Learn How to Get Federal Financial Aid

Many students worry about skyrocketing college costs. Fortunately, the federal government has deep pockets. According to the U.S. Department of Education, more than 10 million students receive financial assistance from the government each year. Also, during the 2005 -2006 school year, the government handed out almost $78 billion dollars worth of grants, loans, and work-study funds. Whether you aim to attend a community college, a vocational school, a private liberal arts college, or a public university, you should understand the federal financial aid process. With some careful planning, you can use federal funds to carry you through school without racking up heavy debts.

Who Is Eligible for Federal Aid?
In order to qualify for federal aid, you must first meet specific government standards, including:

• Demonstrated financial need
• U.S. citizenship (or be a qualified non-citizen)
• Valid Social Security number
• Registration with the selective service if you are an 18- to 25-year-old male
• Possession of an official GED or high-school diploma
• Acceptance or enrollment in a school that participates in federal financial aid programs
• No defaults on prior loans
• No drug-related offenses while receiving financial aid from the government

If you do not fully match one or more of these requirements, don't despair. While your financial awards could be delayed or lessened, you may still be able to get federal aid. For example, people with drug convictions may receive federal funding after completing an approved drug rehabilitation program. If you have any questions about your eligibility, you should call the government's Federal Student Aid Information Center.

How Can I Apply?
Before receiving federal financial aid, you should first file a Free Application for Federal Student Aid (FAFSA). Although paper versions of the FAFSA are available, it is faster to complete the FAFSA online, since the Internet cuts down on post-office lag time and paperwork. Try to fill out your application as early as possible since federal awards can be competitive. After logging on to the Free Application for Federal Student Aid (FAFSA) website, take the following steps:

• Gather up your income-related documents, which may include W-2 forms, tax returns, parents' tax returns, bank statements, and investment information
• Apply for an electronic PIN number; this comes in handy when you need to update or finalize your online FAFSA application
• Complete the FAFSA within the time frame indicated on the FAFSA website
• Print a copy of your FAFSA application for your records
• When your Student Aid Report (SAR) document is mailed to you, carefully review it for accuracy and submit changes if necessary
• Ensure that each school you apply to receives all of your financial aid information

After you are approved for federal funding, schools should mail letters regarding financial aid awards. Use your top offers to narrow down your choices in colleges or universities. When you decide on the most appealing financial aid package, you may sign the award letter and mail it back to your school of choice.

Which Types of Aid Are Available?
The three major types of federal financial aid are grants, loans, and work-study programs. Specific awards include:

• Federal Pell Grant: typically awarded to undergraduate students. These grants may range anywhere from $400 to $4,050.
• National Science and Mathematics Access to Retain Talent Grant: frequently referred to as a National SMART Grant. This grant is presented to qualified juniors and seniors majoring in engineering, science, technology, and mathematics. The National SMART Grant can be as large as $4,000 per year.
• Federal Work Study (FWS): requires working while attending school. Federal law states that FWS students should receive at least minimum wage as payment for any work done.
• Federal Perkins Loan: can be granted to both undergraduate and graduate students. Loan maximums are $4,000 for undergraduate students and $6,000 for graduate and professional students.
• Subsidized Direct or FFEL Stafford Loan: the federal government pays interest on these loans throughout school enrollment and during grace periods. Loan amounts may be anywhere from $3,500 to $8,500.
• Unsubsidized Direct or FFEL Stafford Loan: students pay all the interest for unsubsidized loans. With unsubsidized loans, students can withdraw up to $20,500.

Do I Need to Repay My Federal Financial Aid?
You do not have to repay federal grants, such as Federal Pell Grants or Academic Competitiveness Grants. Any money you make through the Federal Work-Study Program (FWS) does not require repayment, either. Loans, however, need to be repaid. Your payment plan typically varies with the types of loans you garner. For example, Federal Perkins Loans can be paid directly to your alma mater at a 5% interest rate. Stafford Loans, on the other hand, are paid to private lenders such as banks or credit unions.

Practicing Responsible Borrowing
Remember, your federal aid package obliges you to follow certain rules. First of all, you should make all loan payments in a timely fashion. Failure to pay loans can result in a loan default, which can damage your credit rating. Unless your loan is officially cancelled, you must repay your loans in full, even if you do not finish your education. Also, you should inform your lender about any changes in your college attendance. If you drop below half-time status, transfer colleges, or leave school unexpectedly, your loan service agency needs to be notified right away. Since loans entail legal obligations and a long-term financial commitment, you should seriously think about the amount of money you are borrowing before signing any promissory notes.

Your post-secondary education marks an important financial investment in your future. Do your best to meet application deadlines and actively maintain your eligibility requirements. Also, don't forget that many other financial assistance options exist besides federal aid, including private scholarships, public grants for minorities, and university-based teaching assistantships.