FINANCIAL AID

Paying for college & ways to get free money

Different Ways of Paying for College

Grants – “gift aid” or “free money”. Grants dp not have to be repaid.

Scholarships – also “gift aid”, often scholarships are merit based and grants are need based.

Federal Work Study – part time jobs for students with financial need. Through work study, you earn money for education expenses.

Loans – borrowed money that you must pay back later. There are many different types of loans, which have different interest rates and conditions.

Grants

Grants and scholarships are often called “gift aid” because they are free money—financial aid that doesn’t have to be repaid. Grants are often need-based, while scholarships are usually merit-based.

Grants and scholarships can come from the federal government, your state government, your college or career school, or a private or nonprofit organization. Do your research, apply for any grants or scholarships you might be eligible for, and be sure to meet application deadlines!

Occasionally you might have to pay back part or all of a grant if, for example, you withdraw from school before finishing an enrollment period such as a semester.

What kinds of federal grants are available?

The U.S. Department of Education offers a variety of federal grants to students attending four-year colleges or universities, community colleges, and career schools.

Different Grants

  • Federal Pell Grants
  • Federal Supplemental Educational Opportunity Grants (FSEOG)
  • Teacher Education Assistance for College and Higher Education (TEACH) Grants
  • Iraq and Afghanistan Service Grants

How do I get a federal grant?

Almost all of the grants listed above are awarded to students with financial need.  If you are interested in any grants, or in any federal student aid, you have to start by submitting a Free Application for Federal Student Aid (FAFSASM). Once you’ve done that, you’ll work with your college or career school to find out how much you can get and when you’ll get it.

Scholarships

There are thousands of scholarships, from all kinds of organizations, and they’re not hard to find. You might be able to get a scholarship for being a good student, a great basketball player, or a member of a certain church, or because your parent works for a particular company, or for some other reason. Find out more about finding and applying for scholarships. You’ll also want to be careful and avoid scholarship scams. Check out the scholarship database for more information!

 Federal Work Study

Federal Work-Study provides part-time jobs for undergraduate and graduate students with financial need, allowing them to earn money to help pay education expenses. The program encourages community service work and work related to the student’s course of study.

Here’s a quick overview of Federal Work-Study:

  • It provides part-time employment while you are enrolled in school.
  • It’s available to undergraduate, graduate, and professional students with financial need.
  • It’s available to full-time or part-time students.
  • It’s administered by schools participating in the Federal Work-Study Program. Check with your school’s financial aid office to find out if your school participates.

What kinds of jobs are there?

The Federal Work-Study Program emphasizes employment in civic education and work related to your course of study, whenever possible.

Are jobs on campus or off campus?

Both. If you work on campus, you’ll usually work for your school. If you work off campus, your employer will usually be a private nonprofit organization or a public agency, and the work performed must be in the public interest.

Some schools might have agreements with private for-profit employers for work-study jobs. These jobs must be relevant to your course of study (to the maximum extent possible). If you attend a proprietary school (i.e., a for-profit institution), there may be further restrictions on the types of jobs you can be assigned.

If you’re interested in getting a Federal Work-Study job while you’re enrolled in college or career school, make sure you apply for aid early.  Schools that participate in the Federal Work-Study Program award funds on a first come, first served basis.

How much can I earn?

You’ll earn at least the current federal minimum wage. However, you may earn more depending on the type of work you do and the skills required for the position.

Your total work-study award depends on:

  • when you apply,
  • your level of financial need, and
  • your school’s funding level.

How will I be paid?

How you’re paid depends partly on whether you’re an undergraduate or graduate student.

  • If you are an undergraduate student, you’re paid by the hour.
  • If you are a graduate or professional student, you’re paid by the hour or by salary, depending on the work you do.
  • Your school must pay you at least once a month.
  • Your school must pay you directly unless you request that the school
    • send your payments directly to your bank account or
    • use the money to pay for your education-related institutional charges such as tuition, fees, and room and board.

Can I work as many hours as I want?

No. The amount you earn can’t exceed your total Federal Work-Study award. When assigning work hours, your employer or your school’s financial aid office will consider your class schedule and your academic progress.

 Loans

If you apply for financial aid, you may be offered loans as part of your school’s financial aid offer. A loan is money you borrow and must pay back with interest.

If you decide to take out a loan, make sure you understand who is making the loan and the terms and conditions of the loan. Student loans can come from the federal government or from private sources such as a bank or financial institution. Loans made by the federal government, called federal student loans, usually offer borrowers lower interest rates and have more flexible repayment options than loans from banks or other private sources. Learn more about the differences between federal and private student loans.

What types of federal student loans are available?

The U.S. Department of Education has two federal student loan programs:

  • The William D. Ford Federal Direct Loan (Direct Loan) Program is the largest federal student loan program. Under this program, the U.S. Department of Education is your lender. There are four types of Direct Loans available:
    • Direct Subsidized Loans are loans made to eligible undergraduate students who demonstrate financial need to help cover the costs of higher education at a college or career school.
    • Direct Unsubsidized Loans are loans made to eligible undergraduate, graduate, and professional students, but in this case, the student does not have to demonstrate financial need to be eligible for the loan.
    • Direct PLUS Loans are loans made to graduate or professional students and parents of dependent undergraduate students to help pay for education expenses not covered by other financial aid.
    • Direct Consolidation Loans allow you to combine all of your eligible federal student loans into a single loan with a single loan servicer.
  • The Federal Perkins Loan Program is a school-based loan program for undergraduates and graduate students with exceptional financial need. Under this program, the school is lender.

Compare all of the federal student loan programs.

How much money can I borrow in federal student loans?

  • If you are an undergraduate student:
    • Up to $5,500 per year in Perkins Loans depending on your financial need, the amount of other aid you receive, and the availability of funds at your college or career school.
    • $5,500 to $12,500 per year in Direct Subsidized Loans and Direct Unsubsidized Loans depending on certain factors, including your year in college.
  • If you are a graduate student:
    • Up to $8,000 each year in Perkins Loans depending on your financial need, the amount of other aid you receive, and the availability of funds at your college or career school.
    • Up to $20,500 each year in Direct Unsubsidized Loans.
    • The remainder of your college costs not covered by other financial aid in Direct PLUS Loans. Note: A credit check is required for a PLUS loan.
  • If you are a parent of a dependent undergraduate student:
    • The remainder of your child’s college costs that are not covered by other financial aid. Note: A credit check is required for a parent loan (called a PLUS loan). 

*Remember, you can borrow less than your school offers you.  You should only borrow what you need.

Why should I take out federal student loans?

Federal student loans are an investment in your future. You should not be afraid to take out federal student loans, but you should be smart about it.

Federal student loans offer many benefits compared to other options you may consider when paying for college:

  • The interest rate on federal student loans is almost always lower than that on private loans—and much lower than that on a credit card!
  • You don’t need a credit check or a cosigner to get most federal student loans.
  • You don’t have to begin repaying your federal student loans until after you leave college or drop below half-time.
  • If you demonstrate financial need, you can qualify to have the government pay your interest while you are in school.
  • Federal student loans offer flexible repayment plans and options to postpone your loan payments if you’re having trouble making payments.
  • If you work in certain jobs, you may be eligible to have a portion of your federal student loans forgiven if you meet certain conditions.

What should I consider when taking out federal student loans?

Before you take out a loan, it’s important to understand that a loan is a legal obligation that you will be responsible for repaying with interest. You may not have to begin repaying your federal student loans right away, but you don’t have to wait to understand your responsibilities as a borrower.

Be a responsible borrower.

  • Keep track of how much you’re borrowing. Think about how the amount of your loans will affect your future finances, and how much you can afford to repay. Your student loan payments should be only a small percentage of your salary after you graduate, so it’s important not to borrow more than you need for your school-related expenses.
  • Research starting salaries in your field. Ask your school for starting salaries of recent graduates in your field of study to get an idea of how much you are likely to earn after you graduate. You can use the U.S. Department of Labor’s Occupational Outlook Handbook to estimate salaries for different careers or research employment opportunities advertised in the area where you plan to live to get an idea of a local starting salary. You also can use the Department of Labor’s career search tool to research careers and view the average annual salary for each career.
  • Understand the terms of your loan and keep copies of your loan documents. When you sign your promissory note, you are agreeing to repay the loan according to the terms of the note even if you don’t complete your education, can’t get a job after you complete the program, or you didn’t like the education you received.
  • Make payments on time. You are required to make payments on time even if you don’t receive a bill, repayment notice, or a reminder. You must pay the full amount required by your repayment plan, as partial payments do not fulfill your obligation to repay your student loan on time.
  • Keep in touch with your loan servicer. Notify your loan servicer when you graduate; withdraw from school; drop below half-time status; transfer to another school; or change your name, address, or Social Security number. You also should contact your servicer if you’re having trouble making your scheduled loan payments. Your servicer has several options available to help you keep your loan in good standing.

How do I get a federal student loan?

To apply for a federal student loan, you must complete and submit a Free Application for Federal Student Aid (FAFSASM). Based on the results of your FAFSA, your college or career school will send you a financial aid offer, which may include federal student loans. Your school will tell you how to accept all or a part of the loan.

Before you receive your loan funds, you will be required to

  • complete entrance counseling, a tool to ensure you understand your obligation to repay the loan; and
  • sign a Master Promissory Note (MPN), agreeing to the terms of the loan.

Contact the financial aid office at the school you are planning to attend for details regarding the process at your school.

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