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Friday, August 8, 2008

Financial Aid: The Ropes

Thursday, November 08, 2007

Posted at 9:15 AM • Comments (0)

Financial Aid: The Ropes

By David Pannen, Education Journalist

A large majority of prospective students in the United States do not have the financial backing to pay the costs incorporated in a college education. Textbooks, school supplies, and of course, tuition are all expenses included with higher education. These costs can add up to thousands of dollars, creating a wall between students and schools. Financial aid is like someone throwing you a rope from the other side, helping you over the wall and into the world of higher education. This source of money minimizes the financial burden on students, allowing them to broaden their choices of education. Students interested in financial aid just have to figure out which line is right for them, so let’s think of this as a ropes course.
An important thing to remember when looking into the cost of college is that the benefit of higher Education will always outweigh the initial cost of learning. Gaining valuable knowledge from an accredited university or trade school will pay off down the road. In today’s competitive job markets, Education has become the main focus of employers. Job applicants without advanced Education backgrounds usually lose jobs to those who do. This is not to say that employees without college educations cannot make substantial contributions in a professional work environment, but without proper education, the opportunity to do so is much less likely. Education is quite possibly the best way to ensure financial security in the future, but to struggling students looking for successful gains, the expense of Education does not outweigh its immediate benefit. Financial Aid is there to help with the primary expenses of higher Education leading students through college and into the professional business world.

Financial Aid is the best way to earn your degree at a cost effective level. There are countless scholarships, grants, and loan possibilities, so students must determine which financial aid program is right for them. A scholarship is money given to a student, usually directly from a school or private organization, based on a certain criteria, such as academics. A grant is a sum of free money given to a student from the government or other organizations to aid with educational expenses. Another financial aid is a student loan. Student loans temporarily lend money to students, who eventually pay off the loan as it collects interest. These loans differ from non-student loans with lower interest rates, increasing their practicality for students. With all the different types of financial aid available, those who never thought they could afford college should do some rethinking. Financial Aid makes the dream of college a reality, letting students from all backgrounds come together to improve their Education and their lives.

Student Grants: Federal Grants and Scholarships

There’s Gold in those Hills!
In a historical comparison, scholarships and grants are much like the California gold rush. Everyone knew the gold was out there; they just had to know where to look. Scholarships and Grants are free money designated for students who are looking for extra monetary support during college. Unlike the California gold rush though, today’s students know exactly where to look. Schools, organizations, and government funding are all resources students can explore without the troublesome effort of gold mining. The final similarity between the two is the deeper the students dig, the more grants and scholarships they will find. No matter what financial situation a student is in, they should always check their options with grants and scholarships.

Federal Grants
Federal Grants are issued by the U.S. Department of Education to assist students with monetary matters. A student grant is free, government funded money given to students for the purpose of Education and living expenses. Students become eligible for all federal, state, and institutional financial aid programs upon completing the FAFSA (Free Application for Financial Student Aid). The FAFSA must be completed by the end of June in order to obtain eligibility for the following scholastic year.
Below is a list of a few types of federal grants.

Pell Grants

The Pell Grant is a need-based grant which offers undergrads up to $4,500 per scholastic year. Funded by the Department of Education, the Pell Grant remains the most common form of financial aid granted by the government. No repayments are required. To apply for the Pell Grant, please visit the FAFSA website.

FSEOG

(Federal Supplemental Education Opportunity Grant)
This grant gives undergrad students with “exceptional” financial need between $100 and $4000 per year. The amount given is relative to when the student applies, the individual need of the student, availability through the school, and financial aid policies within the school. FSEOG’s are given in addition to the Federal Pell Grant. Much like Pell Grants, FSEOG’s are not paid back. To apply for the FSEOG, visit the FAFSA website.

The Academic Competitiveness Grant

Awarded in addition to the Pell Grant, the Academic Competitiveness Grant allows first and second year students extra aid for attending school. Students must have completed an intense high school curriculum, as concluded by state and local Education agencies, not to mention the Secretary of Education. Second year student are required to have a 3.0 GPA in order to receive funding. The grant presents $750 for first-year students and $1,300 for second-year students.

Eligibility
• U.S. Citizen
• Eligible for a Pell Grant
• Enrolled as a full-time first or second year student in a two-year or four-year degree program
• Graduated from High School after January 1, 2005

To apply for The Academic Competitiveness Grant, visit the FAFSA website.

National SMART Grant

This grant offers third and fourth year full-time undergrads with up to $4,000 per year. Students eligible have to be majors in physical, life, or computer sciences, mathematics, technology, engineering, or foreign languages which were regarded by the government as significant to national security. The National SMART Grant is given in addition to the Federal Pell Grant. In order for a student to keep this grant, a minimum 3.0 GPA is required.

Eligibility
• U.S. Citizen
• Eligible for a Pell Grant
• Enrolled as a full-time third or fourth year student in a baccalaureate degree program
• Minimum 3.0 GPA
• Enrolled in one of the following majors: Computer Science, Mathematics, Critical Foreign Languages, Life Sciences, Physical Sciences, Technology, Engineering, or Multidisciplinary Studies.

To apply for National SMART Grant, student can visit the FAFSA website.

Institutional Grants

Unlike federal grants, institutional grants come from colleges and universities, giving students money without repayment. Institutional grants can also be scholarships. Students interested should contact their school’s financial aid office to learn more about financial relief through Institutional Grants.

FAFSA: The FAFSA calculates the student’s Expected Family Contribution or EFC. Colleges use the EFC to determine how much and what type of federal aid the student should receive. Basically, they take the EFC and subtract it from the cost of tuition. The figure left over is the amount of money needed to be granted by the government. Undergrad and graduate students are required to fill out a FAFSA each year they want to qualify for federal aid. Students can apply for the various grants directly thorough the FAFSA website or mail the application via snail mail.

Scholarships are another great source of free money. The key to evaluating scholarships is identifying which ones will fit you and which ones will not. By eliminating the scholarships which might not apply to you or those who do not fit your criteria, you can narrow your focus down to scholarships that better your chances of receiving free money. There are basically two different types of scholarships and grants. Each can offer wide range of money to specific students.

Merit-Based: Merit-Based scholarships are presented to students from either a college/university or an outside organization. These scholarships are usually given to students who have excelled in academics, community services, leadership positions, athletics, and other talents or characteristics which an organization or school highlights. Students who receive merit-based scholarships are often awarded with disregard to financial-need.

Cultural or Ethnicity-Based: Ethnicity-Based scholarships aid candidates who qualify by race, religion, or country origin. After candidates meet criteria, other qualifications are taken into consideration by looking into the students’ background. Students with well-rounded credentials are more likely to receive scholarships.

Obtaining Scholarships: Where to Look?

Before you begin applying for scholarships, shop around to get a good idea of what types are out there. Research is the most important step in finding the scholarships you want. By reading this section you have already begun, but a further search of the following groups and organizations will give you a much better idea of where to apply for free student aid.

Local Foundations – Many community organizations set aside large sums of money for the purpose of student financial aid. Contact any local organization and inquire about scholarship opportunities, they will more than likely have additional information.
Churches – Looking into a local parish for scholarship money may or may not produce a good lead, but check if the diocese (headquarters) gives financial aid. Students with an interest in theology have the best chance at receiving money from religious institutions.
Chamber of Commerce – Students interested in a future in Business or Public Services might receive scholarships from their local chamber of commerce. If no such luck occurs, inquiring about the list of chamber members could be an advantage because members have been known to donate to local students.
Guidance Counselors – For high school, college, or grad students, a guidance counselor is very knowledgeable about scholarship opportunities at the local and national levels.
Labor Unions – All significant labor unions will usually offer their members and member’s children scholarship possibilities.
PSAT/NMSQT – The PSAT/NMSQT (Pre Scholastic Aptitude Test/National Merritt Scholarship Qualifying Test) is taken during the junior year of high school. High scores on this test make a student eligible to qualify for the National Merit Scholarship. The PSAT/NMSQT is a requirement for some private scholarship programs as well.
Schools – Older, more renowned schools, private or public, frequently have large endowments for scholarship funding.
Universities – Always research university scholarship opportunities. If a student is planning on attending a certain university, there is a great chance that it offers scholarships available for incoming students. Students who are interested in scholarships should contact the financial aid office at their school.

Here are a few places to look for scholarships and grants:
National Merit Scholarship
Free Scholarship searches at FastWeb
Scholarships.Com
College-Scholarships.Com

Loans

Another type of financial aid is a student loan. Unlike scholarships and grants, which provide students with the money for school without repayment, student loans advance the money needed for higher Education while presenting students with low interest rates upon repayment. Loan providers also offer students affordable payment plans, collecting money only after the student graduates. A student loan is a very practical approach to funding a professional Education while accommodating students with financial flexibility.

Federal Loans are loans issued by the government and the U.S. Department of Education to ensure that students have financial aid through their college careers. The U.S. Department of Education’s website is a great resource for further information covering loans and other financial aids issued by the government. Through the government, students have various loan options by filling out a FAFSA. After completing the FAFSA, the U.S. Department of Education can further assess a student’s financial needs.

Here are a few examples of federally guaranteed student loans:

Stafford Loans – Subsidized and Unsubsidized
Stafford loans are the most common student loans. There are two ways of disbursement: FFEL programs (Federal Family Education Loan) funded from public capital beginning at the U.S. Treasury Department and DL programs (Direct Loan) funded by private capital (banks, private lenders, etc.) through the U.S. Department of Education. The current interest rate for Stafford loans fixed at 6.8%, effective July 1, 2006.
Subsidized Stafford loans are useful because the federal government pays the interest for as long as the student is at least a half-time student and during a six-month grace period after graduation. Students are held responsible for the interest collected during repayment. To qualify for a subsidized Stafford loan, students are required to fill out a FAFSA.
Unsubsidized Stafford loans are general federal loans without attention to financial need. Unsubsidized loans compile interest as soon as the loan has been taken out. Students can pay the interest as it adds up or later after graduation. Students may qualify for an unsubsidized loan if they do not meet the requirements for subsidized loans.
Apply for a Stafford loan

Perkins Loans
Perkins Loans are fixed low-interest rate loans (5%) which accumulate interest only after a nine month grace period after graduation or when a student is in school less than half-time. This particular loan is for undergrad and graduate students with great financial need. To apply for this loan, students must complete their FAFSA. Perkins loans are very similar to subsidized Stafford loans with the exception of fees and a longer grace period.
Apply for a Perkins loan

Federal Parent PLUS Loans
Federal Parent PLUS Loans are essentially low-interest loans for parents with good standing credit. Repayment begins 60 days after the last disbursement although the interest-rates compile after the first lending. The interest rate varies with government budget changes although the highest rate mandated by law is 9%. The current interest rate is 8.5% through the FFEL program and 7.94% through the DL program, which will be effective through June 30, 2007. Parents can borrow as much money as the cost of tuition (minus all other financial aids). In most cases, the money is given straight to the school. If the parents do not have notable credit, a cosigner may sign along with the parents of the child wishing to receive federal aid.
Apply for a Parent Plus loan

Federal Graduate PLUS Loans
Federal Graduate PLUS Loans are similar to Parent PLUS loans except they are targeted to independent students looking for financial relief from their graduate programs. This loan has the same interest rates as the Parent PLUS loans in both FFEL programs and DL programs. A Graduate PLUS loan allows grad students to borrow up to the full cost of their graduate tuition (minus all other financial aids).
Apply for a Federal Graduate PLUS Loan

Private Loans

Private Loans are loans which usually fill in the financial gap between the college expenses and federally financed aid. In some cases though, these loans cover a student’s entire financial aid throughout college. Private loans can be found through banks, online loan services, and other regional loan providers. Because these loans begin to accrue rates as soon as money is lent, it is more practical to apply for a subsidized federal loan before a student goes through a private lender.
Onveon offers a full list of private loan providers who take care of students needs with affordable and accommodating payment plans. Access our selection of private loan providers

Loan Consolidation

In essence, consolidating loans is taking out one loan to pay for many. Students with many loans tend to feel the burden of overwhelming loan payments. By consolidating student loans, students pay lower interest-rates, have secure fixed-rates, and conveniently have the task of only managing one loan. Consolidating many loans into one saves time and effort; two things students treasure dearly. In order to consolidate loans, student must check with their loan providers and inquire about consolidation. Student should make sure that by consolidating their loans, they will receive better interest rates.

Loan Links

Stafford Loans
Parent PLUS Loans
Perkins Loans

Tags: financial aid tips, pell grant, education loans, goverment education loans, federal grants, scholarships, fseog, fafsa, academic competitive grant, national smart grant, institutional grants, scholarship tips, stafford loans, subsidized loans

Posted at 9:15 AM • Comments (0)