Student loan debt is a major issue for many college students and their families. In the United States, the average student loan debt is over $30,000 and the total amount of student loan debt is over $1.5 trillion. With so much money at stake, it is important for students and their families to understand the federal student aid system and how to navigate it. This guide will provide a comprehensive overview of the federal student aid system, from understanding the types of aid available to the application process.
Understanding Federal Student Aid
Federal student aid is money provided by the federal government to help students pay for college. This money can come in the form of grants, loans, or work-study programs. Grants are free money that does not have to be repaid, while loans must be repaid with interest. Work-study programs provide students with part-time jobs to help cover the cost of their education.
Types of Federal Student Aid
There are several different types of federal student aid available. The most common types are:
Pell Grants
Pell Grants are grants awarded to undergraduate students who demonstrate financial need. The maximum amount of a Pell Grant is $6,345 for the 2020-2021 academic year.
Federal Supplemental Educational Opportunity Grants (FSEOG)
FSEOG grants are awarded to undergraduate students with exceptional financial need. The maximum amount of an FSEOG grant is $4,000 for the 2020-2021 academic year.
Direct Subsidized Loans
Direct Subsidized Loans are low-interest loans that are awarded to undergraduate students who demonstrate financial need. The interest rate for Direct Subsidized Loans is 5.05% for the 2020-2021 academic year.
Direct Unsubsidized Loans
Direct Unsubsidized Loans are loans that are not based on financial need. The interest rate for Direct Unsubsidized Loans is 5.05% for the 2020-2021 academic year.
Federal Work-Study Programs
Federal Work-Study Programs provide part-time jobs to undergraduate and graduate students. The jobs are usually related to the student’s field of study and are available on- or off-campus.
Eligibility for Federal Student Aid
In order to be eligible for federal student aid, students must:
Be a U.S. citizen or eligible non-citizen
Students must be U.S. citizens, permanent residents, or eligible non-citizens in order to receive federal student aid.
Have a valid Social Security number
Students must have a valid Social Security number in order to receive federal student aid.
Have a high school diploma or GED
Students must have a high school diploma or GED in order to receive federal student aid.
Be enrolled in an eligible program
Students must be enrolled in an eligible program at an eligible school in order to receive federal student aid.
Maintain satisfactory academic progress
Students must maintain satisfactory academic progress in order to receive federal student aid.
Not be in default on a federal student loan
Students must not be in default on a federal student loan in order to receive federal student aid.
Applying for Federal Student Aid
In order to apply for federal student aid, students must complete the Free Application for Federal Student Aid (FAFSA). The FAFSA is available online and must be completed each year in order to receive federal student aid. The FAFSA is used to determine a student’s eligibility for federal student aid.
Accepting Federal Student Aid
Once a student has been awarded federal student aid, they must accept the aid in order to receive it. Students can accept their federal student aid online through their school’s financial aid website.
Repaying Federal Student Loans
Once a student has graduated or left school, they are responsible for repaying their federal student loans. Students should contact their loan servicer to determine the best repayment plan for their situation.
FAQs
What is federal student aid?
Federal student aid is money provided by the federal government to help students pay for college. This money can come in the form of grants, loans, or work-study programs.
Who is eligible for federal student aid?
In order to be eligible for federal student aid, students must be U.S. citizens, permanent residents, or eligible non-citizens; have a valid Social Security number; have a high school diploma or GED; be enrolled in an eligible program at an eligible school; maintain satisfactory academic progress; and not be in default on a federal student loan.
How do I apply for federal student aid?
In order to apply for federal student aid, students must complete the Free Application for Federal Student Aid (FAFSA). The FAFSA is available online and must be completed each year in order to receive federal student aid.
What happens after I accept federal student aid?
Once a student has accepted their federal student aid, they can use the money to pay for college expenses. Once a student has graduated or left school, they are responsible for repaying their federal student loans. Students should contact their loan servicer to determine the best repayment plan for their situation.
