Establishing eligibility for financial aid is a fairly simple task if you meet some basic requirements and can show financial need. Generally speaking, to be eligible for financial aid, a person must be a U.S. citizen, have a Social Security number (except for students from the Marshall Islands, Micronesia and Palau), possess a high school diploma or GED, be enrolled in college, have no drug convictions and not owe a refund to the financial aid program. Also, male students must register with the Selective Service (ages 18 to 25 only).
Financial aid for U.S. college students dates as far back as 1642, when a scholarship fund was set up at Harvard University. Federal financial aid for low-income students and those who needed assistance (non-military or military veterans) began after the Civil Rights Act of 1964. Programs such as work-study and federal loans were put in place and evolved in to the system we have today. Over the years, the programs have undergone many changes, including laws regarding who can obtain aid, changes in interest rates, increases in aid packages (such as the 2007 College Cost Reduction and Access Act) and the use of technology for applications and to manage financial aid accounts.
The availability of federal financial aid for students ensures that post-secondary education is obtainable for all those who want to attend. Higher education is viewed as an investment, and the federal government helps protect the investment by regulating financial aid and keeping loan costs manageable. Students must continuously meet requirements to keep receiving financial aid, so the system has rules in place and rewards those who follow the rules.
There are three types of financial aid options for students: grants, loans, and work-study. Students do not have to pay back grants, and the money is most often given in the form of a Pell grant, which is usually only for undergraduate students. The TEACH Grant is for students who are seeking a career in education and who are seeking teacher licensing. There are also competitive grants that are awarded for students who have a high GPA. Loans are repayable at a relatively low interest rate with a lot of flexibility in repayment options. Stafford loans are available for students and have limits as to how much they can borrow depending on degree status. Both undergraduate and graduate students can take out these low interest loans and begin repayment after finishing a degree program or after six months of being out of school. The Perkins loan is for parents of college students. They have the choice to apply for one of two different loan types and can begin repayment two months after the student begins classes. Work-study is a program that allows students to work while earning tuition money and support from the federal government.
The Free Application for Federal Student Aid (FAFSA) is available on the Internet year round, though individual schools will have their own deadlines for applying for financial aid. Generally, students should apply for aid no later than June if beginning classes in the fall. There are also deadlines for submitting paper work and for correcting or updating the application. Refer to the links in the Resources section to check your state's financial aid deadlines. Contact the financial aid office at the school you will be attending if you are unclear about what paperwork needs to be done and when it should be submitted.
Financial aid packages can vary greatly from one student to the next and are determined based on financial need. The greater the need of the student, the higher the amount of aid will likely be. Financial aid is often a combination grants, loans and sometimes work-study. Awards also depend on the amount of liquid assets, such as cash savings, and other investments that a student or parents of a student possess. Other factors such as the cost of tuition, housing, living, expenses and previous financial aid awards also help to determine how much money a student will receive. Check the FAFSA website (listed below in the Resources section) for current award and loan limits.