A friend of mine who is in the financial planning and investment business sent out great information to his clients last week. The information points to programs, aid, grants and more that are available for financing college. Many of us are in the throws of getting someone in the family off to college. And many people are figuring out funding this year for next year college starts, I thought it timely to share the wealth of information that you will read below - from Joe Guittadaro, with his permission to share.
Federal and State College Financial Aid Programs
The cost of financing a college education can be daunting to many families. Although most colleges agree that the family should be the primary support vehicle, financial assistance does exist. In addition to private sources such as trade unions, fraternal or service organizations and professional associations, there are numerous state and federal aid programs available.
The cost of financing a college education can be daunting to many families. Although most colleges agree that the family should be the primary support vehicle, financial assistance does exist. In addition to private sources such as trade unions, fraternal or service organizations and professional associations, there are numerous state and federal aid programs available.
The good news is that a
family does not have to be in a low-income bracket to qualify for many
current aid programs. Most need-based programs take into account family
living expenses, the number of children in the family and how many
children are in college.
The federal government
administers several major financial assistance programs. Some are direct
assistance programs; that is, the assistance goes directly to the
student. Other programs are administered through the college that the
student attends, funds are sent directly to the college, which in turn
dispenses the money to the student in accordance with federal
guidelines.
The Pell Grant (formerly
the Basic Educational Opportunity Grant Program) was named for Senator
Claiborne Pell, who sponsored the legislation that established the
program. A Pell Grant is based solely on financial need. The amount of
the award is based on student need (within certain limits) and on how
much money Congress appropriates to the program each year. It is
important to apply for a Pell Grant even if you think you won’t qualify,
since many college and state aid programs require it. Just check the
proper box on the financial aid application.
The Academic
Competitiveness Grant (ACG) provides need-based grants for the first two
years of undergraduate study to full-time students. The National
Science and Mathematics Access to Retain Talent (SMART) Grant is
available during the third and fourth years of undergraduate study to
full-time students who are majoring in physical, life, or computer
sciences, mathematics, technology, or engineering or in a foreign
language determined critical to national security. These two grants are
for U.S. citizens who are eligible for the federal Pell Grant, and who
have successfully completed a rigorous high school program, as
determined by the state or local education agency and recognized by the
Secretary of Education.
Stafford Student Loans
The Stafford Student
Loan (formerly the Guaranteed Student Loan) is a federally subsidized
loan program that allows the student to borrow from private lenders and
the government at lower interest rates. Families with high incomes are
eligible for the program if certain needs tests are satisfied. The loan
is insured either by the federal government or a state agency.
Banks and other lending
institutions voluntarily take part in the loan program. Repayment of
principal and interest is deferred until six months after a student
graduates or leaves school, and standard repayment is made over a 10- to
30-year period, depending upon the amount owed. An undergraduate may
borrow up to certain limits each school year under the program. The
government pays the interest for all undergraduate and graduate school
years and for six months after the last class.
PLUS loans are available
to parents of dependent undergraduate students, and to graduate or
professional students who reach their Stafford Loan limits. Repayment
of a PLUS loan begins 60 days after parents receive the money, and
lenders typically establish a repayment period of 10 to 25 years.
Graduate students may defer payment while in school at least half-time.
A Supplemental Education
Opportunity Grant (SEOG) is a grant to a student with demonstrated
financial need. The money is sent by the federal government directly to
the colleges, which determine the award amount and dispense the money to
the students. (These are in addition to Pell Grants.) The
Department of Education allocates a specific amount of money to each
participating college. Once distributed, there are no additional sums.
Applications are made through the academic institution’s office of
financial aid. Early application is strongly recommended.
The College Work-Study
Program is a program administered by each participating college to
provide employment for students who demonstrate financial need. The
federal government grants funds to colleges for this purpose. Students
normally obtain employment under this program as part of an overall
financial aid package. They generally work 12 to 15 hours per week
during school sessions, and up to 40 hours a week during vacation
periods. Examples of college employment include library clerks, faculty
aides, maintenance workers and cafeteria workers. The awards are
determined by the colleges, and once a student has earned the full award
amount, employment is terminated for that academic year.
Application is made
through the college financial aid office. Eligibility is based solely on
financial need. Students must be enrolled at least half-time in an
accredited college and maintain good academic standing while employed.
These earnings will not reduce the student’s financial aid eligibility,
however funds are limited, so apply early.
Perkins Loans (formerly
National Direct Student Loans) are administered by colleges that also
act as lenders. Eligibility is based on the student’s calculated need.
Although the interest rate is low, funds are limited and students should
submit the financial aid application early. A student will pay no
interest while still in school. There is a nine-month grace period after
leaving college. Repayment is stretched out over 10 years.
State governments also
offer a variety of assistance programs. But most state assistance is
available only to state residents attending schools within that state.
Some states do make exceptions and permit state residents to attend
out-of-state schools. A few states allow nonresidents to receive
assistance while attending a school within the state or have reciprocity
arrangements with other states.
Many states have special
programs for teachers and National Guard enlistees. Others offer
work-study programs and special academic supplements. Application
procedures vary from state to state. While most states allow the student
to use one of the same need analysis application forms used by the
federal programs, some states require separate application forms that
must be completed for state programs. Students may find out about state
programs and requirements through their high school guidance counselor,
college financial aid office or a state agency.
It is important to begin
early and thoroughly investigate all potential sources of financial
aid. Your child’s college placement office can be a good starting point
for information on financial aid sources.
This communication is
not intended to be tax or legal advice and should not be treated as
such. Each individual’s situation is different. You should contact your
tax and/or legal professional to discuss your personal situation.
This article was
prepared by Wealth Management Systems Inc. The opinions voiced in this
material are for general information only and are not intended to
provide specific advice or recommendations for any individual. We
suggest that you discuss your specific situation with a qualified tax or
legal advisor. Please consult me if you have any questions.
Because of the
possibility of human or mechanical error by Wealth Management Systems
Inc., or its sources, neither Wealth Management Systems Inc., nor its
sources guarantees the accuracy, adequacy, completeness or availability
of any information and is not responsible for any errors or omissions or
for the results obtained from the use of such information. In no event
shall Wealth Management Systems Inc. be liable for any indirect, special
or consequential damages in connection with subscribers’ or others’ use
of the content.
~ Marianne 408-295-6656 marianneadoradio@gmail.com ~
Tracking #1-302800
Joe Guttadauro, MBA
1165 LINCOLN AVE, STE 330
SAN JOSE, CA 95125
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