February 2008
Federal Student Financial
Aid Deadline Just Ahead
The Key to College Loans
& Grants
Dear Friend,
Higher education is one of the smartest
investments we can make in our own future. But the cost
of that investment gets steeper and steeper every year -
nearly doubling in the last ten years! There are several
common ways to pay for college or technical school: some
students come from families who can afford to pay
outright; some earn athletic or academic scholarships;
and many people work to put themselves through school.
But the vast majority relies, at least in part, on
federally-insured student loans or federal grants.
All of it begins with FAFSA - the Free
Application for Federal Student Aid. It has to be filled
out to receive any federal student financial aid, and in
many cases, state or school financial assistance.
Every year the federal government
provides billions of dollars in grants and low-interest
loans to students and parents all over the country.
Students in Hawaii received $143-million in financial
assistance in the 2006-07 school year; nearly 11,000
college students received federal Pell Grants, and
another 8,700 helped pay for college through need-based
federal student loans.
There are three major types of federal
financial aid: grants, work-study, and loans.
- Grants don't need to be paid back,
and they're usually based on financial need. The
federal government will offer five different grants
for the 2008-2009 school year: Teacher Education
Assistance for College and Higher Education (TEACH)
Grants, Pell Grants, Federal Supplemental Educational
Opportunity Grants (FSEOG), Academic Competitiveness
Grants (ACG), and National Science and Mathematics
Access to Retain Talent (SMART) Grants. Pell and FSEOG
Grants are based entirely on need, while the TEACH,
and SMART Grants also consider student achievement and
prospective careers, and ACGs are awarded to students
with need and outstanding academic records.
- Federal Work-Study provides
part-time jobs for undergraduate and graduate students
with financial need, allowing them to earn money to
help pay education expenses. The program encourages
community service work and work related to the
recipient's course of study.
- Finally, there are four federal
student aid loan programs: Federal Perkins loans, in
which the school or its agent is the lender and the
interest rate is fixed at 5%; Federal Family Education
Loan (FFEL) Stafford loans, in which the lender is a
bank, credit union or other private lender and the
interest rate is variable, but cannot exceed 8.25%;
Direct Stafford loans, in which the lender is the
federal government and the interest rate is the same
as the FFEL Stafford loans; and Plus Loans. While the
first three loans are for students, Plus Loans can be
taken out by parents and are basically the same as
Stafford Loans.
The information on the FAFSA determines
a student's eligibility for aid, most of which is
need-based, meaning that grades and test scores are not
a factor. The FAFSA form can be daunting. There are many
questions, so it is best to be prepared before beginning
the process. It's also good to know that, after filling
it out once, you only need to complete a shorter annual
renewal form for each school year.
The Department of Education's FAFSA
website, http://www.fafsa.ed.gov/,
has many resources to familiarize you with the process
and with FAFSA itself. There's a link to determine your
dependency status for the federal students financial
assistance; not the same as dependency status for taxes.
This will tell you whether or not you'll need your
parents' financial information. You can also find school
codes and apply for a PIN, which will be necessary to
complete the application. There is a checklist of items
needed before you start filling out your FAFSA at http://www.fafsa.ed.gov/before003.htm.
The website also has contact
information to help you through the process at http://www.fafsa.ed.gov/contact.htm.
The U.S. Department of Education's
deadline for the 2008-2009 school year is June 30, 2008,
but many schools have earlier due dates; some as early
as February.
You should check with your school's
financial aid office. The FAFSA requires income and
financial information for the previous yeaer, however if
you don't have all your information by the deadline, you
can estimate and then enter the actual amount when you
get it.
This new Congress has passed the
College Cost Reduction Act, which increased the maximum
Pell Grant a student can receive. The law also gradually
reduces the interest rates on Stafford loans to 3.4% in
2011. I'll be working to find even more ways to make
college affodable for every student who wants to go
because education is the key to opportunity and a
prosperous and secure future, for individuals and for
our nation.
Aloha,
Neil Abercrombie
Member of Congress
