Government Financial-Aid Programs
The government doles out much of the financial aid students receive through Federal Student Aid (FAFSA), an office of the U.S. Department of Education. More than 13 million students apply for federal student aid each year, and the government awards more than $75 billion annually [source: Federal Student Aid]
Federal programs are based on a student's demonstrated financial need, which is calculated by subtracting the amount the family can afford to pay from the cost of attendance (tuition, fees, room and board). This formula puts part-time students at a slight disadvantage. Because they pay less for classes and may not require room and board, their need is typically lower than that of a full-time student. However, part-time students can still qualify for many loans, grants and work-study programs. Some grant programs will even accept students who are enrolled less than half-time, but usually the award will only be a percentage of the original amount [source: University of Cincinnati].
Three main types of government financial aid are available:
Loans (must eventually be repaid):
- Federal loans have fixed interest rates set by the government. Direct loans (Stafford) come straight from the government. Subsidized direct loans are based on a student's need. The government pays the interest for as long as the student is enrolled at least half-time. Unsubsidized direct loans don't have to do with a student's financial need, but the borrower must pay the interest.
- Federal Family Education Loans (FFELs) come from private financial organizations, but are guaranteed by the U.S. government.
Grants (do not have to be repaid):
- Pell Grant -- Awarded primarily to undergraduate students. Eligibility is based on the student's financial need. The maximum amount of the grant varies from year to year (for the 2010-11 school year, the maximum was $5,550) [source: Federal Student Aid]
- Federal Supplemental Educational Opportunity Grants (FSEOG) -- Given to students who demonstrate exceptional need
- Academic Competitiveness Grant (ACG) -- Awarded based on financial need to first-time freshmen and sophomores who are enrolled in eligible undergraduate programs
- National Science and Mathematics Access to Retain Talent (SMART) Grant -- Awarded based on financial need to juniors or seniors who are enrolled in science, math, technology, or foreign language programs
- State grants -- Grants of various amounts given out on a state-by-state basis
- The Federal Work-Study program -- Provides federally subsidized jobs for both full-time and part-time students to help pay for college