Student financial aid
Student financial aid
refers to funding intended to help students pay educational expenses including
tuition and fees, room and board, books and supplies, etc. for education at a
college, university, or private school. General governmental funding for public
education is not called financial aid, which refers to awards to specific
individual students. Certain governments, e.g. Nordic countries, provide student
benefit. A scholarship is sometimes used as a synonym for a financial aid award,
although grants and student loans are also components of financial aid packages
from students' intended colleges
The United States, federal government
provides need-based federal aid called Federal Student Financial Aid,
which is composed of different programs, grants, and scholarships, work and loan
programs including Federal Pell Grants, Federal SEOG Grants, SMART Grants,
Academic Competitiveness Grants (ACG Grant), Federal Work-Study Program, Federal
Stafford Loans (in subsidized and unsubsidized forms), Federal Perkins Loans,
State Student Incentive Grants and Federal PLUS Loans. Federal Perkins Loans are
made by participating schools per annual appropriations from the U.S. Department
of Education, whereas Federal Stafford Loans and Federal PLUS Loans are made by
participating lenders under the Federal Family Education Loan Program (FFELP).
The U.S. Department of Education serves as a lender and guarantor under the
William D. Ford Direct Loan Program.
To qualify for federal student aid, a
student must file the Free Application for Federal Student Aid (FAFSA). The
FAFSA uses a calculation taking into account income and assets to determine a
student's Expected Family Contribution (EFC) toward his or her college education
for that year. Colleges use the EFC to decide what types of financial aid a
student is eligible to receive. Students must complete the FAFSA each year to be
considered for financial aid and must complete an entrance and exit survey.
The EFC also takes into consideration
any participation in college savings or pre-paid tuition plans. In the past,
financial aid officers weighed pre-paid tuition plans more heavily than other
529 college savings plans when determining a student’s eligibility. In February
2006, Congress passed legislation to treat both types of plans evenly.
State governments also typically
provide some types of need- and non-need-based aid, consisting of grants, loans,
work-study programs, tuition waivers, and scholarships. Individual colleges and
universities may provide grants and need- and merit-based scholarships. Students
requiring financial aid beyond what is offered by their institution may consider
a private (alternative) education loan, available from most large lending
institutions. Typically, education loans obtained through the federal government
have lower interest rates than private education loans.
Institutions may also offer their own
student financial assistance, in the form of need- or merit-based aid, as well
as endowed scholarships (with varying need and/or merit-based criteria). Some
schools may only require the FAFSA; some may also require an additional
need-based analysis document, such as the CSS/Profile, to apply for such funds
to apply a more stringent need analysis for the rationalization of institutional
funds.
Types of Aid
When you apply for financial aid, the UC Student Financial Aid
Office will consider you for all aid sources. We will first look at scholarship
and grant eligibility based on merit or need. Self-help sources such as
work-study and loans will next be assessed for awarding.
It is helpful to review each aid program to know what is
available and to learn more about specific awards once you receive an award
offer.
Scholarships
Scholarships are "free money" generally awarded based on merit
and are not paid back. Additionally, any scholarship that you receive may reduce
or replace the self-help (loan or work-study) portion of your aid package.
Grants
Grants are "free money" that is not paid back. They are
awarded based on need. An exception is the TEACH Grant, as noted below.
Work-Study
Work-Study lets you work and earn money to help pay for your
costs. It is a need-based employment opportunity given to you as part of your
financial aid package.
Loans
Low interest student and parent loans are borrowed money that
must be repaid. Loans are a large part of many students' aid package. Borrow
only what you need. Always remember that you will pay back what you borrow.
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