Financial Planning Options
Financial Aid Options: Financing Your Education
Federal Pell Grant:
Federal Pell grants are awards to help undergraduate students pay for their education. These grants provide a “foundation” of financial aid, to which aid from other federal and non-federal sources may be added. Unlike loans, grants are awards and do not have to be paid back.
The U.S. Department of Education uses a standard formula revised and approved every year by Congress to evaluate the information you report when you apply for a Pell grant. The formula produces an Expected Family Contribution (EFC). Your Student Aid Report (SAR) contains this number and will tell you whether you are eligible for a federal Pell grant.
Stafford Student Loans: Federal Direct Student Loan Program (DL):
Many students rely on loans from the federal government to finance their educations. These Stafford Student Loans, administered by “Direct Lending Schools,” are provided by the U.S. government directly to students and their parents. They have low interest rates relative to private/commercial student loan rates. Federal subsidized and unsubsidized loans do not require credit checks or collateral. Federal parent loans require credit check, but no collateral.
Federal student loans also provide a variety of payment plans, deferment options and extended repayment terms for those who qualify. Students eligible for the Stafford DL program loans are not allowed to borrow in any amount that exceeds the annual or aggregate loan limits, or their estimated cost of school attendance.
All Stafford loans are either subsidized (the federal government pays the interest while you’re in school and during the six-month grace period beginning after you graduate, leave school or drop below half-time enrollment) or unsubsidized (you pay all the interest while your are enrolled and during the six-month grace period, although you can have the interest deferred until after your grace period beginning when you graduate, leave school, or drop below half-time enrollment). To receive a subsidized Stafford loan, you must be able to demonstrate financial need.
All students who have not exceeded the annual or aggregate loan limits, cost of attendance and meet eligibility requirements for Title IV assistance are eligible for the unsubsidized Stafford loan regardless of financial need.
If you do not qualify for a subsidized loan, with the unsubsidized Stafford loan you have the option to defer payments until after you graduate, leave school or drop below half-time enrollment by capitalizing the interest. This, however, adds the deferred interest payments to the loan balance, increasing the overall size and cost of the loan.
Parent Loan for Undergraduate Students (PLUS)
Parents of dependent students can take out loans to supplement their children’s aid packages. The federal Parent Loan for Undergraduate Students (PLUS) allows parents to borrow money to cover any costs not already covered by the student’s financial aid package, up to the full cost of attendance. Like the Stafford loan, PLUS loans are either FFELP (provided by private lenders, such as banks) or Direct (funds provided by the federal government). Parents seeking a PLUS loan must pass a credit check to become eligible.
PLUS loans are the financial responsibility of the parents, not the student. If the student agrees to make payments on the PLUS loan, but fails to make the payments on time, the parents will be held responsible.
Dependent students whose parents have been declined for a PLUS loan are eligible to borrow an additional $4,000.00 on an unsubsidized Stafford loan.
To estimate cost of attendance and aid eligibility, visit the U.S. Department of Education’s Net Price Calculator. More information on types of loans and financial awareness counseling is available here.
To learn details about how to apply for education grants and student loans, visit our How to Apply page.
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