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The Four Primary Sources of Financial Aid

Before applying for a school, it is important to know what percentage of “need” based financial aid the school will be from gift aid (free money, i.e. grants and scholarships) and self-help aid (loans, work-study). Not every school will give the same type of award package.

Some schools will meet 100% of your ‘need’ in grants and scholarships, and some will meet 100% of it in loans and work-study. For the most part, it will definitely be a combination of grants, scholarships, loans, and work-study.

The majority of financial aid comes from four primary sources:

• Federal Government
• State Government
• Campus-based programs
• Private Scholarships

Federal Government Based Programs

There are three major federally based programs: 1) Pell Grants, 2) Subsidized and Unsubsidized Stafford Loans, 3) Parent PLUS LOANS.

Pell Grants: The Federal Pell Grant does not have to be repaid. Pell Grants are awarded only to undergraduate students with extreme financial need.

Subsidized and Unsubsidized Stafford Loans: These loans are available through the Federal Family Education Loan (FFEL) from a bank, credit union or other lenders that participate in the program. Subsidized loan is based upon the need of the student and the unsubsidized is available to families regardless of the need.

Parent PLUS/SLS Loans: PLUS stands for “Parent’s Loans for Undergraduate Students.” These loans are in the parent’s name and aren’t based upon ‘need’ but on credit approval.

State Government Based Programs

Each state differs in its own special programs. These can include grants, scholarships, tuition assistance, and loans. There will be more benefits most likely if you are registered as an in-state student.

The best thing for you to do is to contact the state in which you are planning to attend school at and contact the Office of Higher Education Student Assistant Authority and ask for a complete guide to the programs available to you as a student.

Campus Based Programs

Campus based programs are funds that colleges and universities receive from the Federal Government and from private endowments. A specific amount of money is given to a college each year. Once that money is awarded, there are no more funds available until next year. This is why it is so important to file your financial aid form on time and correctly since aid is awarded on a first come basis.

The four main sources of campus based aid are: 1) SEOG grants 2) work-study 3) Perkins Loans and endowments.

Supplemental Educational Opportunity Grants (SEOG): these are “need” based grants awarded to students with extreme financial need. Priority is given to students who receive the Pell Grants.

Federal Work-Study: This award is based upon “need”. The student is offered an amount of money for the year and is expected to work part-time on the campus for the Federal, minimum wage to pay back the funds until the student has earned the amount awarded.

Federal Perkins Loan: These are low interest subsidized loans that are offered by colleges and subsidized by the Federal government. The Government also subsidizes the interest.

Endowments: Endowments are funds that are given to schools from private sources such as alumni, corporations and other foundations.

Private Scholarships

Millions of dollars are given away each year to deserving students by private organizations. Finding these scholarships and applying for them can be a frustrating, but rewarding process. It is recommended NOT to pay for scholarship searches.

The best place to start is in your high school guidance office, then move onto searches on the Internet. Be persistent and apply for all that you can.