Here are the most common types of federal aid available to students and their families:
Stafford Loan
- Available to U.S. citizens or permanent residents, these loans usually offer lower interest rates than private loans
- Either Subsidized or Unsubsidized
- Subsidized Stafford Loans are "needs based," meaning the student's family income has to be under a certain amount to qualify; because these loans are subsidized by the government, they don't accumulate interest while the student is in school; the government pays the interest
- Unsubsidized Stafford Loans are available to all students regardless of financial need; however, the student is responsible for all interest that accumulates on the loan, including while in school; unsubsidized Stafford Loans start accumulating interest as soon as the student gets the money
- Variable interest rates are adjusted annually
- Maximum Stafford loan amounts increase each year in school
- Begin repaying six months after leaving school
- Once repayment begins, the student is obligated to a 10-year term, regardless of the total loan amount, unless the loans are consolidated
Perkins Loan- Available to U.S. citizens or permanent residents
- Deferred, campus-based loans awarded directly to students with exceptional financial need, no parental co-signer needed
- 5 percent fixed interest rate
- School acts as lender
- Interest accrues and repayment begins nine months after student graduates, leaves school or falls below half-time status
- Maximum is $4,000 a year for undergraduates, $6,000 a year for graduate students
- Cumulative limits:
- $20,000 undergraduates
- $40,000 graduate students
PLUS Loan- Available to U.S. citizens or permanent residents
- Credit-based loans for parents of students only
- Student not involved in loan, so doesn't develop a credit history
- Repayment begins 60 days after 2nd disbursement of loan funds
- Borrow up to annual Cost of Attendance (COA) less financial aid received
- Though not required for a PLUS Loan, the student should still fill out a FAFSA to receive the maximum federal aid he or she is eligible for
Pell Grants
- Available to U.S. citizens or permanent residents
- Need-based gift aid for students that does not have to be repaid
- Awards range from $400 to $4050
- Generally, Pell Grants are awarded to students with family income below $35,000 a year; more than one half of all Pell Grant recipients come from families with annual incomes under $15,000
- Unlike other federal award programs, merit aid, such as scholarships will not reduce the amount of a Pell Grant award
Federal Supplemental Education Opportunity Grant (FSEOG) - Available to U.S. citizens or permanent residents
- For the neediest of students, with extremely low expected family contribution as expressed on the SAR (Student Aid Report)
- Priority is given to students who have been awarded a Pell Grant
- This gift aid does not have to be repaid
- Awards range from $100 to $4,000
Work-Study Program- Campus-based programs that provide jobs for students with financial need
- Available to U.S. citizens or permanent residents
- Work usually relates to community service or each student’s course of study
- Undergraduate students paid on an hourly basis receive federal minimum wage (or more), depending on skills and work requirements; graduate students may receive a stipend or hourly wage
- Work-study assignments can change from year to year
- Earnings are based on wage and hours, both of which are set by the school
- The federal aid award will set the maximum amount of earnings you can receive
- Any U.S. citizen or permanent resident is eligible
- Requires completion of FAFSA
Scholarships- Aid is based on outstanding academic achievement
- Any U.S. citizen or permanent resident is eligible
- Do not have to be repaid
- See SchoolSoup.com for more information about scholarships