An Overview of Federal Student Aid

1. An Overview of Federal Student Aid

2. What is Federal Student Aid? • Federal Student Aid (FSA) is provided by the US Department of Education and helps students pay for expenses at post-secondary institutions • FSA covers expenses such as tuition, room and board, books and supplies, transportation, computers, and dependent care • There is more than $150BN worth of FSA available to qualifying students • FSA is granted to students that meet basic eligibility requirements • FSA falls into one of three categories: grants, loans, or work-study • The FAFSA (Free Application for Federal Student Aid) must be completed in order to qualify for FSA (~22MM FAFSAs are submitted each year) • The FAFSA is available beginning January 1st of the year that the student plans to enroll in school • Visit www.fafsa.gov to fill out the FAFSA form and begin the financial aid process.

3. Prerequisites to Receiving Federal Student Aid • A high school diploma or a General Educational Development (GED) certificate • A valid social security number • Must be a US citizen or eligible non-citizen • Must meet satisfactory academic progress requirements • Compliance with Selective Service registration • Must be enrolled or accepted as a student and be on the path to a degree or certificate in an eligible program

4. Types of Federal Student Aid • Grants: Funds that are not required to be repaid • Loans: Funds that are borrowed from the school and must be paid back with interest • Work-Study: Funds that a student earns by working part-time while attending school

5. Federal Grant Programs • Federal Pell Grants: Available almost exclusively to undergraduates (UG’s) • Federal Supplemental Educational Opportunity Grant (FSEOG): Available to UG’s that have a very low estimated financial contribution (EFC) • Teacher Education Assistance for College and Higher Education Grant (TEACH): For UG’s, post baccalaureates, and graduate students that are willing to teach full-time in designated teacher shortage areas for four (4) years after graduation • Iraq and Afghanistan Service Grant: Available to non Pell-eligible students whose parent/guardian died as a result of military service in Iraq or Afghanistan after the events of 9/11; and who, at the time of death, were younger than 24 years of age and/or enrolled at least part-time at an institution of higher education

6. Federal vs. Private Loans • A federal loan is supported by the federal government and allows students to borrow money to help pay for school • Benefits of a federal loan include: low-fixed interest rates, income-based repayment plans, cancellations for certain employment, and deferment options • There are two (2) types of federal loan programs: The Federal Perkins Loan Program and The Direct Loan Program • A private student loan is a non-federal loan issued by a lender such as a bank or a credit union and commonly requires a credit check

7. Federal Perkins Loan Program • Federal Perkins loans are low interest loans that help need-based undergraduate and graduate students finance the cost of post-secondary education • School is the lender; approximately 1700 schools participate • Interest rate = 5% • Amount received depends on financial need, amount of other aid, and availability of funds at school • Repaying a Federal Perkins Loan begins after the grace period has expired. The grace period begins on the day that the student graduates and lasts for nine (9) months • During the grace period, the student does not pay principal and is not charged interest. If a student is attending school less than half-time (typically defined as less than six (6) credit hours), his/her grace period may be affected • A student has up to ten (10) years to repay a Federal Perkins loan

8. Direct Loan Program • The Direct Loan Program is the largest federal student loan program available with four (4) types of direct loans: • Direct Subsidized Loan (DSL): For UG’s; US Department of Education pays interest while borrower is in school and during grace and/or deferment periods; student must be attending at least half-time and have financial need. IR = 6.8% • Direct Unsubsidized Loan (DUL): For UG’s and graduate students; borrower is responsible for all interest; student must be enrolled at least half-time; financial need is not required; US Department of Education is the lender. IR = 6.8% • Direct PLUS Loan (DPL): For parents of dependent UG’s and also graduate and professional students; student must be enrolled at least half-time; financial need is not required. Borrower is responsible for all interest; US Department of Education is the lender; graduate student/parent cannot have a negative credit history. IR = 7.9% • Direct Consolidation Loan (DCL): Allows student or parent to combine multiple federal education loans into one loan with one (1) monthly payment

9. Direct Loan Program (cont.) • Lender is the US Department of Education • Direct loans have a fixed interest rate that varies depending on the loan type • Amount that can be borrowed varies based on whether the student is enrolled in an undergraduate or graduate program • The grace period is six (6) months for DSL’s and DUL’s. DPL’s do not have a grace period, but can defer for up to six (6) months • On average, students have between 10 - 30 years to repay a loan • Must be enrolled at least half-time (typically defined as six (6) credit hours) to qualify • To take out a Direct Loan, student must complete a Master Promissory Note (MPN). This is a legally binding agreement to repay loan

10. Federal Work-Study Program • Federal Work-Study (FWS) provides part-time employment for undergraduate and graduate students with financial need, thus allowing them to earn money to help pay education expenses • FWS encourages community service and work related to the recipient’s area of study • Undergraduate students are paid by the hour and will receive at least federal minimum wage • The amount earned cannot exceed the FWS award amount • FWS employment may be on-campus or off-campus • When assigning work hours, the student’s employer or financial aid administrator will consider award amount, class schedule, and academic progress

11. What is PrepTalk? PrepTalk is a new virtual webcasting tool designed for the college admission process. Through PrepTalk, colleges can communicate with prospective students in a live setting. • Why was PrepTalk created? • On average, colleges visit 500 high schools a year, yet there are 27,000+ high schools in the United States • 75% of students would speak with a college representative via webcam, but currently only 20% are doing so • A college education is the second largest investment a family will make (next to a home), but its often difficult for parents to get direct interaction with college reps • Demonstrated interest is an increasingly important factor – more than 50% of colleges rank it as being of considerable or moderate importance in the decision making process • How do I learn more about PrepTalk events? • Visit www.preptalk.tv to learn more about participating colleges and upcoming webcasts on PrepTalk!