What to Know About the 3 Main Types of US Financial Aid

Financial Aids are assistances in the form of money, gift, or employment. These are programs that help finance your education, from different sources including the federal and state governments.

Education is one of the most important investments. However, financing one’s own education can be difficult. A lot of students are getting financial help to assist them in paying the cost of tuition fees in college or their choice of vocation.

Financial programs generally come from these sources:

* Federal government
* State government
* School and
* other public and private sources

Students are given financial assistance to pursue their education through need-based aid. The principle of need-based aid is simple. Students and families pay the educational expenses based on their abilities.

The 3 Main Types of College Financial Aids are:
1.GRANTS – These are gift assistances that do not have to be paid back. Every year the Department of Education in the U.S. determines the qualified students for this grant. Some examples of grants:

* Federal Pell Grant

Award Year 2008 – 2009
The minimum grant for one year for an eligible student is $ 523. The maximum grant is $ 4,731.

* Federal Supplemental Educational Opportunity Grant or FSEOG – This grant comes from a limited fund given to students dire financial needs. Students granted FSEOG are with the lowest Expected Family Contribution based on the standard of U.S. Department of Education.

* Academic Competitiveness Grant (ACG) – A student must be a freshman or sophomore to avail of the ACG Grant. It should be his first time to avail of ACG, and must be a citizen of the United States. He must have graduated on or after January 1, 2005, and must have passed a federally defined rigorous high school program.

The maximum ACG grant for 2008 – 2009 is:

– $ 750 – for first year students
– $ 1300 – for second year students

A high school transcript is required before this award is considered.

2. LOANS – Loans are borrowed money from a lending company. These have to be paid back with interest.

Examples of loans are:

* Subsidized Federal Stafford Student Loan

This student loan program has a low interest rate. A student’s eligibility for this subsidy is determined using federal methodology. A student should attend at least 6 units per quarter. This loan does not accumulate interests. Payments can be made six months after graduation, in minimum of $ 50 per month. Loan must be paid in full within ten years. Borrowers with outstanding balance can still be eligible for the loan and can consolidate their payments.

* Unsubsidized Federal Stafford Student Loan.

This loan program is eligible to students who did not pass the full or partial loan. The Unsubsidized Federal Loan is based on financial need and requires 6 credits per quarter in attendance. A fixed interest rate of 6.8% is given for loans distributed on or before July 1, 2006, after which the fixed interest rate is reduced to only 6%.

* Parent Plus Federal Loan

This is a credit-based loan. Parent Plus Federal Loan is for parents who want additional assistance on top of their income. Applications for this type of loan are available in banks.

3. WORK-STUDY

This program gives students a chance of paying partly their expenses. They can work part-time with at least minimum wage salary. Priority is given to qualified students with below average economic conditions. Once approved, students are required to work with the Career Service Department in no more than 20 hours a week.