Eligibility and awarded financial aid is determined by the information from the completed FAFSA (www.fafsaonline.com), which must be filled out as soon after January 1, 2010 as possible. Be aware that some aid money may be awarded on a first-come, first-served basis.
Grants are federal and state awards based on need and do not need to be repaid. Check individual colleges for offered grants and deadlines. The federal Pell Grant has changed this year due to the 2009 stimulus bill. The maximum has increased from $4731 to $5350 for undergraduates, and President Obama hopes to boost it to $5550 for 2010.
Scholarships do not need to be repaid and vary greatly in dollar amount. They are not federally funded and are awarded based on special ability, academic achievement, religious affiliation, financial need, ethnic background or special interest. Check with your high school guidance counselor, college financial aid office, local businesses, unions, organizations, churches, social clubs and community groups for types of awards. Make sure to check scholarship deadlines.
Work study is a federal program that offers students part-time jobs both on and off campus in trade for financial aid. Job opportunities are based on level of need. The stimulus money has added $200 million to the program for the 2009-2010 school year across the nation to hire more students.
Education loans must be repaid with interest, so it is imperative to investigate all other financial aid options first. Make sure you read and understand the term of the loan.
- Federal Perkins loans are low-interest student loans based on need for undergraduates and graduates administered by each participating school and must be repaid directly to schools.
- Stafford Federal Family Education Loans (FFEL) are provided through private lenders. Direct Stafford loans are provided through the US government. Both loans may be unsubsidized, which means they are not based on need, (an additional $2,000 in unsubsidized loans became available for dependent students in 2009 with a current interest rate of 6.8 percent) or subsidized, which means they are based on need (on July 1, 2009, the interest rate for subsidized loans decreased from 6.0 to 5.6 percent and the rate will continue to decrease each year). For all Stafford loans, you must sign a promissory note and entrance loan counseling is now a requirement.
- Federal PLUS loans are government-sponsored loans for parents and graduate students and are not based on need. The yearly limit to borrow is equal to the cost of attendance minus any other financial aid you receive. FFEL PLUS loans have a fixed rate of 8.5 percent and Direct PLUS loans have a fixed rate of 7.9 percent.
According to the White House Office of Management and Budget, President Obama wants to eliminate the middlemen in federal student loans beginning in the 2010-2011 school year, moving away from private lenders (Stafford FFEL programs) and moving towards only the US government providing student loans (Stafford Direct loan programs). While not yet written into law, it is estimated that this would save $4 billion a year in bank subsidies and that savings could be invested directly into aid for students.
Educational Tax Credit reduces a student/family’s tax liability and for 2009 and 2010 it will increase from $1800 to $2500 for families earning up to $180,000, and it can be claimed for all four years of college instead of two.
For more information on any of these options, visit www.studentaid.ed.gov.
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