Types of Financial Aid Programs:
After you have calculated the cost of college, and have determined that the amount required to be saved per month to send your child off to school is out of reach, many people ask: “What Financial Aid available”? Below is the major financial aid available through the US department of Education:
- Stafford Loan
- Federal Pell Grant
- Plus Loans
- Consolidation Loan
- Federal Supplemental Education Opportunity Grant (FSEOG)
- Federal Work-Study & Federal Perkins Loans
Below we will attempt to briefly explain them so that you can determine if any of them fit your situation.
Stafford Loans: Direct and FFEL:
This is the largest aid program the US department of Education provides. There are two types: Direct and FFEL. Direct Stafford Loans are loans the federal government provides directly to the student. FFEL Stafford Loans are loans in which a lender (such as a bank) provides the student.
Stafford loans are either subsidized or unsubsidized. Subsidized means that there is no interest charged until the student begins repaying the loan. Unsubsidized loans have interest added to the loan while the child is in school. Repayment on the loans typically does not begin until 6 months post one of the following:
· Graduating
· Not being enrolled as at least a half-time student for a semester (if 12 credit hours is considered full time, then the student would have to be enrolled with at least 6 credit hours to not initiated the pay back on the loan).
Federal Pell Grant:
Another financial aid avenue is the Federal Pell Grant. This is a grant, not a loan; which means the money does not need to be repaid. Pell Grant eligibility is based on the Expected Family Contribution (EFC) equation. They are awarded to students who are working on their first undergraduate degree, and do not hold any other professional degrees. Applicants can only be awarded one Pell Grant per year. The Maximum amount granted in the 2007-2008 school year was $4,310. The amount changes each year depending on funding.
Plus Loans:
Plus loans are loans available to parents who have a good credit history. “Plus” stands for “Parent Loans for Undergraduate Students”. The loan is funded through the Direct Loan and the FFEL programs. The child must be enrolled at least half time and be a dependant for the parents to qualify. Funds are typically disbursed twice throughout the school year and interest accruals (adds) to the loan. Repayment on the loan usually begins 60 days after the final distribution of that school year. Typically the total loan must be paid off within 10 years.