An Overview of Federal Student Aid

Federal Student Aid (FSA) is provided by the US Department of Education

and helps students pay for expenses at post-secondary institutions

FSA covers expenses such as tuition, room and board, books and supplies,

transportation, computers, and dependent care

There is more than $150BN worth of FSA available to qualifying students

FSA is granted to students that meet basic eligibility requirements

FSA falls into one of three categories: grants, loans, or work-study

The FAFSA (Free Application for Federal Student Aid) must be completed in

order to qualify for FSA (~22MM FAFSAs are submitted each year)

The FAFSA is available beginning January 1st of the year that the student

plans to enroll in school

Visit www.fafsa.gov to fill out the FAFSA form and begin the financial aid

process.

What is Federal Student Aid?

A high school diploma or a General Educational Development

(GED) certificate

A valid social security number

Must be a US citizen or eligible non-citizen

Must meet satisfactory academic progress requirements

Compliance with Selective Service registration

Must be enrolled or accepted as a student and be on the path

to a degree or certificate in an eligible program

Prerequisites to Receiving Federal Student Aid

Grants: Funds that are not required to be repaid

Loans: Funds that are borrowed from the school and must be paid

back with interest

Work-Study: Funds that a student earns by working part-time

while attending school

Types of Federal Student Aid

Federal Pell Grants: Available almost exclusively to undergraduates (UG’s)

Federal Supplemental Educational Opportunity Grant (FSEOG):

Available to UG’s that have a very low estimated financial contribution (EFC)

Teacher Education Assistance for College and Higher Education Grant

(TEACH): For UG’s, post baccalaureates, and graduate students that are

willing to teach full-time in designated teacher shortage areas for four (4)

years after graduation

Iraq and Afghanistan Service Grant: Available to non Pell-eligible

students whose parent/guardian died as a result of military service in Iraq or

Afghanistan after the events of 9/11; and who, at the time of death, were

younger than 24 years of age and/or enrolled at least part-time at an

institution of higher education

Federal Grant Programs

A federal loan is supported by the federal government and allows

students to borrow money to help pay for school

Benefits of a federal loan include: low-fixed interest rates,

income-based repayment plans, cancellations for certain

employment, and deferment options

There are two (2) types of federal loan programs: The Federal

Perkins Loan Program and The Direct Loan Program

A private student loan is a non-federal loan issued by a lender

such as a bank or a credit union and commonly requires a credit

check

Federal vs. Private Loans

Federal Perkins loans are low interest loans that help need-based

undergraduate and graduate students finance the cost of post-secondary

education

School is the lender; approximately 1700 schools participate

Interest rate = 5%

Amount received depends on financial need, amount of other aid, and

availability of funds at school

Repaying a Federal Perkins Loan begins after the grace period has expired.

The grace period begins on the day that the student graduates and lasts for

nine (9) months

During the grace period, the student does not pay principal and is not charged

interest. If a student is attending school less than half-time (typically defined

as less than six (6) credit hours), his/her grace period may be affected

A student has up to ten (10) years to repay a Federal Perkins loan

Federal Perkins Loan Program

The Direct Loan Program is the largest federal student loan program available with

four (4) types of direct loans:

Direct Subsidized Loan (DSL): For UG’s; US Department of Education pays

interest while borrower is in school and during grace and/or deferment periods;

student must be attending at least half-time and have financial need. IR = 6.8%

Direct Unsubsidized Loan (DUL): For UG’s and graduate students; borrower

is responsible for all interest; student must be enrolled at least half-time;

financial need is not required; US Department of Education is the lender. IR =

6.8%

Direct PLUS Loan (DPL): For parents of dependent UG’s and also graduate

and professional students; student must be enrolled at least half-time; financial

need is not required. Borrower is responsible for all interest; US Department of

Education is the lender; graduate student/parent cannot have a negative credit

history. IR = 7.9%

Direct Consolidation Loan (DCL): Allows student or parent to combine

multiple federal education loans into one loan with one (1) monthly payment

Direct Loan Program

Lender is the US Department of Education

Direct loans have a fixed interest rate that varies depending on the loan

type

Amount that can be borrowed varies based on whether the student is

enrolled in an undergraduate or graduate program

The grace period is six (6) months for DSL’s and DUL’s. DPL’s do not have

a grace period, but can defer for up to six (6) months

On average, students have between 10 - 30 years to repay a loan

Must be enrolled at least half-time (typically defined as six (6) credit hours)

to qualify

To take out a Direct Loan, student must complete a Master Promissory Note

(MPN). This is a legally binding agreement to repay loan

Direct Loan Program (cont.)

Federal Work-Study (FWS) provides part-time employment for

undergraduate and graduate students with financial need, thus

allowing them to earn money to help pay education expenses

FWS encourages community service and work related to the

recipient’s area of study

Undergraduate students are paid by the hour and will receive at

least federal minimum wage

The amount earned cannot exceed the FWS award amount

FWS employment may be on-campus or off-campus

When assigning work hours, the student’s employer or financial aid

administrator will consider award amount, class schedule, and

academic progress

Federal Work-Study Program