Financial Aid
Student financial aid refers to funding intended to help students pay education expenses including tuition and fees, room and board, books and supplies, etc., for education at a college, university, or private school.
The most basic forms of student financial aid include loans (federal and institutional), grants, and scholarships. (merit and need-based).
The FAFSA
Need-based financial aid is awarded on the basis of the financial need of the student. The Free Application for Federal Student Aid (known as the FAFSA) is generally used to determine need-based aid eligibility for federal student financial aid.
It is a form that is filled out annually by current and future university students in the USA, both undergraduate and graduate. The FAFSA determines your eligibility for federal student financial aid, including Pell grants, Stafford loans, PLUS loans, and work-study programs.
In addition, most states and schools use information from the FAFSA to award non-federal financial aid. For this purpose, the applicant can include the codes of schools they are applying to when filling out the FAFSA. At private institutions, a supplemental application may be necessary for institutional need-based aid.
You can apply for the FAFSA directly on their website:
The FAFSA consists of questions regarding the student's finances, as well as those of their family; these are entered into a formula that determines the Expected Family Contribution (EFC). A number of factors are used in determining the EFC including the family size, income, number in college, and assets (not including retirement and 401(k) funds). This information is required because of the expectation that parents will contribute to their child's education, whether that is true or not. Students who will not be receiving parental aid for college expenses may be able to appeal directly to their school of choice for a re-evaluation of aid awards based on their personal circumstances.
The FAFSA does not have questions related to student or family race, ethnicity or religion.
Source: Wikipedia and http://www.fafsa.ed.gov/
Loans
Higher education loans, while they are a form of financial aid, differ from scholarships and grants in that they must be paid back, with interest. They come in several varieties in the United States:
- Federal student loans made to students directly (eg. Stafford and Perkins Loans): No payments while enrolled in at least half time status.
- Federal student loans made to parents: Much higher limit, but payments start immediately.
- Private student loans made to students or parents: Higher limits and no payments until after graduation, although interest will start to accrue immediately. Private loans may be used for any education related expenses such as tuition, room and board, books, computers, and past due balances. Private loans can also be used to supplement federal student loans, when federal loans, grants and other forms of financial aid are not sufficient to cover the full cost of higher education.
Federal education loans are available in either the Direct Loan or federally-guaranteed student loan programs. Federal law sets the maximum interest rates and fees that lenders may charge for federally-guaranteed loans.
Few students can afford to pay for college without some form of education financing. Grants, scholarships, work-study and other forms of gift aid just do not cover the full cost of a college education. Many students find that they must supplement their savings with government and private loans. The Federal education loan programs offer lower interest rates and more flexible repayment plans than most consumer loans, making them an attractive way to finance your education. You can also deduct up to $2,500 in student loan interest even if you don't itemize deductions on your income tax return.
For information on the interest rates on federal loans, see FinAid.com's resource: http://www.finaid.org/loans/
Resources:
http://en.wikipedia.org/wiki/Student_loans_in_the_United_States
http://www.studentscholarshipsearch.com/ebook/scholarship-search-secrets-p7.php