Financial Aid and Scholarships

Some of you may already have been accepted to the college of your dreams. But there may be a bigger challenge than just getting accepted, and that is deciding how you are going to pay for your dream education.

Paying for school doesn't always have to be a problem. There are many ways to offset the cost of a college education—your first step is to fill out the Free Application for Federal Student Aid (FAFSA). To further help you along, the following are some basic terms to help you understand the financial aid lingo.

1) Scholarships and grants are awarded by a variety of organizations, and do not have to be paid back. They may, however, require you to keep a certain GPA; if it is an athletic scholarship, you must remain academically eligible.

Most schools offer scholarships based on academic merit and/or financial need. You can also check with religious organizations, foundations, labor unions, businesses, or town and city groups for scholarships based on achievement, ethnicity, hobbies, or talents.

Another possibility is the military. All branches of the Armed Forces offer the Reserve Officer's Training Corps (ROTC), a federal merit-based scholarship program that will pay for tuition, fees, books, and provide you with a monthly allowance. If either you or your spouse are veterans, or are a dependent of a veteran, veterans' educational benefits may be available as well. Check with your local Veterans' Affairs office.

Grants are financial aid awards that do not need to be repaid. For example, the Pell Grant is the largest federal grant program and can provide you with up to $3,000 a year based on financial need.

2) Federal Supplemental Educational Opportunity Grants (FSEOGs) are federally funded grants available based on financial need. While FSEOG and Pell Grants are available for undergraduate students, they're not an option for graduate school.

3) Work-Study programs count as financial aid when the college financial aid office arranges the employment. Your earnings are then excluded from the expected family contribution equation.

4) Loans are amounts of money that must be paid back. For a loan to be considered financial aid, it must carry a lower interest rate than the current commercial rates. The Stafford Loan program does not require borrowers to pay either the loan's principal or interest until after completing their studies. There are several types of loans:

Direct and FFEL Stafford Loans are the Department of Education's form of self-help financial aid. Direct Stafford Loans are available through the Federal Family Education Loan (FFEL) program. The terms and conditions of a Direct Stafford or FFEL Stafford are similar.

The major differences between the two are the source of the loan funds, the application process, and the available repayment plans. Under the Direct Loan program, the funds for your loan are lent to you directly by the U.S. government. If your school doesn't participate in Direct Loans, the funds for your loan are lent to you from a bank, credit union, or other lender that participates in the FFEL Program.

Direct and FFEL Stafford Loans are either subsidized or unsubsidized. A subsidized loan is awarded on the basis of financial need. You will not be charged any interest before you begin repayment or during authorized periods of deferment. The federal government "subsidizes" the interest during these periods.

An unsubsidized loan is not awarded on the basis of need. You will be charged interest from the time the loan is disbursed until it's paid in full. You can receive a subsidized and an unsubsidized loan for the same enrollment period.

A Federal Perkins Loan is a low-interest loan for undergraduate and graduate students with exceptional financial need. Your school is your lender. The loan is made with government funds with a share contributed by the school. You must repay this loan to your school.

Depending on when you apply, your level of need, and the funding level of the school, you can borrow up to $5,000 for each year of graduate or professional study.

A Perkins Loan borrower is not charged any fees. However, if you skip a payment, you may have a late charge and collection costs. Your school will either pay you directly or credit your account. You'll receive the loan in at least two payments during the year, and you can cancel it whenever you'd like.

If you're attending school at least half time, you have a nine-month grace period after leaving school until you must begin repayment. After that, you may be allowed up to ten years to repay.

PLUS Loans enable parents or relatives to borrow to pay the educational expenses of each child who is a dependent undergraduate student enrolled at least half time.

PLUS Loans are available through both the Direct Loan and FFEL programs. Most of the benefits to parent borrowers are identical in the two programs. To be eligible for a PLUS Loan, your parents will be required to pass a credit check.

Federal Student Aid Eligibility:
You (or a parent) must be one of the following to receive federal student aid:

• U.S. citizen
• U.S. national
• U.S. permanent resident who has an alien registration receipt card

If you have only a Notice of Approval to Apply for Permanent Residence (I-171 or I-464), you aren't eligible for federal student aid. If you're in the United States on an F1 or F2 student visa only, or on a J1 or J2 exchange visitor visa only, you can't get federal student aid. Also, those with G series visas (pertaining to international organizations) are not eligible for federal student aid.

The Financial Aid Process:
If you apply using the Free Application for Federal Student Aid (FAFSA) on the Web or FAFSA Express, your data will be processed by the processing system. You'll receive a Student Aid Report (SAR) in the mail approximately three weeks after you mail in the signature page that can be printed from the Web or from FAFSA Express software.

The FAFSA form is required for all students who seek consideration for federal financial aid programs. Before completing, compile all tax information—for yourself and parents or spouse.

For most federal student aid programs, the FAFSA is the only form you'll need to file. To receive a Federal Family Education Loan, (FFEL), Stafford Loan, or a Direct or FFEL Plus Loan, you'll have to complete additional forms. Submit the form no sooner than January 1 of your senior year, but as quickly as possible thereafter. Aid is distributed on a first-come, first-served basis.

In about a month, you'll receive your Student Aid Report (SAR), which you should check for accuracy. If there are no problems, the SAR will report your Expected Family Contribution (EFC), the number used to determine your eligibility for federal student aid. The results will also be sent to the schools you list on your application.

If it has been more than four weeks since you submitted your application and you haven't received your SAR, you can check on your application by contacting the Federal Student Aid Information Center at (319) 337-5665 Monday through Friday, 9:00 a.m. to 8:00 p.m. Eastern Time.

FAFSA on the Web is a free U.S. Department of Education Web site where you can submit the FAFSA online. You can use FAFSA on the Web on a PC or Macintosh that's equipped with certain versions of Netscape.

Filing the FAFSA:

• Ask your high school guidance office or call (800) 433-3243 for a FAFSA form or visit FAFSA on the Web at www.fafsa.ed.gov.
• Complete the FAFSA. Be sure to include both student and parent signatures and to list all colleges you're interested in applying to for financial aid.
• Mail your completed form as soon after January 1 as possible. Financial aid is generally awarded on a first-come, first-served basis.
• In about four weeks, you'll receive the FAFSA results, or SAR. The colleges you listed on the FAFSA will receive the same results.
• The college financial aid offices will use the results to calculate your financial aid package.

You should begin receiving college financial aid award letters summarizing your financial aid package after all the paperwork is complete and you've been accepted for admission.