Federal Student Aid uses the data on your FAFSA to calculate an Expected Family Contribution (EFC). The EFC is an indicator of your family‘s financial strength to pay for education after high school. Your school will subtract your EFC from your total cost of attendance. The result is your financial need.
The EFC is not the amount of money that your family must provide. Rather, you should think of the EFC as an index that colleges use to determine how much financial aid (grants, loans, or work-study) you would receive if you were to attend their school.
Your application results are transmitted to the school(s) listed on your FAFSA, and the school(s) uses the EFC amount to determine the amount of financial aid that you are eligible to receive. Many states and schools also use the FAFSA data to award aid from their programs. Some states and schools also may require you to complete additional applications.
Completing and submitting a FAFSA is free, whether you file electronically or on paper. In fact, charging students and/or parents a fee for completing and/or submitting the FAFSA is prohibited by law.
Federal student aid programs
There are three categories of federal student aid: grants, loans and work-study.
· Grants provide financial aid that does not have to be repaid.
· Loans provide borrowed money that must be repaid with interest.
· Work-study allows students to earn money to help pay for education expenses while enrolled in school.
Your financial aid ―package—the aid your school awards you—is likely to include funds from the federal student aid programs.
The major federal aid programs are described below:
Federal Pell Grants are available to undergraduate students only (with one minor exception for teacher certification students). Pell Grant awards for the 2011-12 award period (July 1, 2011 to June 30, 2012) range up to a maximum of $5,550.
Federal Supplemental Educational Opportunity Grants are grants available for undergraduates only; awards range from $100-$4,000.
Federal Work-Study provides jobs to undergraduate and graduate students, allowing them to earn money to help pay education expenses.
William D. Ford Federal Direct Stafford Loans are student loans that must be repaid. The federal government provides the funds for your Stafford Loan through your school. First-year dependent undergraduates are eligible for a subsidized loan up to $3,500 and an additional unsubsidized amount of up to $2,000 for a total of up to $5,500.
A subsidized loan is awarded on the basis of financial need. If you're eligible for a subsidized loan, the government will pay (subsidize) the interest on your loan while you're in school, for the first six months after you leave school, and during any periods when your payments are deferred (postponed).
For an unsubsidized loan, you are responsible for the interest from the time the unsubsidized loan is disbursed until it is paid in full. Annual maximum loan amounts increase for subsequent years of study, with even higher amounts for graduate students. Subsidized loans first disbursed to undergraduate students on or after July 1, 2010 through June 30, 2011, have an interest rate of 4.5 percent.
Direct PLUS Loans are unsubsidized loans made to parents of dependent undergraduate students and to graduate or professional students. A dependent undergraduate student whose parent is unable to obtain a PLUS Loan may borrow additional Stafford Loan funds at the higher loan limits otherwise available only to independent undergraduates. Direct PLUS Loans first disbursed on or after July 1, 2006, have a fixed interest rate of 7.9 percent.
Ramon L. Rodriguez
Financial Aid
03/24/2011 |