college students reading on the lawn

What is a College Financial Aid Package?

You know your child is headed for college and you also know your family is going to need financial aid to pay for your child’s education.

You are certainly not alone. In the last two posts, we covered facts you need to know about college financial aid and explained the all-important FAFSA.

college graduationOnce your family has filed a FAFSA and the EFC has been calculated, the staff of the financial aid office will determine what financial aid you are eligible to receive.

The official form letter you receive will list the type and amount of the aid you will receive.  That includes funding from:

 

  • Grants
  • Loans
  • Employment
  • Federal Aid
  • State Aid
  • Institutional Aid
  • Outside organization or private funding sources.

Examples of What Your Financial Aid Package Will Include:

Grant Programs

  • The largest federal grant program is the Pell Grant Program. Awards range from $600 to $5,500.
  • Most colleges and universities, especially private schools, have their own grant programs and awards are usually based on outstanding high school grades.  Individual states also sponsor grant programs.  Check your state’s website for further information.

Loan Programs

  • One popular federal loan program is the Perkins Loan Program. The current interest rate is 5% and the maximum amount is $5,500 per year.
  • Stafford loans are federally subsidized loans and have an interest rate of 3.4%.
  • Freshmen can receive $3,500, sophomores $4,500 and juniors and seniors $5,500 to meet their educational expenses.
  • Parent Loans to Undergraduate Students (PLUS) allow parents to borrow up to the total cost of education minus any financial aid awarded.  The interest rate is 7.9%.

Work Programs

  • The federal Work-Study program allows students to work part-time usually on-campus.
  • Many colleges and universities sponsor their own employment programs.

The New College Guide by Marguerite-J-Dennis FeaturedThe New College Guide: How to Get It, Get Out, and Get a Job recommends:

  • Compare all of your estimated financial aid awards before you apply.
  • Be honest and accurate in completing all of your financial aid forms.
  • Calculate your estimated loan bill with an estimate of what your first year salary is likely to be.  I recommend allocating 15% of your first year’s salary to meeting your loan bill.
  • Make employment an essential part of your financial aid plan.
  • Financial aid counselors can exercise professional judgment to increase your award if you can make a good case.