What is Federal Financial Aid?

“Federal Student Aid, an office of the U.S. Department of Education, ensures that all eligible individuals can benefit from federally funded financial assistance for education beyond high school. We consistently champion the promise of postsecondary education to all Americans—and its value to our society.” –FederalStudentAid.ed.gov
What different types of aid are offered?

  • Grants – student aid funds that do not have to be repaid (other conditions apply).
    Click here for a list of Federal Grants
    Click here for a list of Massachusetts Grants
  • Work-Study – a part-time work program to earn money while you are in school.
  • Federal Loans – student aid funds that you must repay with interest. Types of federal student loans:
    • Perkins
    • Direct Stafford
    • Direct PLUS (graduate and professional degree student borrowers)
    • Direct PLUS (parent borrowers)
    • Direct Loan Consolidation

Steps to Apply for Financial Aid

  1. Gather documents such as income tax returns (yours and your parents), W-2 forms, other income records, and identification documents (social security cards, drivers licenses)
  2. Apply online at www.fafsa.ed.gov. The process is free. (Remember you will need a PIN to sign your FAFSA. You can get this PIN before filling out the forms here)
  3. After your FAFSA is submitted results are sent to the schools you listed on your application. You will receive a Student Aid Report (SAR).
  4. Your SAR will contain your Expected Family Contribution (EFC) and Data Release Number (DRN). If you need to make changes to your SAR do so immediately either online at fafsa.gov or through the mail.
  5. Once your school receives information from FAFSA you will get an award package from your institution that will indicate the amount and type of federal, state and school aid you have access to.

(Above information from the Federal Student Aid website http://studentaid.ed.gov)

Where does most aid come from?

Above image from College Board Trends in Student Aid 2011.

Understanding Student Loan Interest Rates

Federal Student Loans made up 39% of all undergraduate aid in 2010-11, the largest single category of aid. In President Obama’s State of the Union address, he asked Congress to prevent federal student loan interest rates from doubling later this year. These pending rate increases are part of a long history of student loan rate changes. To view a detailed history and explore the current status of loan interest rates check out the following piece from the New America Foundation:

Student Loan Interest Rates: History, Subsidies, and Cost By Jason Delisle, New America Foundation February 9, 2012