usually one week. You will then receive a Student Aid Report (SAR) in the mail. This will contain the information you submitted and your Expected Family Contribution number (EFC), which is used to determine your eligibility for federal student aid. Each college you listed on your application will also receive this information, and the financial aid office at each school will then use the information to put together your aid package. You should always make a personal contact with the financial aid office of your top choice schools. This can help in getting you the best package possible.
TYPES OF FINANCIAL AID
It is important that you understand the various types of financial aid available to you. Listed below are the most common types of aid.
GRANTS: Grants are given for athletics, academics, demographics, special talents and need. Grants do not have to be repaid.
SCHOLARSHIPS: Scholarships are awarded for academic excellence or for meeting certain criteria that sets you apart from others. No repayment is required.
LOANS: Student loans, which have lower interest rates, may be federally subsidized, college-sponsored, or available through banking institutions. A FAFSA form must be submitted to determine eligibility for federal loans. Most loans are in the student's name and must be repaid after graduation or if you leave school without graduating.
COLLEGE WORK-STUDY: College work-study is a federally sponsored program that allows colleges to hire students for employment. Students usually work ten to twenty hours per week and must be paid the federal minimum wage or higher.
All or some of the above types of aid can be included in your financial aid package. You do not have to take the entire package. You can pick and choose the types of aid you want to get from the package offered..
HOW TO APPLY FOR FINANCIAL AID
The first step in applying for financial aid is to complete the Free Application for Student Aid (FAFSA). All students are required to complete the FAFSA to be considered for federal (and most state) financial aid. FAFSA forms are available (usually in December) from your high school guidance office or college financial aid offices, or can be found on line at www.fafsa.ed.gov.
The FAFSA is due any time after January 1 of the year that you will be attending school. You will need information from your parents' previous year's income tax form to complete the FAFSA. It is best to file as early as possible, making sure to meet your college's financial aid deadline. If your parents can not complete their income tax forms early enough to meet the financial aid deadline for your school, you can still file the FAFSA with estimated income tax information and amend it later in the year. Most state financial aid offices use information from the FAFSA to determine state grant recipients. Be sure to mark the section of the FAFSA giving permission to send your information to your state office. The Pennsylvania Higher Education Assistance Agency (PHEAA) oversees state grants. Their Web site, www.pheaa.org is an excellent source of information about all types of state and federal aid.
Many four-year private colleges, as well as some public universities, require the PROFILE in addition to the FAFSA. The PROFILE is a need analysis report, not an aid application. Some colleges have their own need analysis forms. It is very important that you check with your college or university to determine what should be submitted to make you eligible for student aid.
Most colleges have their own financial aid application forms ("in house forms") that must be completed in addition to the FAFSA, and perhaps the PROFILE. There are deadlines for a college's financial aid forms and for the FAFSA/PROFILE applications. These deadlines may not be the same for every college, but are usually before March 15th. Missing a deadline could greatly reduce the amount of financial aid you receive.
You should always determine how much "free money" (grants and scholarships) you will be receiving before accepting student loans. If you are eligible, the loans will be there in April and May if you need them. See below for federal aid programs.
FEDERAL FINANCIAL AID PROGRAMS
The federal government is the largest source of financial aid for students. There are many programs that grant aid to students. The most prominent ones are listed below with a brief synopsis of their main points:
FEDERAL PELL GRANT: This is the largest grant program, giving aid to over four million students each year. Eligibility for a Pell Grant is based on the Expected Family Contribution (EFC) from your FAFSA Student Aid Report (SAR). The amount awarded depends on the EFC, the cost of education at the college you will attend, and whether you will be a full or part-time student. The amount of the award is also dependent of the funding provided by Congress. The maximum is usually around $3,000 with an EFC of zero down to a few hundred dollars for higher EFC's. If your EFC is above the year's cut off you may not be eligible for a Pell Grant, which is mainly aimed at lower-income families. However, you may still be eligible for other types of federal aid.
FEDERAL SUPPLEMENTAL EDUCATIONAL OPPORTUNITY GRANT (FSEOG): This grant provides additional need-based federal grant money to supplement the Pell Grant. Each participating college is given funds to grant to especially needy students. The maximum award is $4,000 per year, but the actual amount the student receives is based on the college's policy, amount of funds available, total cost of education, and the amount of other aid received.
FEDERAL WORK-STUDY (FWS): This program is aimed at students who are qualified and need aid for their educational expenses. They work on an hourly basis in jobs on or off campus and must be paid at least the federal minimum wage. Earnings are limited by the amount of the award.
FEDERAL PERKINS LOAN: This loan is a low-interest loan for students with outstanding financial need (lowest EFC). These loans are made through the college's financial aid office. The loans are limited to a maximum of $3,000 per year, for up to five years of undergraduate studies, with the interest being paid by the federal government while the student is in good standing. Students may take up to ten years to repay the loans, beginning nine months after they graduate, leave school, or drop below half-time status. Loan payments can be canceled, completely or in part, for students who choose to work in certain types of jobs, such as law enforcement, teaching in low-income areas, or volunteer work such as VISTA or the Peace Corps.
FFEL STAFFORD STUDENT LOAN: This type of loan may be acquired from a participating commercial lender such as a bank, credit union, or savings and loan association. The interest rate varies from year to year. For students who qualify, the interest is paid by the federal government while the student is in school. NOTE: There is also an unsubsidized FFEL Stafford Loan, not based on need, which is available regardless of family income. On these unsubsidized loans, the borrower is responsible for paying the interest from the time the loan is established. Completing the FAFSA is a requirement for the subsidized FFEL Stafford Loan.
WILLIAM D. FORD DIRECT STAFFORD LOAN: This is essentially the same as the FFEL Stafford Loan except the U. S. Department of Education is the lender, rather than a bank. Not all colleges participate in this program. If your school does not, you can still apply for the FFEL Stafford Loan. The terms of the Direct Stafford Loan are similar to the FFEL Stafford Loan, but the Direct Stafford Loan offers a choice of payment plans. Students cannot receive both a Direct and FFEL Stafford loan in the same period, but may receive both in different enrollment periods (semesters or quarters).
PLUS LOANS: These loans are set up for parents of dependent students with cash flow problems. There is no need requirement to qualify, and the loans are made by FFEL lenders or by the Department of Education. The loan has a variable interest payment that cannot exceed 9 percent. There is no specific limit on these loans other that the cost of the student's education less other financial aid received. Repayment begins sixty days after the money is advanced. There is a 4 percent fee (in addition to the interest), which is subtracted from the proceeds. Parents must have a good credit record to qualify.
HOPE SCHOLARSHIP TAX CREDITS: Beginning in 1998, the HOPE Scholarship tax credit helps offset some of the expense for the first two years of college or vocational school. Students or the parents of dependent students can claim an annual income tax credit of up to $1,500 (100% credit for the first $1,000 of tuition and required fees and a 50% credit on the second $1,000. Grants, scholarships, and other tax-free educational assistance must be deducted from the total tuition and fee payments. Visit the IRS Web site for more information about this tax credit.
LIFETIME LEARNING TAX CREDIT: This tax credit is targeted to adults who want to go back to school, change careers, or take a course or two to upgrade their skills. It is also aimed at college Juniors and Seniors and to graduate and professional degree students. A family will receive a 20% tax credit for the first $5,000 of tuition and required fees paid each year through 2002, and for the first $10,000 thereafter. The LIfetime Learning tax credit is available for tuition and required fees less grants, scholarships, and other tax-free educational assistance. The maximum credit is determined on a per-taxpayer (family) basis, regardless of the number of post-secondary students in the family, and is phased out at the same income levels as the HOPE Scholarship tax credit. It is possible to claim the Lifetime Learning tax credit for some members of a family and the HOPE Scholarship credit for others who qualify in the same year. NOTE: These programs are for "tax credit" and may reduce the amount of federal income tax that you owe. They do not pay the full amount of tuition and fees. Visit the IRS Web site for more information about this tax credit.
REMINDER: The more students, from your family, attending post-secondary institutions (including parents) on at least a half-time basis, the lower the Expected Family Contribution (EFC) will be. That would greatly effect the amount of aid each can expect. EACH STUDENT MUST COMPLETE A FAFSA FORM EVERY YEAR TO BE ELIGIBLE. Click below for links to financial aid and scholarship Web sites.
