Online Guide to
College Grants and Student Loans

How to get a university grant, scholarship, or student loan under the College Financial Aid System!

HOW SCHOOLS MEET "STUDENT NEED":
COLLEGE GRANTS - SCHOLARSHIPS - STUDENT LOANS

There are two types of student aid that colleges use to fill need - the college grant (or scholarship) and self-help aid. College grants are generally known as Free College Scholarships and do not need to be repaid. They include education grants and scholarship grants, including, for example, athletic scholarships, nursing scholarships, minority scholarships, graduate scholarships, and other free college scholarships. Self-help aid is money that must be paid back through a work or college loan commitment. Self-help aid generally refers to College Work Study programs and student loan programs (also known as college loan, education loan or university loan programs).

These funds come from the three primary sources of college financial aid: 1. The Federal government 2. The state government 3. The campus-based programs.

FEDERAL PROGRAMS

There are three major Federal student aid programs: (1) Pell Grants, (2) Subsidized and Unsubsidized Stafford College Loans, and (3) PLUS SLS Student Loans.

1. Pell Grant: The Federal Pell Grant Program is the largest student financial aid program funded by the Federal Government. A Pell Grant is only awarded to an undergraduate student with extremely low family contributions. Pell Grant awards are set by the government, and the total amount of the award is determined by subtracting the family contribution. A free federal financial aid application form (FAFSA) must be filed.

2. Subsidized and Unsubsidized Stafford College Loan: The first type of Stafford college loan, a subsidized federal student loan, is based on "need." If the student has a need of $2,500 or more, they are eligible for the need-based subsidized version of the Stafford college loan. There are no interest or principal payments on the subsidized version of the college loan until six months after the student graduates from college. In effect, the government is picking up the interest for the four years the student is enrolled in college. The "Unsubsidized" version of the Stafford college loan is available to all families regardless of their "need." The only difference is that the interest payments on the college loan will not be subsidized by the government, and the interest payments will start to accrue immediately.

Stafford college loans are made by private lenders such as banks and S & L associations, and some are made directly from the college. To receive a Stafford college loan, the student must fill out a college loan application from a lender, and send it to the college for certification by the college's financial aid office. Maximum amounts of the Stafford college loan are limited based on the student's year in college. Graduate students can borrow more up to a set maximum minus any undergraduate monies borrowed from the Stafford college loan program.

3. PLUS/SLS Student Loan: A Plus student loan stands for "Parent's Loan to Undergraduate Students." These student loans are not based on "need" and can be obtained by either parent as long as they are credit-worthy. These student loans have unlimited borrowing limits up to the total cost of attendance minus any other financial aid received. Interest on these student loans begins right away, or, if the parent prefers, they can allow the interest to accrue. These student loans are not as beneficial as a Stafford college loan, but can help parents to pay their family contribution if they don't have the money to pay for it themselves.

An SLS student loan stands for "Supplemental Loans to Students." These student loans are available to independent undergraduate and independent graduate students only. Independent students may borrow up to a set amount for their first two years, and then another set amount per year after, up to a set maximum of. Interest on these student loans begins right away, or the student can let it accrue.

State Grant, Scholarship and University Loan Programs: Each state offers its own state-based programs which can include state grants, state scholarships, tuition assistance, and university loans. Many of these programs are set up to help people pursuing careers in the teaching profession (teaching scholarships), the medical and dental professions (medical scholarships), and several other fields. Other state programs are set up to help "needy" in-state students to get educations, which may or may not include a university loan program.

Campus-Based Scholarship, Grant and University Loan Programs: Campus-based programs are funds that colleges and universities receive from the Federal government and from private endowments. Generally, a set amount of money is given to a college each year. And, once that money is awarded, there are no more funds available from these programs until the next school year. That is why it is imperative for a student to file their financial aid forms (FAFSA) on time since aid is awarded on a first come, first served basis.

There are five main types of campus-based funds: (1) SEOG college grants, (2) College Work Study Programs, (3) Perkins Student Loans, (4) Endowments, and (5) Tuition Remission or Discounts. Let's take a closer look at each one of these programs:

1. Supplemental Educational Opportunity Grant: This is a "need-based" college grant awarded to Students with extreme financial need. Priority is given to students who receive Pell grants, and there is no guarantee that all eligible students will receive SEOG college grants. Award amounts range from a minimum of $100 to a maximum of $4,000, based on the students financial need and the school's availability of these funds.

2. College Work Study Program: College Work Study is a campus-based program that is awarded to students based on their need. In most cases, the student is offered a certain amount of money from the program (i.e., $2,000). The student is then asked to work part-time on campus for the Federal minimum wage until the student has earned the total amount awarded. At that point, the student's work commitment is over. College Work Study is something all students should accept, if offered, since once the work commitment is done, they never have to repay the money, unlike a student loan.

3. Perkins College Loan: Perkins college loans are low interest subsidized student loans that are administered by the college and subsidized by the Federal government. The interest rate on these college loans is low and no interest or principal payments are made until 6 months after the student graduates from college. This type of college loan is awarded on a first come, first served basis.

4. Endowments: Endowments are funds that are given to schools from private individuals (mostly alumni) and by different foundations, and organizations. Private schools have a lot more of these types of funds available for their students. State colleges, on the other hand, rely almost entirely on Federal and State funds.

5. Tuition Remissions and Discounts: These types of awards are often called "funny money," or "Robin Hood money." The reason these funds are called "Robin Hood money" is because schools are basically taking money from the wealthier students who can afford to pay in full and giving these monies to the "needier" students by reducing their tuition. Therefore, in the case of tuition remissions or discounts, no grants or scholarships are actually being awarded, instead, all the school is doing is lowering its "price tag" so that the student can afford to go to their school.