Different Types of Financial Aid for College Students

Congratulations!  Your son/daughter just got accepted to their dream college or university.  Once the celebration dies down, the reality of how to pay for the privilege of attending this dream college begins to creep into your thoughts.  Even with prior planning, your savings will likely not be enough to cover the high cost of tuition.

So, what are the options available to you and your child to make the dream of attending this university a reality?

There are many different types of financial aid and as discussed in a prior post, the FAFSA form must be completed.  For tips on filling out the FAFSA form, see this post  here. 7 Tips for filing out FAFSA forms

CollegeGrants and scholarships are free gifts that generally do not have to be repaid.  Grants are typically need-based, while scholarships are merit-based.  Loans taken out by the parents or students must be paid back with interest.

There are a number of options that are available for financial aid.  The federal government, states, colleges, non-profit or private organizations and banks or other lenders offer an array of choices.

The following are a sample of the federal programs that may be available:

Federal Pell GrantThese are generally awarded to undergraduate students who are in financial need, with the annual award limit up to $5,500.

Federal Supplemental Educational Opportunity Grant (FSEOG)-  These grants are awarded to those undergraduate students with exceptional financial need and are subject to each individual college (not all colleges participate).  The annual award limit for this grant is $4,000.

Federal Perkins Loan– The individual college is the lender for undergraduate and graduate students with financial need who are eligible.  The annual loan limit for undergraduate is $5,500.

Direct Subsidized Stafford Loan– Offered by the US Department of Education, undergraduate students who are enrolled at least half time and demonstrate financial need.  The annual loan limit varies depending on the year in school and ranges from $3,500-$5,500 per year.

Direct Unsubsidized Stafford Loan– Offered by the US Department of Education to students who are enrolled at least half time and range from $5,500-$20,500 per year.  The amount depends on other financial aid received and the year in school as well as dependency status.

Direct Plus (Loan)-Offered by the US Department of Education to parents of students who are enrolled at least half time.  The parents must have a good credit rating in order to be eligible.

To find out more information on your choices, you can go to http://studentaid.ed.gov/ or http://www.finaid.org/.

In addition, each college or university may offer a work-study program as part of the financial aid package.  This allows the student to work at an on-campus job during the school year.

And remember to check out your area’s clubs and organizations for scholarships.  The applications are readily available and it is worth a shot.

Don’t let the process of applying for financial aid diminish the great accomplishment of acceptance into your child’s dream school!  Try to take advantage of the numerous programs available.

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About Maureen Crimmins

Maureen Crimmins is co-founder of Crimmins Wealth Management and a fee-only independent financial advisor. Have a financial question? ASK MAUREEN

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