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What You Need to Know About College Scholarships: Part 2

Part 1 of this series covered the basics of searching for scholarship money to lessen the cost of college and the average cost of college. Part 2 looks at scholarships available through the federal government and gives you additional information about qualifying and applying for these opportunities to help you achieve your educational goals.

 

Federal Scholarships for College

 

It’s a big part of the American Dream: graduating from college to pursue a productive and rewarding career. In fact, Americans value a college education so much that our federal government awards over 120 billion dollars in annual aid to help students achieve this goal. Much federal financial aid is in the form of student loans, work-study programs, and tax credits for education. However, the government also awards “free money,” which often doesn’t have to be repaid. Instead of calling this type of award a scholarship, the government calls it a federal grant. Grants are awarded based on need, plus special conditions and circumstances. A federal scholarship or grant could be your ticket to a great education at a lower cost.

 

Federal Grants & Private Scholarships: What’s the Difference?

 

You may be eligible for both federal grants and scholarships from your college, state, service club, foundation or business. One of the main differences between the two types of aid is the application process. Each private scholarship has its own process, and you must carefully adhere to the instructions and meet all deadlines if you hope to qualify. Eligibility for a federal grant is determined using the comprehensive FAFSA® form, which students submit to apply for all federal student aid (grants, loans, work-study and other types of federal assistance). An exception to this is military ROTC scholarships and VA programs, which have varying application processes. ROTC and VA applicants must go through the appropriate service branch or agency to apply.

 

Private scholarships are frequently awarded on merit (scholastic or athletic achievement), specified condition (area of study, heritage, college or state) or financial need. Sometimes, more than one criterion is used to determine the award. Federal grants are based primarily on need, although some federal programs have been established for specific purposes like promoting teacher education or community service. Such grants may have additional requirements, like academic achievement and service commitment, in exchange for education benefits. Likewise, scholarships awarded through U.S. military ROTC programs come with a specific commitment to serve.

 

How Do You Apply for a Federal Grant or Scholarship?

 

Application for federal grants begins by filling out the Free Application for Federal Student Aid (FAFSA®) form. To apply for scholarships through military ROTC programs, you must apply with the associated military branch. Application for VA benefits can be accessed through the Dept. of Veterans Affairs website. The Dept. of Defense also offers scholarships and graduate fellowships with their own application process. Links to these federal sites are listed here:

 

 

Resources for Grants & Scholarships Through the Federal Government

Check out these federal grant programs that could help you lower the amount of money you have to borrow to attend college.

 

Pell Grants:

These grants gave eligible students a maximum amount of $6,195 toward their education in 2019 – 2020. Students may receive this assistance for up to 12 semesters of college.

Available To: Undergraduate Students

Qualifications:

  1. Must show exceptional financial need.
  2. Have not earned a bachelor’s, graduate, or professional degree. May be eligible if enrolled in a post-baccalaureate teacher certification program.
  3. Must not have been incarcerated in a federal or state correctional institution.

Amount Received Dependent On:

  • Expected Family Contribution (EFC). Defined by the Department of Education as “an index number that college financial aid staff use to determine how much financial aid you would receive if you were to attend their school.” The FAFSA form information is used to calculate this. The formula takes into account your family’s taxed and untaxed income, assets, benefits, family size, and the number of family members who will attend college.

Cost of Attendance – Expected Family Contribution = Financial Need

  • Cost of Attendance. Determined by your school for your program.
  • Attendance Schedule. Will you be a full-time or part-time student?
  • Are you attending school for the entire year or just a semester?

 

 

Federal Supplemental Educational Opportunity Grants:

This is an additional grant program distributed by participating colleges and allocates anywhere from $100 to $4000 toward a recipient’s undergraduate education. Submitting your FAFSA early can have a direct impact on this type of grant. Each school sets its own deadline for campus-based funding. You should be able to see the deadline on the school’s website and if it’s not there be sure to speak with a member of your financial aid office.

Available To: Undergraduate Students

Qualifications:

  1. Must show exceptional financial need.
  2. Have not earned a bachelor’s, graduate, or professional degree.

 

 

Teacher Education Assistance for College & Higher Education (TEACH) Grants:

You must also be pursuing a career in teaching. In order to qualify you will need to teach at the elementary or secondary level school in a high-need field in a low-income area after graduation.

Available To: Undergraduate Students, Post Baccalaureate Students, or Graduate Student (Attend a Participating School)

Qualifications:

  1. Enrolled in a TEACH-Grant-eligible program.
  2. Meet academic achievement requirements (scoring above the 75th percentile on one or more parts of a college admissions test or maintaining a cumulative GPA of at least 3.25)
  3. Receive TEACH counseling to explain the terms and conditions of the service obligation. Must complete counseling each year you receive a TEACH Grant.
  4. Sign a TEACH Grant Agreement to Serve.

 

Iraq & Afghanistan Service Grants:

Eligible students who lost a parent in military service and do not meet the need-based threshold for a Pell Grant can apply for additional college funds through this program.

Available To Qualifications:

  1. Not eligible for the Federal Pell Grant due to Expected Family Contribution.
  2. Meet Federal Pell Grant requirements for eligibility.
  3. Parent or guardian was a member of the U.S armed forces, who died as a result of military service performed in Iraq or Afghanistan after the events of 9/11.
  4. Under 24 years old or enrolled in college at least part-time at the time of the parent or guardian’s death.

 

 

SMART Scholarship Program:

The Dept. of Defense offers undergraduate scholarships and graduate fellowships to encourage participation in the STEM sciences and recruit future civilian employees for the DoD.

Available To Qualifications:

  1. Must be a U.S., Australia, Canada, New Zealand, or United Kingdom Citizen at the time of application
  2. As of August 1, 2019, must be 18 years of age or older.
  3. Ability to participate in summer internships at a DoD facility.
  4. Willingness to accept employment post graduate for DoD
  5. Minimum of 3.0 on a scale of 4.0 and in good standing.
  6. Pursuing one of these disciplines for undergraduate or graduate degrees.

 

Jobs to Reduce Student Loans

 

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Parent PLUS Loans vs. Cosigning Education Loans: What Is the Difference?

It’s no secret that paying for college and graduate school can be expensive. Along with purchasing a home, receiving a degree or two from a higher education institution can be one of the most costly (yet rewarding) financial steps of a person’s life. For most traditional college students, this decision is made at an age where the magnitude of the financial implications is too abstract to grasp.  Many students begin college around 18 years old, and with Forbes’ estimated average yearly tuition cost of $43,500 per year, funding often requires assistance in the form of student loans. Some students take out loans in their own names to pay back after graduation, but since annual loan limits in the federal program have not increased proportionately with rising tuition rates at many four-year colleges, parents often choose to help their children fill the financial aid gap with loans designed especially to supplement additional education costs.  Parent PLUS loans or cosigning a loan are the top two options for parents looking to help fund a child’s college education — but what is the difference, and which is right for you?

Cosigning a Loan

Cosigning a loan makes both the parent and the child mutually responsible for repayment. While a student does not need a cosigner to qualify for most federal loans, having a parent cosigner increases the chances of being approved for private loans needed to meet the total cost of attendance. The parent is not solely responsible for the loan, but if the child defaults or fails to make timely payments, the parents are required to take responsibility or risk damaging their credit score. Some experts caution parents against cosigning student loans, but in some cases it may be necessary in order for the child to be approved by private lenders.

Parent PLUS Loans

A Parent PLUS Loan is simply a federal education loan taken out by parents to help pay for their child’s tuition. What makes it different from other student loans is that the parent assumes complete financial responsibility for the loan. In other words, if the payments are not made on time, it affects the credit score of the parent. While some parents may be eager to help foot the bill for their child’s education, it is recommended to take advantage of Direct Loans first before taking out a Parent PLUS Loan. PLUS loans typically involve higher interest rates and fees than Direct Loans, and there is no grace period — the repayment process begins as soon as the final disbursement is made. Parent PLUS Loans are available to the parents of dependent undergraduate students and offer one way to curtail the amount of debt that the child accumulates.

Which is the Right Move?

If you are a parent considering ways to help your child pay for college, it is crucial to understand the differences and financial implications of both options. Both Parent PLUS Loans and cosigning a loan carry varying degrees of financial risk, and both are options for parents who want to make sure their child is not taking on too much debt. However, remember that parents can always help pay for lower-cost loans that are solely in their child’s name, which may save everyone money. Ultimately, it is a personal choice that depends on the financial situation and preferences of the family.

Are you a parent who financially supported your child’s education through a Parent PLUS Loan? See what  options are available for refinancing your loans into flexible repayment plans and competitive interest rates that could lower your monthly payments or total cost of the loan.