Federal Financial Aid and Grants

The federal government provides two ways to finance secondary education: loans and grants.  A loan is money that must be repaid upon graduation; a grant is money that does not have to be repaid.  The federal government’s two signature education loan programs are the Stafford Loan and the Perkins Loan.  The government’s signature education grant program is the Pell Grant.  Federal financial aid and grants are easy to get with the help of a qualified financial aid officer.

Stafford Loans

One of the most well known types of federal financial aid and grants is Stafford loans. Stafford loans are fixed-rate student loans, available to both graduate and undergraduate students who are (a) U.S. citizens, (b) attending college at least half-time, and (c) fulfill certain other eligibility requirements, which can be outlined by a school’s financial aid officer.  The amount of a Stafford loan is determined by need, not by credit history, and Stafford loans are subsidized by the federal government, so they are guaranteed at a low interest rate.  Any student receiving a Stafford loan must remain continually enrolled in school.  Once a student has graduated or left school, the Stafford must be repaid.  The Stafford loan can be used to pay for tuition, books, and other school-related expenses.

Perkins Loans

Another one of the popular types of federal financial aid and grants are Perkins loans.  Perkins loans are similar to Stafford loans, except that the money is given to and administered by the college.  And where Stafford loans can be used for tuition, books, and living expenses like housing, the Perkins loan can only be used for the cost of classroom education.  Perkins loans carry a 5% fixed interest rate for the duration of the repayment period.  Perkins loans are limited to $5500 a year for undergraduates (with a lifetime maximum of $27,500), and $8000 a year for graduates (with a lifetime maximum of $60,000, including any undergraduate loans).

Pell Grants

A third one of the federal financial and grants that a lot of people know about are Pell grants. Pell grants are a need-based form of financial aid, targeted toward low-income families.  Grant amounts are based on (a) the student’s expected family contribution; (b) tuition costs; (c) the student’s enrollment status (part time vs. full time); and (d) whether or not the student is enrolled for the full academic year.  The maximum grant amount is $5,500 a year, which covers approximately 30% of annual tuition at most colleges.  Pell grants are available only for the first full years; beyond the fourth year, the Pell Grant is no longer available.

Call your school’s financial aid officer if you believe you qualify for any or all of these federal financial aid and grants.

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