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The rising prices for higher education bring new financial issues to students and their families. Savings and parents’ income are only a part of the sources of funding for young people’s education and they are far from enough to pay for proper higher education. Nowadays, more and more families face the need to seek out financial aid from the outside. According to the last years’ research, scholarships and grants are the main hope for families to pay for college, loans being a popular option as well but a less desirable one.
Student financial help is meant to cover such expenses as tuition, accommodation, and other fees. The amount of money issued to one student varies from full coverage to a small handout. There are several types of financial aid available in the USA now. They include scholarships, grants, loans, etc. Most importantly, all of them can be divided into federal and private ones. In most cases, families apply for federal financial aid and only continue with the private offers if they fail to get help from the government. Although both options offer some great opportunities, the majority of the federal ones come with lower interest rates.
Speaking of the federal financial aid, we include all kinds of money students and their families get from the governmental institutions. This is the initial step for all families. Applying for federal aid is a necessary step for every student that’s also encouraged by all higher educational establishments.
To send a request for federal financial aid, the government offers a Free Application of Federal Student Aid that can be found on the official website of the Department of Education. This is a universal form for all citizens of the USA.
This application is available starting on October 1 for the following year and is open till June 30. However, it’s recommended to apply as early as possible as the offers come gradually.
The FAFSA is meant for the U.S. citizens and eligible non-citizens. However, many establishments include this application to the general requirements of foreigners to assess their financial situation with the help of the federal program. (The eligible citizens category includes but isn’t limited to “green cards,” “parolee,” refugee, Cuban-Haitian entrant, etc.) The form can be completed online or sent to a financial aid office.
Another form that is often filled in is the College Scholarship Service Profile. It is mostly used by elite establishments that are about 250 in the country. This is a somewhat different process of accessing students’ financial status as it estimates those account assets that aren’t included to FAFSA. CSS digs deeper but also shows the full picture.
The FAFSA is only a general form that determines your financial status and determines the need for additional funds. It may come in various ways.
When speaking of federal help, loans are the most frequently used way of funding. They have a fixed interest rate that may vary from year to year and depends on the type of loan. There are three options future students and their families can choose from. There are direct subsidized and unsubsidized loans. The first offer is issued to undergraduate students based on financial need and the second – to all other eligible undergraduate and graduate students. Currently, the interest rates are 5.05% and 6.6% respectively. There are also Direct Plus loans that are issued to graduate and professional students as well as the parents of undergraduates. The offered interest rate is 7.6%.
There is also the Perkins Loan Program that works with undergraduate and graduate students with extreme financial need and is issued through schools.
All students are required to follow the set financial aid deadline.
Student loans eligibility includes several factors. Firstly, your school must be a part of the official school loan program list. Secondly, students themselves have to meet several financial aid requirements including having a valid Social Security number, being a U.S. citizen or have a Green Card, being registered with Selective Service (for males), sign the FAFSA and maintain satisfactory academic grades.
Another type of aid issued by the government is a federal grant. This is the most desirable option as any funds given by the program don’t have to be repaid, unlike loans. The greatest grant in the country is the Pell Grant. Every year, it covers tuition of approximately 5 million students. These funds are strictly need-based. The grant is also available for the students of elite for-profit institutions.
The last type of federal aid is work-study. This is a special program that helps students by providing them with part-time work, mainly on campus. The wage is at least the federal minimum and the funds earned by the work partially cover the studies. The eligibility is determined by FAFSA as the students should also prove their financial need.
After submitting the form, applicants can check its status using their financial aid number and account.
While federal aid remains the main objective of most students, private offers are still very popular. The private loan sector is rather diverse with countless companies and banks offering their own help. Admittedly, the interest rates of such offers are not as affordable as the governmental ones, but the general process of getting money is easier. Private loans are often issued to people not eligible for federal aid. Besides, this is a popular option for international students who are not allowed to get federal aid. Most banks are willing to lend study money to foreigners if they provide such necessary documents as a college acceptance paper, credit history, study visa, etc.
Unfortunately, private loans and grants are not as safe as the federal and a fair share of families faces fraud offers. The federal sector is unified and presents fewer opportunities for scam schemes. It is always better to deal with trusted sources.