Edufacts™
July 2005
Paying for your education: Federal student aid options
Students in the United States continue to depend heavily on the federal government to help finance their higher education. In 2003-2004, forty-six percent of all undergraduate college students received some form of financial aid from one or more federal programs; twenty-seven percent received Pell Grants, with the average grant amount being $2,500; and thirty-three percent took out federal Stafford loans, borrowing an average of $4,900.
Despite the large numbers of students receiving financial aid, however, many students and parents are generally unaware of how federal aid works, and families of new college students can find the process intimidating.
The financial aid application process
The first step in the student aid process is to complete and submit the Free Application for Federal Student Aid (FAFSA). Most federal and state programs use the information supplied on the FAFSA to establish how much aid a student needs to be able to pay for the education he or she wants. Copies of the FAFSA are available from high school counselors, in libraries, from college and university financial aid offices, and online at www.fafsa.ed.gov. The FAFSA is available in English and Spanish.
Types of financial aid
In general, scholarships and grants are considered “gift” aid, since they don’t have to be repaid. Usually, scholarships are given for merit in academics, athletics, or a particular field of study. Grants are usually given to students with financial need using formulas established by the federal government and/or the school. Work-study programs are federally and state subsidized programs that help students work their way through school. Loans are a type of student aid that must be repaid. Federal Stafford loans, Federal PLUS loans, and other government-sponsored student loans typically provide more benefits than traditional consumer loans because they offer lower interest rates, allow extended repayment terms, and require no collateral.
No one should be afraid to borrow to finance an education — the higher earning potential for workers with a bachelor’s degree or greater can justify a reasonable amount of debt. But it's also important to understand the system and borrow sensibly.
For more information on federal student aid, for tips on how to establish high expectations for students as early as middle school, and for assistance in planning for higher education academically and financially, visit www.AIE.org. TG provides this Web site as a public service to help all families and students achieve their educational and career dreams.
Source: National Center for Education Statistics, Student Financial Aid Estimates for 2003-04
About TG
TG is a public, nonprofit corporation that helps create access to higher education for millions of families and students through its role as an administrator of the Federal Family Education Loan Program (FFELP). As a public service, TG provides Edufacts, a publication containing current information about education issues, on a monthly basis. Edufacts is one of the many ways in which TG promotes awareness of education issues, advising the public on national and state trends in education and student aid, and serving as a premier source of information. High resolution files suitable for publication are available as a free download from TG’s web site at http://www.tgslc.org/edufacts/index.cfm. For more information, please e-mail or call kristin.boyer@tgslc.org or (512) 219-4990.