Financial Aid Basics
There are three types of federal financial aid:
1. Federally Subsidized Student Loans
A federal student loan is a type of financial aid that, like any other loan, needs to be repaid, with interest, to the lender. Money from the loan is first applied to tuition, fees and room and board and if any funds are left over they can be issued via cash or check directly to the student. Remaining funds can also be held, per your request, by the school to be used at a later date. A federal loan cannot be cancelled due to dissatisfaction with your education, not getting a job after graduation or if you experience financial difficulty. Federal loans are legally binding contracts so before you borrow the money, you want to be certain that you are informed and prepared.
The various loan programs have different eligibility criteria, amounts awarded, interest rates, lenders and repayment requirements.
Grants are federal funds awarded to students that, unlike loans, do not have to be repaid. There is the occasional rare situation, such as leaving school prematurely, where a student must repay the grant.
There are 4 types of federal grants:
• Pell Grants
• Federal Supplemental Educational Opportunity Grant (FSEOG)
• Academic Competitive Grant (ACG)
• National Science & Mathematics Access to Retain Talent Grant (National SMART Grant)
In order to get a federal grant, you must provide documented information to determine your financial need. The factors considered when calculating a student’s financial need include the Cost of Attendance, Expected Family Contribution, and whether you are a full-time or part-time student or attending school for a full academic year or less.
With a federal work-study program, you are able to receive financial aid in exchange for work. Eligible participants can be undergraduate or graduate students and full-time or part-time students. Check with your school’s financial aid office to make sure that a work-study program is available, because not all schools participate. In addition to community-service based work, work-study programs will also try to find you a job that relates to what you are studying, if at all possible.