Types of Financial Aid
Students heading to college this year will likely receive some form of financial aid if they apply. According to the National Center for Education Statistics, 66% of undergrads received student financial aid in the 2007-2008 school year, with an average of $9,100 awarded. More than half of the students received grants that did not need to be repaid and another 47% received federal student aid and college loans. Just over a third of students received Pell Grants. With so many types of aid, it can be hard knowing where to start. Here is a brief overview of the types of aid available to new and existing students.
FAFSA is one of the most common types of student financial aid. According to the US Department of Education, nearly 70% of this financial aid comes from their programs, like the Free Application for Federal Student Aid. By filling out an application form, students can receive one of the following; Federal Stafford Loans, Federal PLUS Loans, Federal Direct Loans or Federal Perkins Loans. The awards of this program are based on demonstrated financial need. Students should apply for these loans well ahead of the semester. If approved, they will receive an award letter stating how much they’ll get and when. They then submit the check to their school office to cover tuition fees and dorm expenses and the rest of the money is returned to them in cash. For most loans, students will be expected to pay this money back gradually upon graduation.
The Department of Education also doles out financial aid money that does not need to be repaid. For instance, Federal Pell Grants, Federal Supplemental Educational Opportunity Grants and Academic Competitiveness Grants are awarded to promising students or students in need, with no strings attached. As of 2010, the maximum allowance for a Federal Pell Grant is $5,350. The award depends upon financial need, cost of tuition and full-time or part-time status. The Federal Supplemental Educational Opportunity Grant can range from $100 to $4,000 per year, depending upon when the student applies, their financial need and school policies. The Academic Competitiveness Grant varies from $750 to $1,300. There are a number of special requirements for this type of grant and it is always combined with the Federal Pell Grant program. Grants scholarships should be the first place students look for extra cash because they will not graduate in debt.
There are many methods of obtaining college loans, grants, fellowships and scholarships. The best way to begin is to visit the prospective school’s financial aid office, where they have a plethora of forms to fill out. Students may need the following documents to apply; student social security number, student’s W2 statements, student’s tax forms, student’s bank statements, parent’s 1040 bank statements and parent’s investment records. Sometimes students are allowed to apply as individuals, but if they’re claimed on their parent’s tax statements, they need to file as dependents and financial need is based upon the parents’ income. The process can be a real pain, but it’s helped millions of students realize their dreams of a college education.
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