What Kinds of Financial Aid Are Available?
Financial aid is available in several forms to homeschoolers, as well as the traditionally schooled. The U.S. Department of Education (the courteous provider of most of this information) awards about $150 billion every year to help millions of students pay for college. This federal student aid is awarded in the form of grants (good), low-interest loans (to be avoided if at all possible), and work-study funds (good).
Grants are typically awarded on the basis of need and generally do not have to be repaid. There are four types of federal student grants:
- Federal Pell Grants are usually awarded to undergraduate students who have not yet earned a bachelor’s degree. (In some cases, students enrolled in post-baccalaureate teacher certification programs may receive Federal Pell Grants.) The maximum Federal Pell Grant award for the 2014-2015 award year is $5,550; however, the actual award depends on 1) the student’s financial need; 2) the college’s cost of attendance; 3) the student’s enrollment status; and 4) the length of the academic year in which the student is enrolled. Students can receive the Federal Pell Grant for up to the equivalent of 12 semesters.
- Federal Supplemental Educational Opportunity Grants (FSEOG) are awarded to undergraduate students with exceptional financial need. The amount of the award is determined by the college’s financial aid office, and depends on the student’s financial need and the availability of funds at the college.
- Teacher Education Assistance for College and Higher Education (TEACH) Grants are awarded to students who intend to teach in a public or private elementary or secondary school that serves students from low-income families. If the service requirement is not fulfilled, it could turn into a loan.
- Iraq and Afghanistan Service Grants are awarded to students whose parents or guardians were members of the Armed Forces and died as a result of performing military service in Iraq or Afghanistan after Sept. 11, 2001. To qualify, a student must have been under 24 years of age or enrolled in college at the time of the parent’s or guardian’s death.
Avoid Loans if Possible
Loans are money that the student borrows to help pay for college, and must be repaid (plus interest). If you want to avoid loans, you might consider earning credits through CLEP exams before college, or earning an associates degree, then transferring to a four-year college for the last two years of school. You can learn more about these options and how to make them work in Get a Jump Start on College: A Practical Guide for Teens.
There are two federal student loan programs:
- The Federal Perkins Loan Program is a campus-based program that provides low-interest loans to undergraduate and graduate students. The amount of the award depends on the student’s financial need, the amount of other aid the student receives, and the availability of funds at his/her college.
- The William D. Ford Federal Direct Loan Program enables students and parents to borrow money at low interest rates directly from the federal government with Direct Stafford Loans or Direct PLUS Loans, which are available to parents of dependent students and to graduate and professional-degree students.
- Subsidized vs. Unsubsidized: A Direct Stafford Loan might be subsidized or unsubsidized. Direct PLUS Loans are always unsubsidized. Subsidized loans are based on financial need and are available only to undergraduate students. The federal government pays the interest on subsidized loans while the borrower is in college and during deferment. Unsubsidized loans are based on the student’s education costs and other aid received. The borrower must pay all accrued interest on unsubsidized loans.
Work-Study is an Honorable Classic
The Federal Work-Study Program enables students to earn money during the school year while also gaining valuable work experience, typically in part-time, career-related jobs. I am always moved by the story of Booker T. Washington working his way through Hampton Institute, and he is only one of millions who have chosen this way to earn a degree. It’s an honorable way to pay for your education.
Other forms of financial aid that might be available to students include:
- State government aid. For more information, contact the state’s higher education agency. You can find the state agency’s contact information at http://wdcrobcolp01.e d.gov/Programs/EROD/org_list.cfm?category_cd=SHE.
- Aid from the college. Students should contact the financial aid offices at the colleges they are considering for more information. This is one of the prime spots to find small local scholarships that sometimes go unawarded due to lack of applicants.
- Scholarships. Some states, local governments, colleges, community organizations, private employers, and other organizations award scholarships based on academic ability or other factors. For more information, visit StudentAid.gov. You may also visit Scholarships.com or Fastweb.com for non-government-affiliated databases.
- Tax credits for education expenses. For more information about the American Opportunity Tax Credit and Lifetime Learning Tax Credit, visit http://studentaid.ed.gov/types/tax-benefits.
- Aid for the military. For more information, visit http://studentaid.ed.gov/types/grants-scholarships/military.
The problem is, you have to qualify for most of these options (grants and work study in particular). They’re awesome options, *if* you can get them. With the formulas they use on the FAFSA to determine the family’s contribution, if you can put food on your table and have even a little for giving to charity, you probably won’t qualify for these programs. So frustrating. I’m sure there are ways to ‘work the system’ by setting your student up as independent so they show no income, but haven’t taken the time to figure out that route.
You definitely have to qualify for grants, but many more qualify than expect to. Even if the EFC seems high, it is worth pursuing. I tell families that the only foolish thing you can do with financial aid is to fail to apply to colleges because you assume you won’t qualify. It is easier now to qualify than ever before, unless you are truly wealthy. There are countless programs and options available–it just takes work to find them and apply.
As I mentioned in the last post, you often stand a better chance of getting a good aid package from a private school. In addition, you may want to look at the Benjamin Kaplan book I linked to in the body of the post for ideas on paying for college. Just remember, there is more than one way to do college, so if your student needs a degree (not everyone does), there will be a way. Best wishes to your student!