I have been doing a lot of research regarding the college financial aid options. Here are my findings so far. As with most of the information on this web site, it is primarily for my consumption – but if it benefits anybody else, well that is good.
Legal Disclaimer: I AM NOT RESPONSIBLE FOR THE ACCURACY OF THE INFORMATION POSTED IN THIS BLOG. IT IS THE READERS RESPONSIBILITY TO VERIFY AND VALIDATE THE DETAILS PRESENTED HERE.
Websites
http://www.eric.ed.gov/ERICDocs/data/ericdocs2sql/content_storage_01/0000019b/80/1c/e2/79.pdf
http://www.fafsa.ed.gov/faq001.htm
http://www.FederalStudentAid.ed.gov/aidinfo
http://www.studentaid.ed.gov
Terms
- Guaranteed Student Loan (GSL) Program
- College Scholarship Service
- Need Analysis System
- Pell Grant Formula (previously Basic Educational Opportunity Grant Program, BEOGP)
- State Student Incentive Grant Program
- Congressional Methodology (CM) system (1986 Law)
- Perkins Loan Program
- College Work Study program
- Supplemental Educational Opportunity program.
Calculation of Need
http://www.eric.ed.gov/ERICDocs/data/ericdocs2sql/content_storage_01/0000019b/80/1c/e2/79.pdf
1. Need is a simple concept. It is defined as the difference between expected family contribution (EFC) and the cost of attendance.
2. Both income and assets of the family are considered in determining the ability to pay.
3. Ability of pay is based on using a portion of discretionary income to pay college costs. Discretionary income is income which is available after all necessities have been paid for.
4. Students are expected to contribute a greater portion of their income and assets for education that their parents because they are the primary beneficiaries of the education received.
5. A proportion of assets is protected. Assets include equity in a home, savings, investments. and any other real estate owned. Part of the assets above a defined minimum are considered to be available to pay educational costs. The amount of this protection is determined based on the age of the oldest parent. Older the parent, greater the protection.
6. Verification of income is based on information from the year preceding the academic year in which the aid will be used.
7. Deductions taken from income to determine the discretionary income are: taxes paid, Standard Maintenance Allowance, medical and dental expenses (above a % of income).
8. The sum of the discretionary income and the income supplement from assets is used, and a variable contribution rate is applied to this which ranges from 22 to 47%. 9. There are annual adjustments for inflation to maintain expected family contributions at roughly the same level (i.e. at 22 – 47%).
9. The Congressional Methodology (CM) system is used to calculate financial aid for all federal student financial aid, except the Pell Grant and State Student Incentive Grant Program.
10. The contribution by dependent students from their own earnings was increased in 1986.
11. The changes in the 1986 law resulted in a potentially significant increase in the estimated need of graduate students.
12. The 1986 law includes provisions for student financial aid admins to exercise discretion and professional judgement in making adjustments to the cost of attendance or expected family contribution. Discretion allows them to be sensitive to individual cases not easily dealt with using std formulas.
13. The Pell grant formula is different because it needs to limit awards to the amount of money appropriated by Congress for the program.
Student Aid
http://www.fafsa.ed.gov/faq001.htm
1. Federal Pell Grants are available only to undergraduate students for a maximum lifetime limit of 18 semesters or its equivalent. Grants do not have to be repaid. (Annual Award Limits – $976 to $5,350).
2. You may be eligible for a student aid grant program called the Academic Competitiveness Grant (ACG). During an eligible student’s first academic year, the maximum ACG is $750; the maximum ACG for a student’s second academic year is $1,300.
3. Another student aid grant program you may be eligible for in your third, fourth and fifth (for programs requiring five years – 2009-2010 only) academic years of undergraduate study is called the National Science and Mathematics Access to Retain Talent Grant (National SMART Grant). If eligible, you may receive up to $4,000 per year. (Up to $4,000)
4. Federal Stafford Loans are student loans that must be repaid and are available to both undergraduate and graduate students. There are two types: Federal Direct Loan (Direct Loan) and Federal Family Education Loan (FFEL). In the Direct Loan Program, the U.S. government is the lender while in the FFEL Program, private lenders provide loan funds that are guaranteed by the federal government. Your school chooses the loan program in which it will participate. In both programs, loan funds are provided to you through your school.
a. Subsidized Direct or FFEL Stafford Loan. No interest while students are in college. (Between $3,500 and $8,500).
b. Unsubsidized Direct or FFEL Stafford Loan. Borrower responsible for interest while in college. Between $5,500 to $20,500 (less Subsidized amt received).
5. Federal PLUS Loans are available to parents of dependent undergraduate students who are enrolled at least half-time. Financial need is not a requirement. PLUS Loans are unsubsidized: the borrower is responsible for interest that accrues during the life of the loan. Borrowers can request a loan for up to the full cost of attendance minus any other financial aid. Graduate and professional students that borrow a PLUS Loan receive an automatic deferment while in school.
6. Federal Work-Study provides jobs to undergraduate and graduate students, allowing them to earn money to pay education expenses.
7. Federal Perkins Loans are low-interest (5 percent) loans that must be repaid; the maximum annual loan amount is $5,500 for undergraduate students and $8,000 for graduate students.
8. You should be sure to find out which financial aid programs described above are available at each school you are interested in attending. Not all schools participate in all of the federal student aid programs.
9. Talk to the financial aid administrator at the school you plan to attend. Be sure to ask about “institutional aid” — money the school awards.
10. Visit www.studentaid.ed.gov to look for scholarships you might qualify for.
11. Look for programs such as Upward Bound, Talent Search, Talent Assistance Grant or GEAR UP.