It All Starts With FAFSA

In an ideal world, when a couple has children, they immediately would set up savings accounts and education IRA's to prepare for their children's college expenses.  Unfortunately, most families don't have the foresight to start saving that early, and many simply can't afford to even if they understand the importance of saving early.

The largest provider of educational grants, student loans and other sources of financial aid is the US Department of Education.  The various programs offered through the Department of Education provide over $80 billion in loans, work-study assistance and grants to deserving students every year.

Getting Started with Financial Aid

If you are a student in high school who is planning to attend college; or you are a parent of a child who will be attending college, your first source for finding financial aid programs to help pay for college costs should be with the US Department of Education.  The process begins with the FAFSA: the Free Application for Federal Student Aid.  This single application will enable you to apply for a large variety of programs, from free money (grants) to work-study arrangements on the college campus, to loans that have to be repaid upon the student's graduation (or exit from college).

The FAFSA can be filled out in paper form (applications are available from your student's school), or over the internet on the FAFSA website.

Eligibility for Federal Financial Aid

Unfortunately, while most families will be able to apply for federal financial aid- not every family will qualify for federal financial aid programs.  Students receiving federal financial aid must meet the following requirements:

• Have GED or High school diploma, or have completed home school education approved by state law.
• Attend college to work towards a certificate or degree
• Be a US Citizen or eligible noncitizen.
• Must qualify for financial need (except for a handful of loans that are not based on income).
• Have a valid Social security number.
• Have registered with Selective service if required.
• Be able to maintain satisfactory academic progress while in college.
• Not be in default on a federal student loan or owe money for a federal student grant
• Use federal financial aid for educational expenses only

Federal Student Aid Programs

If it is determined that you are eligible for financial aid through the US Department of Education programs, there are a number of programs you can apply for using the FAFSA. 

• Grants: Money that does not need to be repaid, typically awarded to students based on financial need.
• Scholarships: Money that does not need to be repaid, awarded for academic or sports performance or financial need.
• Campus based Aid: Money that the college provides for some students to help finance the costs of education; could be in the form of loans, scholarships or grants.
• Stafford Loans: Money that needs to be repaid, is subject to maximum borrowing limits; typically repayments begin after the student graduates or leaves college.
• PLUS Loans: Money that is taken in the name of the parents or guardians, and is paid back while student is still attending college.
• PLUS loans for graduate/professional students: Loans for students attending graduate level of study.