Federal student aid programs

There are three categories of federal student aid: grants, loans, and work-study. Grants provide financial aid that does not have to be repaid. Loans provide borrowed money that must be repaid with interest. Work-study allows students to earn money while enrolled to help pay for education expenses.

Your financial aid "package" - the aid your school awards you - is likely to include funds from the federal student aid programs. Note that not all schools participate in all of the federal student aid programs administered by the U.S. Department of Education. The major programs are described below:

• Federal Pell Grants are available to undergraduate students only (with one minor exception for teacher certification students). Grants do not have to be repaid. For the 2006-07 award year (July 1, 2006 to June 30, 2007), grants will range from $400 to $4,050.
  
  
• Direct Stafford Loans and Federal Family Education Loan (FFEL) Stafford Loans are student loans that must be repaid and are available to both undergraduate and graduate students. If your school participates in the William D. Ford Federal Direct Loan (Direct Loan) Program, the federal government provides the funds for your Direct Stafford Loan through your school. If your school participates in the FFEL Program, a private lender provides the funds for your FFEL Stafford Loan. First-year undergraduates are eligible for loans up to $2,625. Amounts increase for subsequent years of study, with higher amounts for graduate students. Federal Stafford Loans made on or after July 1, 2006 are subject to a fixed rate of 6.8 percent.
  
  

  If you qualify (based on need) for a subsidized Stafford Loan, the government will pay the interest on your loan until the date your repayment is scheduled to begin and during any deferment periods. You are responsible for paying all of the interest that accrues on an unsubsidized Stafford Loan.
  
  

• FFEL PLUS Loans and Direct PLUS Loans are unsubsidized loans made to parents (Parent PLUS Loan) and effective July 1, 2006 to graduate or professional students (Graduate/Professional PLUS Loan). FFEL PLUS Loans are made through private lenders; Direct PLUS Loan funds are provided by the federal government through the school. If you are an independent student or a dependent student whose parents cannot get a PLUS Loan, you are eligible to borrow additional Stafford Loan funds. Graduate PLUS borrowers are required to complete the Free Application for Federal Student Aid (FAFSA) before applying for these loans. They also must have applied for their annual loan maximum eligibility under the Federal Subsidized and Unsubsidized Stafford Loan Program before applying for a Graduate/Professional PLUS Loan. Direct PLUS Loans made on or after July 1, 2006 are subject to a fixed rate of 7.9 percent. FFEL PLUS Loans made on or after July 1, 2006 are subject to a fixed rate of 8.5 percent.
  
  
• Campus-Based Programs are administered by participating schools. There are three of these programs. Federal Supplemental Educational Opportunity Grants are grants available for undergraduates only; awards range from $100-$4,000. Federal Work-Study provides jobs to undergraduate and graduate students, allowing them to earn money to help pay education expenses. Federal Perkins Loans are low-interest (5 percent) loans that must be repaid; the maximum annual loan amount is $4,000 for undergraduate students and $6,000 for graduate students.
  
  

The above programs provide over $70 billion in aid to help more than 8.9 million recipients and their families pay for postsecondary education. Your financial aid package also may include aid from the Leveraging Educational Assistance Partnership (LEAP) Program, which assists states in providing grants to eligible students for postsecondary study. States may use a percentage of their LEAP funds to provide work-study assistance.

The Higher Education Reconciliation Act of 2005 (HERA) created two new grant programs for full-time students at degree-granting institutions who are eligible for Federal Pell Grants and are U.S. citizens. Under the Academic Competitiveness Grant (ACG) Program, students may receive up to $750 for the first year of undergraduate study and up to $1,300 for the second year of undergraduate study. Under the National Science and Mathematics Access to Retain Talent (SMART) Grant Program, students may receive up to $4,000 for each of the third and fourth years of undergraduate study. These yearly amounts are in addition to what the student receives under the Pell Grant Program. You can get more detailed information at www.studentaid.ed.gov by clicking on the Funding Tab.