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The Government only gives you so much!Nov 03 '00 Write an essay on this topic.Students and parents, beware when looking into colleges and universities. Beware of the rising cost! The purpose of this review is to make consumers aware of the limits of Financial aid awarded by the Dept. of Education, and to let you know to start looking for outside scholarships and grants and to start early. I hear a lot of this statement, "Everyone says there is money out there, you just have to apply. But, Where is it?" A lot of times this statement comes from parents trying to send their students to private schools. Where is it, is right! By applying for federal aid via the FAFSA form, you can become eligible for Federal aid. Its trying to figure out what type of aid you are eligible that is the Kicker! One major thing that many people have never been told or just don't understand is that Student loans are part financial aid. Just to briefly cover the types of Financial Aid the Department of Education offers: Federal Pell Grant Federal Supplemental Educational Opportunity Grant Federal Perkins loan Subsidized Stafford Loans Unsubsidized Stafford Loans Federal PLUS Loans. These are the only types of aid offered by the federal government and the dollar amounts are set. The breakdown on the amounts of money for each award is: Pell grant ranges from $400 to $3300 for full time students. These monies are divided per quarter or per semester, depending on the curriculum. For instance at a quarter school, a student will receive two disbursements(payments) to their student account in the amount of $1650 for each semester. For a quarter school, the payments are sent in three disbursements of $1100 each. You have to check with each school on whether or not a student can receive a summer payment of Pell grant money. One thing you want to keep in mind is that even if your student is awarded a full Pell grant, the actual amount awarded may not be $3300. The full amount is based on the cost of attendance at your particular school. At most private/high cost institutions, the full $3300 will be awarded but if your school has low tuition cost, the school uses a Cost of Attendance chart to determine your award amount. The SEOG or supplemental education opportunity grant coincides with the Pell grant. The Department of Education usually determines the eligibility cut off. For example, if your EFC(Estimated Family Contribution) is determined to be less than 1350, than you may be eligible to receive the SEOG grant. The dollar amount to be awarded is determined by each school. The Federal Perkins loan is a loan! It usually carries an interest rate of about 5% and the most your monthly payment will ever be is $40 monthly. This is partly due to the fact that the loan is also a set dollar amount per quarter or semester as determined by the school. This is a need based award, as is Pell and SEOG. By need based I mean that if you EFC is low then the cost of attendance versus your family's income is used as a basis of determination of need. Your 'need' is determined by a set of formulas governed by the D.O.E. The SEOG grant and the Federal Perkins loan are usually campus based funds, meaning the DOE allots each school a certain amount of money to be awarded for the Financial aid year, which starts in July and ends in June. Because of this, it is imperative to get your application in early as these funds can be depleted rather quickly and the DOE does not allocate any additional funds for these two awards once the monies are awarded. Then there is the Subsidized Stafford loans. This loan is guaranteed by the government and most students qualify for them as long as you are not in default on any previous loan or over your loan limit($23K). The loan amounts again are set based on a student's Academic year Status in school. Here is the breakdown: Freshman- you earned between zero and 36 credit hours - $2625. Sophomore- earned between 37 and 96 credit hours - $3500 Junior/Seniors- earned more than 96 credit hours - $5500 This loan is also a need based loan, and your school can help you determine if you qualify for this loan. The Subsidized Stafford loans are to be paid back 6months after leaving school or graduation, whichever comes first. While a student is in school and during the initial 6month deferment period, the government pays the interest for the student. Once leaving school and the first 6months pass, then interest starts accruing. The interest rate varies year by year, but will never be higher than 9%. Currently the interest rate 8.19%. The Unsubsidized Stafford Loan is similar to the Subsidized Stafford in that it is also guaranteed by the government but it is not need based. You would have to get with your particular school to find out if you can get this loan. The difference is that the interest starts acruing immediately on this loan. Again current interest rate is 8.19% with a cap a 9%. The loan amounts also differ: Freshmen/sophomores- loan amount is $4000 Juniors/seniors- loan amount is $5000. If you are and independent student you and you have completed the fafsa then you can be considered for the Unsubsidized stafford loan. Independent status is based on your date of birth, marital status, if you have children that you supplied for more than half of their support, if you are an orphan or ward of the court, if you in a graduate program and if you are a veteran of the armed forces. If you do not fall into the independent category then in order for you to qualify for the Unsubsidized loan, your parent will have to be denied for the PLUS loan. The Parent loan or PLUS loan is the final piece of financial aid the DOE authorizes. This is a credit based loan with a current interest rate of 8.99%. There is a interest rate cap at 10%. If a parent is approved for the parent loan, then the parent can borrow as much as they want/need, as long as the borrowed amount plus all other aid awarded does not exceed the school's budget or the student's cost of attendance. Now you see, because the DOE only allows so much per award, the money that is out there, depending on the school you chose is usually not enough to cover tuition cost and expenses and you need to research on your own. Apply early and often. Hopefully this epinion can be helpful to all getting ready to attend college or even those who are currently enrolled. I have always thought it's best to have as many facts as possible when planning for your future. I hope in posting this, more people can start saving now or accurately set up a plan for college expenses.  |
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