What is Financial Aid?

WHAT IS FINANCIAL AID?
Financial Aid is monetary assistance for qualifying college students in the form of scholarships, grants, loans, or work-study programs to pay for education expenses. Scholarships or grants are awarded to qualifying students and do not need to be repaid. However, student loans are monetary assistance that will need to be paid back after graduation and they usually include interest. Any student interested in applying for federal financial aid must first fill out a Free Application for Federal Student Aid (FAFSA), which generates a Student Aid Report (SAR) and eligibility rating. Forms must be submitted to the student's potential education institutions, which determine the amount of aid you may receive.

SCHOLARSHIPS AND GRANTS
Both scholarships and grants can be defined as sums of money awarded to students to put directly towards college tuition and expenses and that are not required to be repaid. The difference between a scholarship and a grant is that scholarships are awarded to students who meet a certain academic or athletic criteria, and grants are usually given to those in financial need.

Scholarships
Scholarships are based on meeting certain academic or athletic criteria, and therefore can be considered a reward of recognition for certain talents, abilities, or qualities that meet or exceed the scholarship committee's standards. There are a wide range of scholarships available to qualifying college-bound students that vary in amount, but the one stipulation that's consistent among all scholarships is that the money has to be used solely towards higher education.

Thousands of scholarships are available each year, distributed by colleges, universities, non-profit organizations, and private companies to students with artistic, athletic, or academic potential. There are also scholarships that fall under these categories:
* Private Scholarships
* Unusual Scholarships
* Military Scholarships
* Non-traditional Scholarships
* Scholarships for Minorities
After researching the various forms of scholarships, apply for the ones for which you are most qualified.

Grants
Grants are also monetary ""awards"" that are rewarded to financially needy students who are enrolled in higher education. There are varying levels of money given through grants, dependent on the institution providing the grant and the amount of money the student needs to cover tuition. Since some grants may not cover much of tuition costs, it is advised to apply for all qualifying grants available. Similar to scholarships, grant money can only be used towards the higher education program reviewed by the grant sponsor.

Grants are offered by a variety of organizations and government sectors, such as the federal government, state or city government, community organizations, private companies, unions, non-profit organizations, schools (even colleges and universities), and possibly employers.
There is a wide range of grant opportunities available to those in financial need, especially minorities, low-income families, students with disabilities, students in specified age groups, and students enrolled in designated academic programs. Examples of these qualifying academic programs include: students pursuing a teaching career or a bachelor's in science, math, engineering, or homeland security.

Below are some of the most well-known federal grants available to undergraduate students:
Pell Grant – awarded to low-income students who have not received their first Bachelor's Degree. Recipients can receive up to $5,500.
Federal Supplemental Educational Opportunity Grant (FSEOG)—awarded to low-income undergraduates. Recipients can receive up to $4,000.

Academic Competitiveness Grant – a fairly new grant program awarded to students who completed a rigorous high school study program. Students can receive up to $750 towards their first year of school and up to $1,300 towards their 2nd year of study.

STUDENT LOANS
Student loans are low-interest loans that can be obtained through private lenders or the federal government. Signing on to receive private student loans may have benefits specific to certain families, but be aware that loans from private lenders can only be consolidated through other private lenders after graduation. There are several types of federal student loans available to students, depending on their financial need, whether the student is claimed as a dependent by parents/guardians, and dependent on the distributing institution. Applying for federal student loans may take months to complete, so it's wise to begin the application process far in advance.

Federal Student Loans
Federal student loans are available to undergraduates, graduates, vocational school students, and students with disabilities. The loans are distributed directly to a student's educational institution by the U.S. Department of Education or by a 3rd-party lender. As with all loans, they are to be repaid in full.

There are 3 Federal Student Loans types:

Perkins Loan—A Perkins Loan is a low-interest loan for undergraduates or graduate students with ""exceptional"" financial need. The loans are dispersed by the institution where the student is enrolled at least half-time, and while there is no minimum required to borrow, the loan is capped at $5,500 per year for undergraduates. This loan is the only federal loan that has an extended grace period of 9 months after graduation before repayment begins.

Stafford Loan (William D. Ford Federal Direct Program)- A Stafford Loan is a federal loan dispersed by the Department of Education. There are two types of federal direct loans: subsidized and unsubsidized.

Direct Subsidized Stafford Loan: This is a low-interest loan for financially-needy students. The loan amount is determined by the college or university where the student is enrolled. Interest on the loan is not charged while the student is enrolled in school, during grace periods, or during deferment periods. Repayment begins 6 months after graduation.

Direct Unsubsidized Stafford Loan: This is a fixed rate (6.8%) loan for students without financial needs. The loan amount (up to $12,000 per year) is determined by the college or university where the student is enrolled, and interest begins accruing after the first pay-out to the school. Payments can be made while the student is in school to help reduce costs, but repayment is not required until 6 months after graduation.

Federal Family Education Loan (FFEL)—An FFEL is a loan obtained through a private lender or bank who receives subsidies from the federal government to ensure federally guaranteed loans to parents. The 3rd-party lender uses their private capital to finance loans and basically acts as the ""middleman"" between the federal government and the family. However, it is advisable to consider private student loans only after you have exhausted all Stafford Loans, grants, and scholarship opportunities.

WORK-STUDY PROGRAM
The Federal Work-Study Program provides qualifying undergraduate and graduate students with campus-based financial aid. The programs are both federally and state-funded, and are awarded to students based on financial need.
The work-study program provides students with jobs, either on-campus or with a non-profit organization, and the work performed must be in the public interest. Students are encouraged to earn their award amount by completing community service jobs or jobs relating to the student's course of study. Typical work-study programs entail 8—10 hour work weeks, depending on the student's award amount, class schedule, and academic progress.

To apply for the work-study program, students must fill out a FAFSA form for the university to determine their eligibility. The award is dispersed directly through the financial aid office of the participating university and each school has a limited amount of money allotted per year. Therefore, it is encouraged for students to apply early, as the awards are granted on a first-come, first-serve basis. Once the money is gone, the opportunity will not be available until the following school year.