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How Federal Student Aid Can Pay for Higher Education

Higher education is one of the most effective ways either to guard against or to recover from unemployment. The U.S. federal government has long recognized the value of higher education in providing a social and financial safety net for its citizens. As a result, several different types of financial assistance are available from the federal government to help students of all ages finance an education. If you're wondering how to pay for higher education, look no further - we'll walk you through everything you need to know to access the federal student aid that's right for you.

6 Types of Federal Student Aid

  1. Federal Student Loan
  2. Federal Student Grant
  3. Federal Student Scholarship
  4. Federal Work Study
  5. Federal Aid for Military Families
  6. Federal Aid for International Study

Federal
Student Loan

fedearal_loan

The U.S. Department of Education office offers different types of federal education loans to students and parents at lower interest rates.

Federal
Scholarships

Federal_Scholarship

It may be a one-time award or help you pay your entire tuition fee. Federal scholarships need not be repaid to the agency.

Federal
Student Grants

Federal_Grant

It is the most desirable education aid that need not be repaid to the U.S. Department of Education except in certain circumstances.

Federal Student Aid

If you are seeking out loans or any financial assistance for your education, federal student aid may be your best option. The federal government has different loan assistance programs, scholarships, and grants to help out students pursuing higher education. Federal student loans offer numerous benefits such as fixed and low-interest rates, multiple repayment options, deferred payments, and more. Federal scholarships and grants, on the other hand, do not require to be repaid.

Federal
Student Loan

fedearal_loan

The U.S. Department of Education office offers different types of federal education loans to students and parents at lower interest rates.

Federal
Scholarships

Federal_Scholarship

It may be a one-time award or help you pay your entire tuition fee. Federal scholarships need not be repaid to the agency.

Federal
Student Grants

Federal_Grant

It is the most desirable education aid that need not be repaid to the U.S. Department of Education except in certain circumstances.

While nothing can guarantee that you always can find employment, investing in higher education can help. Getting a college education or advanced degree provides essential critical thinking skills, experiences, and networks that can help connect you with continuous employment. And if you're thinking that higher education is too expensive for you, think again.

The federal government makes available several different kinds of student aid to make sure a lack of resources doesn't keep students from pursuing their academic degrees. The U.S. Department of Education's Office of Federal Student Aid makes available roughly $112 billion in student aid each year to help Americans cover the costs of higher education - whether that be college or career school.

What Is Federal Student Aid?

The U.S. Department of Education recognizes that students are America's smartest investment. To this end, the federal government is the largest provider of student financial assistance in the United States. Federal student aid comes in many different shapes and sizes, including federal loans, grants, and scholarships - chances are, you can find a financial aid vehicle that's right for you. A well-educated workforce is in everyone's best interest, and the federal government invests in making a college education possible for more than 10 million students each year.

1. Federal Student Loan

Federal student loans make it possible for you to borrow the money you need to cover the costs of your higher education. But unlike other financial aid vehicles, like scholarships and grants, federal student loans must be paid back, along with the interest they accrue.

The U.S. federal government makes available four different types of federal student loans:

Each federal loan program has specific processes and eligibility criteria. Federal student loans are available for undergraduate, graduate, and professional students in varying amounts. When you receive a comprehensive financial aid package from your school or college, it will outline how much of your financial assistance is presented as a federal student loan.

Federal student loans offer a few advantages over college loans you may be able to access through other lending institutions. First, the interest rate on a federal student loan typically is lower than the rates associated with private student loans. In most cases, you can qualify for a federal student loan without a credit check or a cosigner. Plus, federal student loans typically have flexible and attractive repayment and loan forgiveness plans that include the ability to defer payments or even have a portion of your federal loans forgiven after a certain amount of time and/or if you work in certain fields.

In some cases, as with a direct subsidized loan, the federal government will also assume the cost of the interest associated with your federal loan while you are enrolled in classes and for some time afterward. In addition, you won't need to begin repaying your federal student loans until your course of study is complete.

Much like other federal student financial aid vehicles, your qualification for a federal student loan largely is determined by the information you provide in your FAFSA. When you receive your full financial aid package from your school or college, it should include a detailed summary of any federal student loans you are eligible for and/or have been offered.

2. Federal Student Grant

Federal student grants are an important and attractive way to pay for higher education - unlike federal loans, grants do not have to be paid back, and many are available from the federal government to cover tuition and other costs of college. This type of student aid generally is awarded based on financial need.

Some of the most widely accessed federal student grant programs include Federal Pell Grants, Federal Supplemental Educational Opportunity Grants (FSEOG), Iraq and Afghanistan Service Grants and Teacher Education Assistance for College and Higher Education (TEACH) Grants.

The Pell Grant is generally awarded to undergraduate students who show documented and exceptional financial need - these federal student grants are reserved for students who have not previously earned any type of degree. The one exception to this stipulation is for some students who are working on teacher certification programs after earning a bachelor's degree. For 2022-23, the maximum Pell Grant amount is $6,895, though the amount you are assigned depends on the cost of attendance at your school or college, your family's anticipated contribution toward your education, whether you are a full- or part-time student and whether you plan to attend classes for a full academic year or less.

In most cases, Federal Supplemental Educational Opportunity Grants are awarded by the financial aid office of a school or college to students who demonstrate the highest financial need. Awards range usually between $100 and $4000 per year and are determined based on the information you provide as part of the Free Application for Federal Student Aid (FAFSA).

Each participating school or college gets a specified, set amount of FSEOG funds each year from the U.S. Department of Education's Office of Federal Student Aid. Once the entirety of the school's FSEOG funds has been awarded, no more FSEOG awards can be given for that academic year. This is important to note because it differentiates the program from the Pell Grant program, which awards grants to every eligible student.

Iraq and Afghanistan Service Grants help cover the costs of college for students who have a parent or guardian who was a member of the U.S. armed forces and died as a result of military service in Iraq or Afghanistan after the events of 9/11. To be eligible, the student must have been under age 24 or enrolled in college at least part-time at the time of the parent's or guardian's death.

These grants generally are reserved for students who are not eligible for a Federal Pell Grant based on expected family contribution but meet remaining Federal Pell Grant eligibility requirements. The grant amount will be equal to the amount of a maximum Federal Pell Grant for that particular award year - however, the amount cannot exceed the cost of attendance for that year at your specific school or college.

Teacher Education Assistance for College and Higher Education (TEACH) Grants are unique in their structure. They require that the student agree to complete a teaching service obligation as a condition for receiving the grant. If the service obligation isn't completed, the TEACH Grant is converted to a loan that must be repaid in full, plus interest.

The TEACH Grant Program awards grants of up to $4,000 per year to students who are completing or plan to complete coursework toward a career in teaching. To be eligible for this program, a student generally must score above the 75th percentile on one or more portions of a college admissions test or maintain a cumulative GPA of at least 3.25. In addition, a student must participate in TEACH Grant counseling that outlines terms and conditions of the TEACH Grant service obligation. To remain eligible for the grant program, you must complete this counseling during each year that you receive a TEACH Grant.

3. Federal Student Scholarship

Scholarships represent one of the best ways to meet the costs of higher education. Think of a scholarship as a gift, designed to help you pay for college without you ever having to pay it back. Federal student scholarships are need-based or merit-based and exist to help close the gap between what you can afford and the true costs of your college education.

Some federal scholarships also target specific majors, especially in fields where workers are in high demand. For example, federal agencies like the National Oceanographic and Atmospheric Administration and the Department of Transportation may offer scholarships in an attempt to attract well-trained candidates for their future employee pipeline.

You can find federal student scholarships in many different amounts, ranging from those that can cover a student's full costs of attendance to those that can help with books and fees. Your qualification for a federal student scholarship is based on the information you provide as part of your Free Application for Federal Student Aid, or FAFSA. You will be required to maintain satisfactory academic progress in order to keep your scholarship.

As with scholarships awarded within the private sector, federal organizations may give scholarships for academic achievements, athletic prowess, or fine arts talent and accomplishments. Scholarships may be available to help provide college access for students who have historically been underrepresented in the world of higher education.

Perform a quick Internet search or check with the financial aid office of your school to learn about federal student scholarships for which you might be eligible. Many scholarships have their own requirements when it comes to eligibility criteria and how to apply, and all will require that you maintain satisfactory academic progress.

4. Federal Work Study

The Federal Work Study Program allows students to earn money to pay for school by working part-time while they are enrolled in classes. Federal work study opportunities are available to undergraduate students, graduate students, and professional students who have demonstrated financial need. Students may be enrolled on a full-time or part-time basis, and their school or college must participate in the federal Work Study Program. As part of your comprehensive financial aid package, you will be assigned a specific number of work study hours, based on your class schedule and academic history.

Most federal work study job placements emphasize civic education and work related to the student's course of study whenever possible. These placements may be on the student's campus or elsewhere within the broader community. If a placement is on campus, you'll usually work for your school. For off-campus placements, your employer may be a private nonprofit organization or a public agency, and the work performed is required to be in support of the public good. For any federal work study placement, you will earn no less than the federal minimum wage, though in some cases you may be able to earn more, depending on the type of work you're doing and the skill set required to do the work successfully.

5. Federal Aid for Military Families

The federal government also makes student financial aid available in recognition of military service. This may include financial aid for veterans or family members of veterans, along with financial aid for students who may be interested in joining a particular branch of the U.S. military.

For example, Army Reserve Officers' Training Corps scholarships are offered at more than a thousand colleges across the country. The Air Force and the Navy offer both full and partial ROTC scholarships. It's important to note that ROTC scholarships are typically awarded as merit scholarships and are not based on financial need.

Through its GI Bill, the U.S. Department of Veterans Affairs offers scholarships to veterans and their dependents. There are actually multiple aid programs that compose the full GI Bill benefit for veterans and their families - these include the Post-911 GI Bill, the Active Duty Montgomery GI Bill, the Reserve and Guard Montgomery GI Bill, and the Veterans Readiness and Employment Program. Each of these federal aid programs has its own set of eligibility criteria. The Post-911 GI Bill is the most comprehensive of these military aid programs, designed to help military veterans and their families cover the full costs of higher education, including tuition, fees, and housing. These benefits may be used by veterans or their family members.

To apply for this type of aid, check whether your selected school participates in federal aid for military families. If the answer is yes, once you are accepted to your school of choice, you'll need to apply separately with the VA for financial aid.

6. Federal Aid for International Study

The federal government also makes funds available for students who wish to study abroad - whether for a semester or their entire college career. Make sure to fill out and submit your FAFSA, which will help determine what level of federal aid you qualify for, based on financial need. If you choose to pursue your degree through an international school, you'll just need to make sure your selected school participates in the American federal aid program. Federal aid for international study typically is awarded as student loans - subsidized or unsubsidized. Parents may also be awarded federal aid on behalf of their students who want to study abroad.

More Federal Financial Aid Programs

In addition to the programs made available through the U.S. Department of Education, the federal government supports higher education in other ways, such as those listed below.

Tax Benefits for Higher Education Costs

The Internal Revenue Service offers a couple of specific tax credits to help Americans offset the cost of higher education. First is the American Opportunity Credit, which allows taxpayers to claim up to $2,500 per student per year for the first four years of the student's study, as long as the student is working toward a college degree or similar licensing, certification, or other credential. There's also the Lifetime Learning Credit, which allows you to claim up to $2,000 per student per year for any college or career school expenses - that includes tuition, fees, books, and any supplies or equipment required for the course that had to be purchased from the school.

You can invest in your state's Qualified Tuition Program, or 529 plan, which allows you to put aside money for education-related expenses. Once you're enrolled as a student and begin to withdraw money from your QTP, it will not be taxed. And once you finish school and begin paying back your student loans, you can deduct any interest you pay from your taxable income. This applies to any loans you take out for yourself, a spouse, or a dependent. The maximum you can claim is $2,500 per year.

You can also withdraw funds from an IRA and use them to pay for higher education expenses. While you'll still need to pay taxes on the amount you withdraw, your withdrawal won't be subject to any penalties as long as you're using the money to cover higher education-related expenses.

Education Awards Through AmeriCorps

Access money to help pay for college expenses by volunteering through AmeriCorps, a program that matches volunteers with community organizations in their area. Volunteers who complete one year of full-time volunteer service generally are awarded $4,725. If you volunteer part-time with AmeriCorps, you can still earn a financial aid award that is pro-rated according to your volunteer service. Funds can be used to cover tuition, educational training - or even for student loans that you already owe. You can claim this financial aid award for up to seven years after you leave AmeriCorps, and volunteers are eligible to receive no more than two awards.

Educational and Training Vouchers for Foster Care Youth

The John H. Chafee Foster Care Program for Successful Transition to Adulthood helps young people who either are currently or formerly were in foster care through its Educational and Training Vouchers (ETV) Program. These grants are funded by the federal government, but they are administered at the state level. In general, if you experienced foster care after age 14 or you exited foster care either to adoption or guardianship after age 16, you may be eligible for financial aid under this program.

Young adults can access financial aid through this program until they turn 26, and they may qualify for no more than five total years of financial aid. These years are not required to be consecutive. Typically a student is eligible for up to $5,000 per academic year, based on the cost of attendance at their chosen school, available program funds, and the student's documented financial need.

Scholarships and Loan Repayment Programs

These financial opportunities can help attract qualified candidates to professions or areas of the country that have been traditionally underserved. For example, the Department of Health and Human Services' Indian Health Service will help clinicians repay up to $40,000 in eligible health profession education loans in exchange for a two-year service commitment to practice health care within American Indian and Alaska Native communities. Priority placement is given to the communities with the greatest need. This contract then may be extended on a yearly basis until the entirety of the student debt is paid.

National Institutes of Health's Loan Repayment Programs (LRPs) include repayment of up to $50,000 each year of a scientific researcher's qualified educational debt in return for a commitment to engage in mission-relevant research for the NIH. These programs, established by Congress, are designed to help recruit and retain highly qualified health professionals in biomedical or biobehavioral government research careers. The NIH is a component of the U.S. Department of Health and Human Services.

The National Health Service Corps offers three different programs to help licensed professional clinicians tackle student debt in exchange for a two-year clinical commitment to an NHSC-approved site. The program generally will pay $50,000 per year for a full-time contract and up to $25,000 per year for a half-time contract. You also may apply for additional loan repayment after the conclusion of the first two-year contract. Participation in this program helps ensure well-trained clinicians in communities that have traditionally been underserved.

Federal Student Aid

It's never too late to look into your options for covering the costs associated with higher education. Higher learning is one of the best ways you can guarantee that you'll always be able to find a job. Plus, it gives you the flexibility and mobility to choose the job that gives you a sense of purpose and engagement. The federal government - along with a whole host of nonprofit organizations, businesses, and other entities - can make funds available to help you pursue your degree. So don't wait. Get started on the road to job security, satisfaction and stability today.

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