Federal Student Aid Programs

Pell grants and a variety of federal loans are the basis of college planning

Federal student aid programs are designed to help defray the cost of a college education and make it affordable for the majority of students. While "affordable" does not mean "cheap", it does mean "accessible" and "available" to students willing to do what it takes to obtain a college education.

Federal student aid programs include both grants and loans.

Grants are a type of need based aid and are granted to the students who demonstrate the most financial need. The most common and well known federal aid grant available is the Pell grant. Pell Grants are usually a foundation of financial aid, to which aid from other federal and nonfederal sources might be added.

Pell grants are the largest source of need based aid and are available to undergraduates who demonstrate financial need. A Federal Pell Grant, unlike a loan, does not have to be repaid. Generally, Pell Grants are awarded only to undergraduate students who have not earned a bachelor’s or professional degree. The maximum Pell Grant award for the 2007-2008 award year is $4,310. You may receive only one Pell Grant in an award year, and you may not receive Pell Grant funds from more than one school at a time.

To determine if you’re eligible to receive a Pell Grant, the U.S. Department of Education uses a standard formula, established by Congress, to evaluate the information you report when you apply. The formula produces an EFC (Expected Family Contribution) number. This number will determine your eligibility for a Pell Grant. YOu can apply for a Pell Grant when you fill out the FAFSA (Free Application for Federal Student Aid) form.

Federal Aid Loan Programs

Federal Student Aid Programs also include many loan programs. Student loans, unlike grants and work-study, are borrowed money that must be repaid, with interest, just like car loans and mortgages. You cannot have these loans canceled because you didn’t like the education you received, didn’t get a job in your field of study or because you’re having financial difficulty. Loans are legal obligations, so before you take out a student loan, think about the amount you’ll have to repay over the years.

The largest and best known programs are listed below:

Perkins Loans
The Perkins loan is the best student loan available. Perkins loans are federally subsidized and have lower interest rates than commercial loans. No payments are made while the student is in school, but six months after leaving school, students must begin making regular payments. Federal Perkins Loans are made through participating schools to students who demonstrate the most financial need. Pell Grant recipients get top priority. They are repaid by the student directly to the school.
Stafford Loans
Stafford loans can be either subsidized or unsubsidized. To receive a subsidized loan a student must demonstrate financial need. All students, regardless of need, are eligible for an unsubsidized Stafford Loan. If you receive a Stafford loan, be sure you understand what you are receiving and know the terms of repayment.
Sallie Mae Signature Loans
In these federal student aid programs you may borrow from $1,500 to $40,000 per year. Sallie Mae loans are designed to cover any qualified higher education expenses when federal funds aren't enough. Use it for tuition, books, fees, even living expenses.
You may choose from several convenient repayment options. The loan funds are sent directly to you.

Even if your financial aid package indicates your may be eligible for federal student aid programs, you cannot receive any assistance without filling in the proper applications. Complete the FAFSA to determine the types of programs you may be eligible to receive. Be sure to borrow only what you absolutely need to complete your education. Be conservative and there won't be any surprises when graduation day rolls around and your loan payments come due.

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