Types of Financial Aid
College financial aid programs, both need- and merit-based,
fall into two major categories: gift aid and self-help aid. Gift
aid doesn't have to be earned or repaid by the student. Self-help
aid must be earned or repaid.
All this Greek to you? Get our Financial Aid Glossary!
Institutional Grants and Scholarships
Type: Gift Aid
What is It?
Gift aid received from colleges and universities is referred
to as institutional aid, since the money comes directly from the
school's resources. These awards, particularly those that are
merit-based, are usually highly competitive and may be awarded
only to those who meet school deadlines and demonstrate academic
achievement.
What Can You Receive?
Varies widely depending on the school and the program. Award
amounts can range from as little as several hundred dollars to a
full scholarship.
Eligibility
Again, depends on the program. Most are based on academic
performance or athletic ability.
Conditions
Depends on the program; but most require students maintain
minimum academic standards.
How Do You Apply?
Contact the school's financial aid office for details.
State Grants
Type: Gift Aid
What is It?
Most states have grant programs—some based on financial need,
others on academic distinction.
What Can You Receive?
Varies widely depending on the state and the program. Award
amounts can range from as little as several hundred dollars to a
full scholarship.
Eligibility
Again, depends on the program. Most are based on financial
need or academic competitiveness. In addition, many state
programs require that you be a resident of that state.
Conditions
Many state programs require that you attend a college or
university in that state.
How Do You Apply?
Varies. Check with your high school guidance counselor or
contact your state's department of education.
Federal Pell Grant
Type: Gift Aid
What is It?
The Pell Grant is the single largest grant program in the
country, totalling more than $7 billion in award money.
What Can You Receive?
The maximum grant award for 2002-2003 is $4,000.
Eligibility
Eligibility for this program is based on financial need, the
cost of the school, and full/part-time status. Most middle-income
families do not meet the need-based criteria.
Conditions
Federal Pell Grants do not need to be repaid.
How Do You Apply?
You must complete and submit the Free Application for Federal
Student Aid (FAFSA).
Federal Perkins Loan
Type: Self-Help Aid
What is It?
Under this program, colleges draw from a pool of money and
make loans directly to students. The college decides the amount
and the recipients.
What Can You Receive?
The maximum loan amount is $4,000 per year. Interest is 5% and
does not accrue while the student is in school.
Eligibility
Eligibility for this program is based on demonstrated
financial need using the federal need-analysis formula.
Conditions
Repayment begins 9 months after college graduation.
How Do You Apply?
You must complete and submit the Free Application for Federal
Student Aid (FAFSA).
Subsidized Federal Stafford Loan
Type: Self-Help Aid
What is It?
The subsidized version of the Federal Stafford Loan is a loan
made by a financial institution such as a bank, savings and loan,
or credit union. Eligibility is determined by each college and
interest does not accrue until after graduation.
What Can You Receive?
Dependent first-year students can borrow up to $2,625 per
year; sophomores up to $3,500; and juniors and seniors up to
$5,500.
Eligibility
Eligibility for this program is based on demonstrated
financial need using the federal formula. Eligibility is
certified by the financial aid office of the school.
Conditions
Repayment and interest accrual begin 6 months after college
graduation.
How Do You Apply?
You must complete and submit the Free Application for Federal
Student Aid (FAFSA).
Unsubsidized Federal Stafford Loan
Type: Self-Help Aid
What is It?
The unsubsidized version of the Stafford Loan is basically the
same except that interest accrues while the student is still in
school and eligibility is not based on financial need.
What Can You Receive?
If you're an independent undergraduate student, or if you're
still dependent but your parents were unable to get a PLUS loan,
you can borrow much higher amounts under the Stafford Loans.
First-year students can borrow up to $6,625 per year; sophomores
up to $7,500; and juniors and seniors up to $10,500.
Eligibility
All college students are eligible.
Conditions
Payments may be deferred until after graduation. However, it
should be noted that interest accrues while the student is in
school.
How Do You Apply?
You must complete and submit the Free Application for Federal
Student Aid (FAFSA).
Federal PLUS Loan
Type: Self-Help Aid
What is It?
This is an unsubsidized, non-need based program for parents of
undergraduate dependent students.
What Can You Receive?
Unlimited. Parents can borrow up to the cost of college.
Interest is variable, based on the 52-week Treasury bill—but will
not exceed 9 percent or go below 3.10 percent.
Eligibility
All parents of undergraduate dependent college students are
eligible. Credit history will be checked by your financial
institution.
Conditions
Repayment begins 60 days after the loan is received.
How Do You Apply?
You must complete and submit the Free Application for Federal
Student Aid (FAFSA).
Federal Work-Study Program
Type: Self-Help Aid
What is It?
This is a popular, need-based program where students earn
money through employment. Most jobs are on-campus and the rate of
pay is generally the same as other student workers — with the
exception that a portion of the pay is picked up by the
government.
What Can You Receive?
Varies. The colleges decide the amount of the awards.
Eligibility
Eligibility is based on need using the federal need analysis
formula. The school decides who gets FWS aid and in what
amounts.
Conditions
FWS money is earned through employment. No repayment is
necessary. However, students must faithfully meet their work
obligations.
How Do You Apply?
You must complete and submit the Free Application for Federal
Student Aid (FAFSA).