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FAFSA Loan Questions and Answers

This post is a compilation of answers to frequently asked questions about student financial aid and college scholarships.

********************************* *** Student Financial Aid FAQ *** *********************************

Copyright (c) 1995-2001 by FinAid Page, LLC. All rights reserved. Written by Mark Kantrowitz, publisher of the FinAid and eduPASS web sites.

This FAQ may be freely redistributed in its entirety without modification provided that this copyright notice is not removed.

This article is provided AS IS without any warranty on its accuracy.

*** Topics

[0] The Best Financial Aid Web Sites [1] Overview of Financial Aid [2] Determining Financial Need [3] Consequences of the Need Analysis Formula [4] Don't Assume You Don't Qualify [5] Applying for Financial Aid [6] Beware of Scholarship Scams [7] The Unclaimed Aid Myth [8] General Advice [9] Financial Planning Tips [10] My School Didn't Award Me Enough Aid! [11] Common Questions and Answers [12] Answering Your Questions

*** [0] The Best Financial Aid Web Sites

The three most useful free web sites devoted to financial aid and college planning are:

+ FinAid (www.finaid.org) + FastWeb (www.fastweb.com) + US Department of Education (www.ed.gov)

FinAid provides an extensive directory of other quality web sites, as well as a large collection of financial aid calculators (including a financial aid estimator, loan repayment calculator, and savings plan designer), the free Ask the Aid Advisor service, and in-depth information and advice about all aspects of student financial aid.

FastWeb provides the largest, most up-to-date, and most popular free scholarship search. Why pay a scholarship search service to use their database, when you can search the best database for free?

The US Department of Education provides detailed information about federal student aid programs.

*** [1] Overview of Financial Aid

The major sources of money for college are the federal government, the state government, the private sector, and colleges and universities.

Most financial aid programs are "need-based". This means that the amount of aid you receive depends on your financial situation. Most government sources of aid are need-based. Other sources of financial aid are "merit-based", which usually depend on academic, artistic, or athletic talent, and may use your grades, test scores, hobbies, and special talents as awarding criteria.

There are two basic types of financial aid: GIFT AID and SELF-HELP AID. Gift aid is money that does not need to be paid back, and includes GRANTS based on financial need, SCHOLARSHIPS based on academic, artistic, or athletic merit, and FELLOWSHIPS for graduate students based on academic merit. Self-help aid includes LOANS and STUDENT EMPLOYMENT.

Although scholarships are awarded primarily based on merit, the amount of the award may depend on financial need. Scholarships provide funds toward tuition, fees, and other required educational expenses. Most scholarships do not provide funds for living expenses.

Most fellowships provide a stipend for living expenses in addition to funds for tuition, fees, and other required educational expenses. Residential fellowships provide support for a student to use an institution's facilities, such as special library or museum collections. Dissertation fellowships support students while writing the thesis.

Some forms of gift aid, such as ROTC scholarships and certain medical fellowships, require a few years of service in exchange for the financial aid. If one fails to complete the service requirement, then one must pay back the award. But most forms of gift aid do not need to be repaid and do not include a service requirement.

Loans are normally repaid with interest, and may be either a student loan or a parent loan. Some loans do not need to be repaid until the student has graduated or otherwise left school. Some loans include forgiveness provisions for students entering particular professions or serving in national need areas. Loans represent more than half of all financial aid. Most students graduate with $10,000 to $20,000 in debt.

Student employment includes federal and state work-study programs, assistantships, and regular part-type employment during the academic year and summer vacation. Numerous studies have found that students who work 10 hours a week do better in school, presumably because the work obligation forces the student to learn time-management skills.

Work-study programs provide employment during the academic year that should be "career oriented", although some students receive gopher-type jobs. The work is typically limited to 10 hours a week, with part of the salary subsidized by the government. Most students who receive work-study jobs are undergraduate students, but graduate students sometimes meet the eligibility requirements.

Teaching Assistantships and Research Assistantships normally provide graduate students with a full or partial tuition waiver and a small stipend and require them to perform teaching and/or research duties.

Most sources of financial aid require that you be enrolled at least half-time, though some awards are restricted to full-time students. There may be other restrictions as well. For example, most federal aid programs are restricted to US citizens, permanent residents, or eligible non-citizens. If you are a US citizen, male, and have reached age 18, you must be registered with Selective Service to receive federal aid.

Note that Sallie Mae offers a K-12 loan as well.

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