How to Pay for College: Federal Financial Aid

Applying for federal financial aid can be a very intimidating subject, but we are here to help you understand the different types of loan options so you can make the best decision for your current and future finances.

Federal financial aid for college students can come in the form of grants, subsidized loans, unsubsidized loans, and military benefits. Read on to learn more about the different types of aid available.

Federal Pell Grant

Pell Grants are only awarded to undergraduate students working on their first bachelor’s degree. The Pell Grant is a form of gift aid (no service or repayment requirements) with eligibility based on need. To be considered for the Pell Grant a student must complete a Free Application for Federal Student Aid (FAFSA) at www.fafsa.gov annually.

The Pell Grant amount is determined by the Expected Family Contribution (EFC) listed on the Student Aid Report, which is determined based on your FAFSA, and the student’s enrollment status (part time vs. full time).

Federal Stafford Loans

The U.S. Department of Education administers several loan programs designed to offer low-interest funding to students who need to borrow money. One such program is the Federal Stafford Loan Program.

Subsidized and Unsubsidized Stafford Loans

• A subsidized loan is awarded on the basis of financial need. The federal government pays the interest while a student is in school and during grace and deferment periods.
• An unsubsidized loan is not awarded on the basis of need. You’ll be charged interest from the time the loan is disbursed until it’s paid in full. If you allow the interest to accrue while you’re in school or during other periods of nonpayment, it will be capitalized—that is, the interest will be added to the principal amount of your loan, and additional interest will be based on that higher amount.

Interest Rates and Fees

The Direct Stafford Loan interest rate and origination fees vary depending on the date of disbursement. For up to date interest rates visit http://studentaid.ed.gov/types/loans/interest-rates.

Loan Limits for Stafford Loans

Federal Stafford Loans have both annual limits and lifetime limits for what a student is permitted to borrow. These limits are based on an undergraduate’s classification (e.g. freshman, sophomore, junior, or senior) and whether a student is considered dependent or independent, based on results from the FAFSA application. Graduate students do not have dependent or independent distinctions, but do have different limits than undergraduate students.

Dependent Undergraduate Student:

• 1st Year $5,500 – only $3,500 may be subsidized
• 2nd Year $6,500 – only $4,500 may be subsidized
• 3rd and 4th years $7,500 – only $5,500 may be subsidized
• Lifetime maximum limit $31,000 – only $23,000 may be subsidized

Independent Undergraduate Student:

• 1st Year $9,500 – only $3,500 may be subsidized
• 2nd Year $10,500 – only $4,500 may be subsidized
• 3rd and 4th years $12,500 – only $5,500 may be subsidized
• Lifetime maximum limit $57,500 – only $23,000 may be subsidized

Graduate Students:

• Each academic year $20,500 – graduate students are only eligible to receive unsubsidized loans.
• Lifetime maximum limit $138,500 – only $65,500 may be subsidized

The Federal Stafford Loan Program is intended solely to aid students pursuing a degree in higher education. In order to qualify, you must complete the FAFSA and meet the basic eligibility requirements for Title IV financial aid and be enrolled at least half-time. You will also be required to complete loan entrance counseling, so you understand the loan program you are entering into, and sign a Master Promissory Note which is a document in where you promise to repay your loans.

Federal PLUS Loans

The U.S. Department of Education also administers a loan program for dependent students that can be borrowed by the student’s parent. Awarding of this loan is subject to credit approval. Parents, stepparents, or adoptive parents may apply. Completion of the FAFSA is required for the PLUS Loan. Yearly loan limits are calculated at the time the PLUS Loan is awarded and are dependent on the student’s Estimated Cost of Attendance (cost to attend school for one academic year, including tuition and fees, books and supplies, room and board, transportation, and personal expenses). The interest rate and origination fees vary depending on the date of disbursement. Please visit here to see current interest rates http://studentaid.ed.gov/types/loans/interest-rates.

Federal Graduate PLUS Loans

Graduate students can also qualify for a graduate PLUS loan. Like the Federal PLUS Loan, it is subject to credit approval. Yearly loan limits are determined by the student’s Estimated Cost of Attendance. Completion of the FAFSA is required for the PLUS Loan. Students who receive graduate Stafford Loans may not qualify for any graduate PLUS Loan. The interest rate and origination fees vary depending on the date of disbursement. Please visit here for more information about interest rates http://studentaid.ed.gov/types/loans/interest-rates.

We know this is a lot of information to take in and CSU Global is dedicated to making sure you understand all of your options and the various aid application processes. Once you are enrolled in one of our degree programs, CSU Global has a full tuition planning team that is here to help you understand your loan and financing options and walk you through the various application processes. This is just one of the many ways we are here to support you and ensure your success today and after graduation.

For more information about tuition planning and the different types payment options please visit here.