 |
| What is financial aid? |
|
Financial aid is any monetary assistance that is available to students to help defray the total cost of attendance of a post-secondary educational institution. There are 3 forms of financial aid: grants/scholarships, loans, and work study; these may be funded by the school, private agencies, or the state or federal governments for the purpose of education.
- Grants/scholarships are a form of financial aid that do not have to be repaid, including state grants, Pell grants, and institutional grants and scholarships. Grants are generally based on need and enrollment in college; scholarships are often awarded for merit in academics, athletics, or a particular field of study. Scholarships may also be awarded based on ethnic background, religious affiliation, and special interests.
- Loans are a form of financial aid that must be repaid, including Federal Stafford Loans, Federal Perkins Loans, Institutional Loans, and Alternative or Private loans.
- Work Study is a form of financial aid that does not get directly credited to a student's tuition bill. The student works at an on-campus job and is paid for the hours that are worked.
|
|
| Who is eligible for Financial Aid? |
|
To be eligible for financial aid, a student:
- Must have a high school diploma, GED, or have passed a similar independent test approved by the U.S. Department of Education.
- Must be a U.S. citizen or eligible non-citizen (federal and state aid).
- Must be enrolled with the Selective Service (if you are a male age 18 - 25).
- Must be enrolled at least half-time as a degree-seeking student at an accredited institution (in order to obtain federal loans).
- Must not be in default on any prior federal education loans.
|
|
| What is the FAFSA? |
|
The Free Application for Federal Student Aid (FAFSA) determines eligibility for all federal (as well as most state and institutional) need-based aid programs by generating an Expected Family Contribution (EFC).
Please go to www.fafsa.ed.gov for instructions and to file your FAFSA. If you do not have access to the Internet, the form may be obtained through your high school guidance office, your college's financial aid office, or the public library. To electronically sign your FAFSA, both student and parent need a Personal Identification Number (PIN). You can apply for your PIN at www.pin.ed.gov before you begin to fill out your FAFSA online.
|
|
| What is Financial Need and the EFC? |
|
| Financial Need is usually defined as the cost of attendance (tuition, fees, room & board, books & supplies, transportation, and miscellaneous expenses) minus the Expected Family Contribution (EFC). The EFC is the figure generated when a student completes the FAFSA, and is used to determine a student's eligibility for need-based financial aid. (Note: an EFC of "zero" does not mean that the student will not have to pay anything out-of-pocket towards the cost of attendance, but rather, that the student will likely qualify for the maximum need-based financial aid, which may or may not be sufficient to cover all costs. Similarly, an EFC of $99,999 does not necessarily mean that the student will not qualify for any aid, but rather, that only non-need-based funds will be available.)
|
|
| Where does the financial aid process begin? |
|
| You should start with a visit or call to the financial aid offices at the schools that interest you. Find out what each has to offer in financial aid and what applications are required. |
|
| When is the best time to apply for financial aid? |
|
| The FAFSA may be available in November or December prior to the new school year; however, you may not file the FAFSA until January 1. As of January 1 you should file the FAFSA as soon as possible as each college has its own financial aid deadline, and institutional financial aid is frequently given out on a first-come, first-serve basis. Check with each school to which you are applying regarding its specific financial aid deadline. You should file a new FAFSA each year that you are attending college to continue to receive financial aid.
|
|
| How far in advance should the student loan application be completed? |
|
| As a general rule, loan applications should be completed at least 60 days in advance of when classes begin.
|
|
| What is the Federal Stafford Loan? |
|
| The Federal Stafford Loan for undergraduate and graduate students is a low-interest loan with an interest rate that varies annually. The student must complete a Master Promissory Note (MPN). The MPN is a legally binding document which the borrower signs before receiving a loan. It is a promise to repay the loan, and includes information about its terms and conditions. The MPN is a single promissory note with a multi-year feature (serial loan). Only 1 note is required for multiple loans or years at participating schools. The loan can be subsidized or unsubsidized.
|
|
| What is the difference between a subsidized and unsubsidized loan? |
|
A subsidized loan is one on which the federal government pays the interest while the student is in school, during the grace period, and during periods of authorized deferment. It is based on financial need.
An unsubsidized loan is one on which the student is responsible for the interest while in school, during the grace period, and during authorized periods of deferment and forbearance. It is not based on financial need. You may be eligible for one or the other, or a combination of both.
|
|
| What are Entrance and Exit Interviews? |
|
| An Entrance Interview (during which the student acknowledges the debt that is about to be incurred) is required before the first loan disbursement can be put on a student's account. An Exit Interview is required before graduation or withdrawal from school, so that the student acknowledges repayment obligation. The purpose of the Entrance and Exit Interviews is to educate the students about the loans, in an effort to keep the default rates as low as possible (which, in turn, enables more lenders to participate and offer low rates to all students).
|
|
| What is the difference between a deferment and forbearance? |
|
- A deferment is a temporary period during which no student loan payment is due if requirements are met. Interest payments can be made or, if postponed, the interest is capitalized and added on to the principal.
- Forbearance is a period of time, granted at the lender's discretion, during which no loan payments of principal are required. The borrower must prove that he or she is willing but unable to make payments.
|
|
| What if I don't know who currently holds my loan? |
|
| You can find lender names and addresses in your repayment information for each of your loans; or, simply go to http://www.nslds.ed.gov/nslds_SA/ to retrieve your loan information.
|
|
| What is the Federal PLUS Loan? |
|
| A Federal Parent Loan for Undergraduate Students (PLUS) enables parents with good credit histories to borrow money to pay for their child's education expenses. Graduate students can also borrow PLUS loans for up to the cost of attendance less other financial aid. The parent or graduate student must complete a Master Promissory Note (MPN). The MPN is a legally binding document that the borrower signs before he or she receives a loan, and is a promise to repay the loan. The note includes information about the terms and conditions of the loan. The MPN is a single promissory note with a multi-year feature (serial loan). Only 1 note is required for multiple loans or years at participating schools. The parent must sign a separate MPN for each student in college.
|
|
| What is an Alternative loan? |
|
| Alternative loans, also called Private Loans for education, are available to bridge the gap between the total cost of attendance and the financial aid awarded. Alternative loans are usually in the student's name, with the parent as the co-signer for dependent undergraduates, although any credit-worthy individual can be the co-signer. The student shares the responsibility for covering college costs, and helps to build his or her credit history.
|
|
| What about Debt Consolidation? |
|
| Federal loans and private loans for education cannot be used to pay off credit cards or for car payments, etc. Those loans are certified by the school based on your cost of attendance and the school can reduce the loan amount or reject the loan.
|
Equal Housing Lender - Member FDIC
Printer-friendly format
