Types of Aid

The Department of Education has the following student financial aid programs:

Federal Pell Grants

Federal Supplemental Educational Opportunity Grants (SEOG)

Federal Work-Study

Federal Perkins Loans

Federal Stafford Loans

Federal PLUS Loans

To qualify for these programs you must:

Establish financial need (except for unsubsidized Stafford and PLUS loans)

Have a high school diploma or GED

Be enrolled as a regular student in an eligible program

Be a U.S. citizen or eligible noncitizen

Have a Social Security Number

Make satisfactory academic progress

Sign a statement of educational purpose/Certification

Sign a statement of updated information and Register with the Selective Service (as required by law)

A Federal Pell Grant is awarded to families whose EFC is approximately $1,900 or less. They range in value from $600 to $3,000. It is intended to assist undergraduate students. If you qualify for a Pell Grant it will be indicated on the Student Aid Report.

SEOG, Work-Study and Perkins Loans are considered "campus-based" programs because they are administered by the colleges and universities.

A Federal Supplemental Educational Opportunity Grant is intended for undergraduates with exceptional financial need as determined by the school. Normally, the student must qualify for the Pell Grant before receiving any SEOG. The amount of the grant is $100 to $4,000.

The Federal Work-Study Program provides college assigned jobs, on or off campus for 8-15 hours a week for at least minimum wage. The salary is paid directly to the student and is intended to cover educational expenses.

A Federal Perkins Loan is a low-interest (5%) loan for graduate and undergraduate students. Up to $3,000 a year can be borrowed for undergraduate work with a debt limit of $15,000, and a maximum of $5,000 per year for graduate work with a debt limit of $30,000. The government pays the interest on the loan while the student is in school and during a 9-month grace following graduation.

A Subsidized Federal Stafford Loan is a low-interest loan provided to students enrolled at least half-time. Loans are made by commercial lending institutions, or sometimes the college or university acts as the lender. Amounts that can be borrowed range from $3,500 for freshman, $4,500 for sophomores and $5,500 for juniors and seniors. The debt limit is $23,000 for undergraduate students. Graduate students may borrow up to $8,500 per year to a maximum of $65,000, minus what was borrowed as an undergraduate. Interest rates are adjusted annually to equal the 91-day T-bill plus 3.1% with a cap of 8.25%. Commercial lenders may charge a 1% insurance and a 3% origination fee. The government pays the interest on the loan while the student is in school and for a 6-month grace period after graduation.

Unsubsidized Federal Stafford Loans work the same way as the subsidized version discussed previously. The exception is the student is responsible for interest payments during the college years.

Dependent students may borrow under both programs but not to exceed the yearly limits already discussed. Independent undergraduates may borrow additional amounts up to $4,000 their first and second year and $5,000 thereafter to a maximum of $23,000. Graduate students may borrow an additional amount up to $10,000 with a debt limit of $73,000.

PLUS Loans provide parents the ability to borrow up to the cost of education less any financial aid received. The interest rate is adjusted annually to equal the 52-week T-bill plus 3.1% with a cap of 9%. Payments begin 60 days after the loan is received.

State:

Every state has extensive programs for assisting students with the cost of education. Some programs are administered directly by the state and others are provided through the colleges and universities. In most cases state programs are only available to residents of that state attending in-state colleges or universities.

College:

After colleges have used up their external resources, they will look to the institution's own pool of money. These are generally merit-based awards for academics, music, talent and athletics. Be prepared to provid additional financial information to the school before receiving such assistance. Information on what colleges have to offer is provided with the admission and financial aid documents sent to the student.

Private Scholarships:

First a word of advice - be careful. There are a number of scholarship search firms advertising for your business. Be aware that a number of these companies are being investigated for fraudulent business practices.

Here are the facts about private scholarships:

During the 2005/2006 school year 135 billion dollars in financial aid is handed out from various sources. Less than 7% comes from private sources such as companies and organizations.

Generally, they are narrowly defined. There are very few private scholarships which do not have some limiting factor such as race, educational pursuit, parent or student affiliation or domicile, just to mention a few.

In most cases they are time intensive to apply for. All have some sort of administrative requirements for applying, which takes time and effort. You might even be required to travel to be interviewed or make an oral presentation, or write an essay.

Most importantly, if you qualify for need-based assistance, depending on the college’s policy, you could find your private award replacing institutional funds in your financial aid package. In effect, it does nothing to lower the family’s cost. However, if you don’t qualify for need-based financial aid, the private money does act to lower the family’s share of expenses.

But don’t give anything back. If you do happen to receive a private scholarship, accept it. You can always negotiate with the college or university to take back loans or work study rather than grants they may have awarded you.

The bottom line is that while there is private money available, the wisest course is to maximize the federal, state and college programs first, then if you have any energy left, go after some of those private offerings.

Use a credible source for private scholarships such as the College Board data base Campus Financial uses. This can save countless hours pouring through pages of private scholarship listings to find those few you might be eligible to apply for. We can create a data screen based on the student’s and family’s profile. Plus we can help you with the query letters to get applications and information. That’s a time saver as well.

Contact us for your personalized list of private funding opportunities and query letters.