GRANTS & WORK STUDY
A grant is a form of federal, state or institutional financial aid that does not need to be repaid. They're typically given to people who demonstrate financial need. There are five main federal grant programs that are available for eligible students pursuing a postsecondary education.
Federal Pell Grant
The Federal Pell Grant Program provides need-based grants to low-income undergraduate students to promote access to postsecondary education.
Pell Grants are considered a foundation of federal financial aid, to which aid from other federal and nonfederal sources might be added.
Amount of Grant
The maximum Pell Grant award is $5,500. The maximum can change each award year and depends on program funding. The amount you get, though, will depend not only on your financial need, but also on your costs to attend school, your status as a full-time or part-time student, and your plans to attend school for a full academic year or less. Note: If you are eligible for a Pell Grant and your parent or guardian was a member of the U.S. Armed forces and died as a result of military service in Iraq or
Afghanistan after Sept.11, 2001, you will receive the maximum Pell for the award year.
Distribution of Grant
· Your school can apply Pell Grant funds to your school costs, pay you directly (usually by check), or combine these methods. The school must tell you in writing how much your award will be and how and when you'll be paid. Schools must disburse funds at least once per term (semester, trimester, or quarter). Schools that do not use semesters, trimesters, or quarters must disburse funds at least twice per academic year.
Federal Supplemental Educational Opportunity Grant (FSEOG)
· The Federal Supplemental Educational Opportunity Grant (FSEOG) program is for undergraduates with exceptional financial need. Pell Grant recipients with the lowest expected family contributions (EFCs) will be considered first for a FSEOG. Just like Pell Grants, the FSEOG does not have to be repaid, but not all colleges participate in the FSEOG Program.
Amount of Grant
· You can receive between $100 and $4,000 a year, depending on when you apply, your financial need, the funding at the school you're attending, and the policies of the financial aid office at your school.
Distribution of Grant
· If you're eligible, your school will credit your account, pay you directly (usually by check), or combine these methods. Your school must pay you at least once per term (semester, trimester, or quarter). Schools that do not use semesters, trimesters, or quarters must disburse funds at least twice per academic year.
Teacher Education Assistance for College and Higher Education - TEACH Grant
· Through the College Cost Reduction and Access Act of 2007, Congress created the TEACH Grant Program that provides grants of up to $4,000 per year to students who intend to teach in a public or private elementary or secondary school that serves students from low-income families. If, after reading all of the information on this fact sheet, you are interested in learning more about the
TEACH Grant Program, you should contact the financial aid office at the college where you will be enrolled.
· In exchange for receiving a TEACH Grant, you must agree to serve as a full-time teacher in a highneed field in a public or private elementary or secondary school that serves low-income students.
You must teach for at least four academic years within eight calendar years.
· IMPORTANT: If you fail to complete this service obligation, all amounts of TEACH Grants that you received will be converted to a Federal Direct Unsubsidized Stafford Loan. You must then repay this loan to the U.S. Department of Education. You will be charged interest from the date the grant(s) was disbursed.
Eligibility: To receive a TEACH Grant you must meet the following criteria:
· Complete the Free Application for Federal Student Aid (FAFSA), although you do not have to demonstrate financial need.
· Be a U.S. citizen or eligible non-citizen.
· Be enrolled as an undergraduate, post-baccalaureate, or graduate student in a postsecondary educational institution that has chosen to participate in the TEACH Grant Program.
· Be enrolled in course work that is necessary to begin a career in teaching or plan to complete such course work. Such course work may include subject area
· Meet certain academic achievement requirements
· Sign a TEACH Grant Agreement to Serve
· Bilingual Education and English Language Acquisition.
· Foreign Language.
· Reading Specialist.
· Special Education.
· Other identified teacher shortage areas as of the time you begin teaching in that field. .
Schools Serving Low-Income Students:
· Schools serving low-income students include any elementary or secondary school that is listed in the Department of Educations Annual Directory of Designated Low-Income Schools for Teacher Cancellation Benefits.
· There are other grants in addition to the ones listed above. Colleges provide institutional grants to help make up the difference between college costs and what a family can be expected to contribute through income, savings, loans, and student earnings.
· Other institutional grants, known as merit awards or merit scholarships, are awarded on the basis of academic achievement. Some merit awards are offered only to students whose families demonstrate financial need; others are awarded without regard to a family's finances.
· Some grants come with special privileges or obligations. You can find out about the types of grants
awarded by each college you are considering by visiting the college’s website or contacting the financial aid office.
· Federal Work-Study (FWS) provides part-time jobs for undergraduate and graduate students with financial need, allowing them to earn money to help pay education expenses. The program encourages community service work and work related to the recipient's course of study.
· How much aid you receive from each of this program depends on your financial need, on the amount of other aid you receive, and on the availability of funds at your college or career school.
Unlike the Federal Pell Grant Program, which provides funds to every eligible student, campus based programs provide a certain amount of funds for each participating school to administer each year. When the money for a program is gone, no more awards can be made from that program for that year.
Will I be paid the same as I would in any other job?
· You'll be paid by the hour if you're an undergraduate. No FWS student may be paid by commission or fee. Your school must pay you directly (unless you direct otherwise) and at least monthly.
Wages for the program must equal at least the current federal minimum wage but might be higher, depending on the type of work you do and the skills required. The amount you earn can't exceed your total FWS award. When assigning work hours, your employer or financial aid administrator will consider your award amount, your class schedule, and your academic progress.
What kinds of jobs are there in Federal Work-Study?
· If you work on campus, you'll usually work for your school. If you work off campus, your employer will usually be a private nonprofit organization or a public agency, and the work performed must be in the public interest.
· Your school might have agreements with private for-profit employers for Federal Work Study jobs.
This type of job must be relevant to your course of study (to the maximum extent possible). If you attend a career school, there might be further restrictions on the jobs you can be assigned.
2012-2013 FEDERAL LOAN PROGRAMS
Federal Perkins Loan
A Federal Perkins Loan is a low-interest (5%) loan for both undergraduate and graduate students with exceptional financial need. Federal Perkins Loans are made through a school's financial aid office. Your school is your lender, and the loan is made
with government funds. You must repay this loan to your school.
How much can I borrow?
You can borrow up to $5,500 for each year of undergraduate study (the total you can borrow as an undergraduate is $27,500). The amount you receive depends on when you apply, your financial need, and the funding level at the school.
Other than interest, is there a charge for this loan?
No, there are no other charges. However, if you skip a payment, if it's late, or if you make less than a full payment, you might have to pay a late charge plus any collection costs.
When do I pay it back?
If you're attending school at least half time, you have nine months after you graduate, leave school, or drop below half-time status before you must begin repayment. This is called "grace period." If you're attending less than half time, check with your college or career school to find out how long your grace period will be.
Stafford Loans (William D. Ford Federal Direct Loan)
What is it? A need-based government loan made to students rather than their parents. The U.S. Department of Education administers the Federal Family Education Loan (FFEL) Program and the William D. Ford Federal Direct Loan (Direct Loan) Program. Both the FFEL and Direct Loan programs consist of what are generally known as Stafford Loans (for students) and PLUS Loans (for parents).
Schools generally participate in either the FFEL or Direct Loan program but sometimes participate in both. Under the Direct Loan Program, the funds for your loan come directly from the federal government. Funds for your FFEL will come from a bank, credit union, or other lender that participates in the program. Eligibility rules and loan amounts are identical under both programs, but repayment plans differ somewhat.
Update on Student Loan Programs
As a result of the Health Care and Education Reconciliation Act, beginning July 1, 2010, federal student loans will no longer be made by private lenders under the Federal Family Education Loan (FFEL) Program. Instead, all new federal student loans will come directly from the U.S. Department of Education under the Direct Loan Program.
This change does not impact the process of applying for federal grants, loans and work study or the amount of federal aid that students are eligible to receive.
How can I get a Direct Loan?
You must fill out a FAFSA. After your FAFSA is processed, your school will review the results and will inform you about your loan eligibility. You also will have to sign a promissory note, a binding legal document that lists the conditions under which you're borrowing and the terms under which you agree to repay your loan.
How to Choose and Evaluate Lenders
You do not need to choose a lender under the Direct Stafford Loan Program, the federal government—through the U.S. Department of Education—is your lender.
How much can I borrow?
It depends on your year in school and whether you have a subsidized or unsubsidized Direct Stafford Loan. A subsidized loan is awarded on the basis of financial need. If you're eligible for a subsidized loan, the government will pay (subsidize) the interest on your loan while you're in school, for the first six months after you leave school, or longer if you qualify to have your payments deferred. Depending on your financial need,
you may borrow subsidized money for an amount up to the annual loan borrowing limit for your level of study (see below).
You might be able to borrow loan funds beyond your subsidized loan amount even if you don't have demonstrated financial need. In that case, you'd receive an unsubsidized loan. Your school will subtract the total amount of your other financial aid from your cost of attendance to determine whether you're eligible for
an unsubsidized loan. Unlike a subsidized loan, you are responsible for the interest from the time the unsubsidized loan is disbursed until it's paid in full. You can choose to pay the interest or allow it to accrue (accumulate) and be capitalized (that is, added to the principal amount of your loan). Capitalizing the interest will increase the amount you have to repay.
You can receive a subsidized loan and an unsubsidized loan for the same enrollment period as long as you don’t exceed the annual loan limits.
Class Standing Maximum Subsidized Additional Unsubsidized
Loan Eligibility Eligibility
Freshman $3,500 $2,000
Sophomore $4,500 $2,000
Junior $5,500 $2,000
Senior $5,500 $2,000
The lifetime loan limit for a dependent undergraduate is $31,000; of which $23,000 can be subsidized.
How will I get the loan money?
You'll be paid through your school in at least two installments. No installment may exceed one-half of your loan amount. Your loan money must first be applied to pay for tuition and fees, room and board, and other school charges. If loan money remains, you'll receive the funds by check or in cash, unless you give the school written authorization to hold the funds until later in the enrollment period.
What's the interest rate?
The College Cost Reduction and Access Act of 2007 reduced the interest rates on subsidized Stafford loans for undergraduate students starting July 1, 2008. These reductions are available only to undergraduate students, not graduate students, and only for subsidized Stafford loans, not unsubsidized Stafford loans. The interest rates are illustrated in the following table.
Phased-in Cuts in Interest Rates on Subsidized Stafford Loans for Undergraduate Students
Year Interest Rate Interest Rate
Subsidized Stafford Loans Other Stafford Loans
(Undergraduate Students) (Graduate or Unsubsidized)
2007-08 6.8% 6.8%
2008-09 6.0% 6.8%
2009-10 5.6% 6.8%
2010-11 4.5% 6.8%
2011-12 3.4% 6.8%
2012-13 6.8% 6.8%
Other than interest, is there a charge for this loan?
For Stafford Loans that are first disbursed between July 1, 2010 and June 30, 2011, there is a fee of 1 percent of the loan, deducted proportionately from each loan disbursement. For a Direct Stafford Loan, the entire fee goes to the government to help reduce the cost of the loans. Also, if you don't make your loan payments when scheduled, you may be charged collection costs and late fees.
When do I pay back my Stafford Loans?
After you graduate, leave school, or drop below half-time enrollment, you will have a six month "grace period" before you begin repayment. During this period, you'll receive repayment information, and you'll be notified of your first payment due date. You're responsible for beginning repayment on time, even if you don't receive this information. Payments are usually due monthly.
During the grace period on a subsidized loan, you don’t have to pay any principal, and you won’t be charged interest. During the grace period on an unsubsidized loan, you don’t have to pay any principal, but you will be charged interest. You can either pay the interest or it will be capitalized (added to your principal loan balance, thus
increasing the amount you’ll repay).
How do I pay back my loans?
You’ll repay your FFEL Stafford Loan to a private lender or loan servicer. You’ll repay your Direct Loan to the U.S. Department of Education’s Direct Loan Servicing Center. Both the Direct Loan and FFEL programs offer four repayment plans you can choose from, but the terms differ slightly. You will receive more detailed information on your repayment options during entrance and exit counseling sessions your school will provide.
Can my Stafford Loan ever be discharged (canceled)?
o Yes, but only under a few circumstances. Your loan can’t be canceled because you didn’t complete the program of study at the school (unless you couldn’t complete the program for a valid reason—the school closed, for example), or because you didn’t like the school or the program of study, or you didn’t obtain employment after completing the program of study.
Non-Need Based Loans
What is it? In general loans are available up to the total yearly cost of college minus any need based aid received. These loans must be reapplied for every year. Loans in parents’ names may require immediate repayment of principal and interest or may be
deferred until after the student drops below ½ time in college or graduates from the undergraduate program. Non-need based loans in the student’s name enable the principal to be deferred until 6 months after they leave school while the interest is payable immediately. Also, Non-need based loans require a credit check and, if necessary, a co-signer.
Direct PLUS Loans (Parent Loans)
Parents can borrow a PLUS Loan to help pay your education expenses if you are a dependent undergraduate student enrolled at least half time in an eligible program at an eligible school. PLUS Loans are available through the William D. Ford Federal Direct Loan (Direct Loan) Program. Your parents must have an acceptable credit history to qualify for the loan.
How do my parents get a loan?
For a Direct PLUS Loan, your parents must complete a Direct PLUS Loan Application and Master Promissory Note, contained in a single form that you get from your school’s financial aid office. You can also apply online at www.studentloans.gov.
How much can my parents borrow?
The yearly limit on a PLUS Loan is equal to your cost of attendance minus any other financial aid you receive.
Who gets my parents' loan money?
The U.S. Department of Education (for a Direct PLUS Loan) will send the loan funds to your school. Your school might require your parents to endorse a disbursement check and send it back to the school. In most cases, the loan will be disbursed in at least two installments, and no installment will be greater than half the loan amount. The funds will first be applied to your tuition, fees, room and board, and other school charges. If any loan funds remain, your parents will receive the amount as a check or in cash, unless they authorize the amount to be released to you or to be put into your school account. Any remaining loan funds must be used for your education expenses.
What's the interest rate?
PLUS Loans have a fixed interest rate of 7.9% Interest is charged on a PLUS Loan from the date of the first disbursement until the loan is paid in full.
Other than interest, is there a charge to get a PLUS Loan?
Your parents will pay a fee of 4% of the loan, deducted proportionately each time a loan disbursement is made. the fee goes to the government to help reduce the cost of the loans. Also, your parents may be charged collection costs and late fees if they don’t make their loan payments when scheduled.
When do my parents begin repaying the loan?
Generally, the first payment is due within 60 days after the loan is fully disbursed, but parents now have the option to defer payment until after the student graduates. Interest begins to accumulate at the time the first disbursement is made.
How do my parents pay back these loans?
They'll repay their Direct PLUS Loan to the U.S. Department of Education's Direct Loan Servicing Center. There are three options for repayment- standard, extended and graduated to meet individual repayment needs
Can a PLUS Loan be discharged (canceled)?
Yes, under certain conditions. A discharge (cancellation) releases your parents from all obligation to repay the loan.
Your parents’ PLUS Loan can’t be canceled for these reasons: You didn’t complete your program of study at your school (unless you couldn’t complete the program for a valid reason—because the school closed, for example), you didn’t like the school or the program of study, or you didn’t obtain employment after completing the program of study.