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Federal Student Aid Programs
Student aid is financial help for an eligible student to pay for educational expenses at a postsecondary school (college, vocational school, graduate school)
There are three categories of federal student aid: Grants, work-study, and loans.
Federal student aid covers expenses such as tuition and fees, room and board, books and supplies, and transportation.
To receive federal aid, a student must complete a FAFSA (Free Application for Student Aid) each year. This application is available at www.fafsa.ed.gov, and must be completed on-line. You can apply beginning January 1st; applications close on June 30th. But you should apply early! Colleges and the Arkansas Department of Higher Education use FAFSA information to award non-federal aid, and their deadlines are usually early in the spring. Also, these funds are limited and those who apply early are more likely to get money.
Major Federal Student Aid Program
a. Federal Grants – Pell grants, Academic Competitiveness grants
b. Campus-based Programs – Federal Supplemental Educational Opportunity Grants, Federal Work Study, Perkins Loans
c. Federal Student Loans—Stafford loans, Parent PLUS loans
Grants are free aid and do not have to be repaid except in certain circumstances; loans must be repaid with interest; federal work-study provides income from a part-time job.
Eligibility for most federal student aid programs is based on financial need rather than academic achievement. To determine a student’s financial need, he/she must complete a FAFSA. Additionally, a student must:
· Have a high school diploma or its equivalent
· Enroll as a regular student in an eligible degree or certificate program
· Be a U.S. citizen or eligible noncitizen
· Have a valid Social Security Number
· Make satisfactory academic progress in college
· If a male 18 years old or older, must be registered with Selective Service (www.sss.gov)
Financial need is the difference between the student’s cost of attendance at the college and the amount the family is expected to contribute to the student’s education. Federal law specifies a need analysis formula that produces the Expected Family Contribution (EFC). Once the school knows the student’s EFC, the next step is to subtract it from the student’s cost of attendance at that school. The result is the student’s financial need.
Colleges then construct a financial aid package that comes as close as possible to meeting the student’s demonstrated financial need; however, the amount awarded can be less than the total amount needed to attend that college. The student may accept or decline any part of the financial aid offered.
Pell Grant Amount
For 2013-14, the annual amount of the Pell Grant is $400 - $5,645. Your cost of attendance less EFC are major factors in determining the Pell Grant amount you will be awarded.
Steps to Federal Student Aid
1. Get help from the high school counselor, financial aid office at the college you plan to attend, or the U.S. Department of Education at 1-800-FED-AID. Never pay for help!
2. Get a Federal Student Aid PIN number. The student and ONE parent need to get a PIN. This number lets you “sign” your online FAFSA.
3. Collect the documents needed to apply, including income tax returns and W-2 forms. If your tax return is not completed by the time you need to complete the FAFSA, estimate the tax information, apply, and correct information later.
4. Complete the FAFSA between January 1 and June 30, but apply as soon as possible. Apply on-line at www.fafsa.ed.gov. To help you complete the application, download the FAFSA on the Web Worksheet and complete it first. Then transfer information to the on-line application. All forms and downloads can be obtained from www.fafsa.ed.gov.
5. The Department of Education will send you your Student Aid Report (SAR) – the result of your FAFSA. Review your SAR and, if necessary, make changes or corrections and submit your SAR for reprocessing. Your complete SAR will contain your Expected Family Contribution (EFC) – the number used to determine your federal student aid eligibility.
6. The college you plan to attend my request additional information from you, or require you to bring in W-2’s and tax forms. Be sure to respond by the deadlines, or you might not receive federal student aid. (It is not unusual to be required to verify income information on the FAFSA.)
7. Contact the financial aid office at the college you plan to attend to go over your Student Aid Package, or to ask questions about the aid being offered.
8. First-year college students: Review award letters from colleges to compare amounts and types of aid being offered. Decide which college to attend based on a combination of a) how well the college suits your needs, and b) its affordability after all aid is taken into account.
Federal Perkins Loans
· Your college is the lender
· Payment is owed to the college that made the loan
· Interest charged on this loan is 5%
· Funds depend on financial need and availability at the college
· Not all colleges participate in the Federal Perkins Loan program
· Undergraduate students – up to $5,500 a year
· Graduate and professional degree students – up to $8,000
Federal Financial Aid Programs: Loans
· Direct Stafford Subsidized
· Direct Stafford Unsubsidized
· Direct PLUS (Parent)
· Direct PLUS (Graduate/Professional)
Stafford Direct Loans
· Government PAYS the borrowers accrued interest while you are attending college and other eligible periods
· Based on Financial Need
· Fixed Rate
· Undergraduate students
· Amount: $3,500-$8,000
· The borrowers is responsible for the interest for the life of the loan
· NOT Based on Financial Need
· Fixed Rate
· Undergraduate and graduate students qualify
· Amount: $5,500-$20,500
Direct Plus Loans
· For parents of dependent students
· Borrowers may receive loan amounts up to, but not exceeding the college’s ‘Cost of Attendance’
· Borrower is responsible for all the interest
· Borrower must not have a negative credit history
Federal Loan Programs
*Interest rate may be subject to adjustments pending legislative changes.
Other Federal Aid Programs
· Corporation for National and Community Service
· U.S. Department of Veterans Affairs
· Reserve Officers Training Corps (ROTC)
Other Federal Aid Programs
· Bureau of Indian Affairs (BIA) Grants
· Vocational rehabilitation benefits
· U.S. Department of Health and Human Services (HHS)
Other Sources of Aid
· Institutional or private tuition plans
· Other family resources
· Home equity loans
· Private/alternative loans
· Tuition savings plans (529 plans)
· Employer-sponsored tuition plans