To a student trying to line up finances for college, the maze of federal financial aid can be quite daunting. The average college student probably doesn't know what's available, and you could easily miss out on a vital piece of financial aid if you don't know what to do. What kind of federal financial aid do you need, and how can you get it?
Qualifying for Federal Financial Aid Starts With the FAFSA
The Free Application for Federal Student Aid (FAFSA) is the first stop for any college student looking for financial aid. Don't pay an organization to find you federal financial aid; it's available free of charge when you fill out the FAFSA. You'll need information about your financial status, plus information about the finances of your parents if you're still a dependent. The FAFSA determines what need-based federal financial aid you qualify for, and from there you can round out your financial aid with merit-based financial aid or student loans.
Need-Based Awards
If the FAFSA demonstrates that your income is low enough to qualify for need-based federal financial aid, you may be eligible for a Federal Pell Grant. Because this form of financial aid is a grant, you do not have to repay it. Federal Pell Grants are based on financial need and institutional information, such as costs and your status as a student. The maximum varies per year, based on program funding, but is traditionally under $5,000 per year.
Federal Student Loans: Another Piece of Federal Financial Aid
Federal student loans are vastly preferable to loans from private institutions, as federal financial aid typically comes with a lower price tag in the form of lower interest rates. You can usually defer repayment of subsidized federal financial aid until you graduate college, while private lenders vary. Stafford Loans are student loans issued directly to the student, and interest rates on these loans are currently scheduled for reduction.
By 2011, the interest rate of Stafford Loans is scheduled to drop from 6.0 percent to 3.4 percent. The amount you can borrow on a Stafford Loan varies, based on your income, other financial aid and your college student status. The most you can borrow on a Stafford Loan is $12,500, although that number could be as low as $3,500 for some students.
Your Parents May Qualify for Federal Financial Aid, Too
If your parents are willing to take out federal financial aid to help you with college, they may qualify for PLUS Loans. There are two types of PLUS loans: Direct PLUS Loans, and PLUS Loans through the Federal Family Education Loan program (FFEL). Direct PLUS Loans are issued by the US Department of Education, while FFEL PLUS Loans are issued and administered by private lenders. Your parents can borrow enough on a PLUS Loan to pay for your school expenses minus any other financial aid, so you can use a PLUS Loan to round out your college financial aid package.
 | With so many types of financial aid for college, finding the right financial aid package for your needs can be an intimidating process. If you're a current or prospective college student, learn about financial aid and how to seek out financial aid for college before you settle on using government and private loans to fund your education. |
 | If you're a college student looking for financial aid, your first stop is filling out a financial aid application. Financial aid applications gather information to determine whether you're eligible for need-based financial aid. |
Going to college is a major financial commitment. Luckily, financial aid can help you cover the cost of getting your degree. Read on for tips on how to read your financial aid award letter so that you can make the best decision for your financial and educational future. |
If you need to get more student financial aid from your school, consider these options. |
When you apply for federal financial aid, it's important to make sure you fill out your financial aid forms completely and accurately. Even the smallest mistake could result in the financial aid staff dismissing a college student's request for aid or reducing the amount of money to which you are entitled. |
