By Bobbie Shocket Lazarz, CFP Cuna Mutual
Federal financial aid. The federal government is the largest single
source of financial aid, providing 67% of all direct aid dollars,
70% in the form of loans. Federal aid is available to both students
and parents.
Pell Grants and Federal Supplemental Educational Opportunity Grants
are awarded only to students with exceptional financial need, as
are low-interest Perkins loans.
Stafford loans for students, which carry relatively-low interest
rates, come in two forms: Subsidized Stafford loans are awarded
based on financial need, and students are not charged interest until
they begin repayment. Unsubsidized Stafford loans are non-needs
based and are available to all students who meet the general eligibility
requirements. However, because these loans are unsubsidized, students
are charged interest right from the time they receive the loan.
Federal Work-Study provides on- and off-campus part-time jobs for
students with financial need. And PLUS loans are for creditworthy
parents who meet the general eligibility requirements.
State government aid. Each state has its own aid programs, which
may include grants, scholarships, loans, and work-study programs.
Some programs are based on financial need, while some are based
on other criteria, such as academic performance.
The needs-based grant program, Leveraging Educational Assistance
Partnership (LEAP), is jointly funded by individual states and the
U.S. Department of Education.
High school counselors and state Departments of Education are the
best sources of information about state financial aid.
College and university aid. Colleges and universities have their
own aid programs, which may include grants, scholarships, loans,
student employment, tuition-savings programs, and cooperative education
programs.
Aid may be based on financial need, academic performance, proposed
field of study, special talents or abilities, or some combination
of these or other factors. When evaluating a family's financial
need, private colleges use an alternate set of formulas in addition
to federal ones.
Private aid. Grants, scholarships, and loans are available from
foundations, religious organizations, employers, and community organizations,
among others. Some programs offer assistance to all families, some
base aid on financial need, and others base assistance on special
criteria, such as academic achievement, special talents, athletic
ability, proposed field of study, ethnic heritage, or community
activities.
Scholarships from these private sources are often for small amounts
and represent only a small percentage of the financial aid awarded
each year.
Be wary of for-profit firms that charge for computerized college
scholarship searches. These services perpetuate the myth that large
amounts of private sector financial aid goes unused each year. In
fact, most scholarship programs receive far more applications than
they have funds.
Furthermore, you can do your own search for free on the Internet.
The Federal Trade Commission warns consumers about questionable
scholarship search services, some of which may be fraudulent. (www.ftc.gov/scholarshipscams)
For more information
The Student Guide: Financial Aid from the U.S. Department of Education,
www.studentaid.ed.gov,
800-433-3243
The Financial Aid Information Page www.finaid.org,
FastWEB (Financial Aid Search through the Web) www.fastweb.monster.com,
The College Board www.collegeboard.com
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