RESTON, Va., March 15 /PRNewswire/ -- It's that time of year again:
college-bound students and their families will soon start receiving financial
aid award letters from the colleges where they were accepted. While the letter
might seem simple to understand at first, the reality is that parents and
students need to take a close look at its contents. The financial aid jargon
often can confuse the most prepared family. To assist parents and students in
this often-challenging phase of the "going-to-college" process,
wiredscholar.com, the foremost online resource for planning and paying for
college tools, offers an Online Award Analyzer to evaluate financial aid award
packages.
Financial aid award letters provide students and their families with the
type and amount of aid they are eligible for, funding sources and conditions
of the award. The type and amount of federal aid awarded depends on many
factors, including the cost of education, family information provided on the
Free Application for Federal Student Aid (FAFSA) and the availability of
funds. The letters generally include information on some of the more common
financial aid sources found in award packages, such as:
* Federal Pell Grant: Students who meet federal criteria for financial
need automatically receive this grant, which does not require
repayment. Once students accept this offer, the grant is credited
directly to their college accounts.
* Federal SEOG (Supplemental Education Opportunity Grant): This grant
is awarded to low-income students based on availability of funds at
the college and does not require repayment. Once accepted, the grant
is credited directly to students' college accounts.
* College or University Grant: Individual colleges or universities
determine eligibility for this award. The college funds this grant
and does not require repayment. Once students accept this grant, it
is credited directly to their college accounts.
* Federal Work-Study: This program is awarded to students with
financial need. Students work part time to earn this award and are
responsible for tuition payment. Work-study funds are not credited
directly to students' accounts.
* Federal Perkins Loan: This low-interest-rate (5 percent) loan is for
students with exceptional financial need and is based on the
school's available loan pool. As with all federal education loans,
repayment is required. Once students accept the loan offer, they
must follow their college's guidelines on receiving it. After the
school disburses the loan funds and students sign a promissory note,
funds are credited directly to their college accounts.
* Federal Stafford Loans: These low-interest-rate education loans must
be repaid. Annual borrowing limits vary depending on a student's
year in college; freshmen receive a maximum of $2,625. Students
must follow their college's guidelines on applying for and receiving
the loan. After students sign a promissory note, the lender
disburses the loan funds to the college. Students have the option of
receiving a check or having funds credited directly to their college
accounts. Two types of Stafford loans are available:
Subsidized: These loans are awarded to students with
financial need. The federal government pays the interest on the
loan while students are in college, and during deferment and
grace periods.
Unsubsidized: These loans are awarded to students regardless
of family income. Borrowers pay interest while attending
college, or may defer payment and allow interest to accrue. In
most cases, accrued interest is "capitalized," or added to the
principal loan amount when repayment begins.
If the award letter is not enough to cover all college expenses, parents
should consider applying for the Parent Loan for Undergraduate Students
(PLUS). PLUS loans are available to parents of undergraduate dependent
students and are not based on income or assets. Parents may take up to 10
years to repay the loan, and the interest rate is variable, with a maximum of
9 percent. Repayment begins shortly after funds are received. Parents
interested in this option should call Sallie Mae's Parent Answer Service(R)
toll free, 800-891-1410, weekdays, 8 a.m. - 9 p.m. ET, or visit
http://www.wiredscholar.com .
About Sallie Mae
Sallie Mae, founded 28 years ago, provides funds for educational loans,
primarily federally guaranteed student loans originated under the Federal
Family Education Loan Program (FFELP). The company currently owns or manages
in excess of $67 billion in student loans and provides parents, students and
educators with comprehensive information on the financial aid process. Through
its specialized subsidiaries and divisions, Sallie Mae also provides an array
of consumer credit loans, including those for lifelong learning and K-12
education, and business and technical outsourcing services for colleges and
universities. USA Education Inc. and its subsidiaries, other than the Student
Loan Marketing Association, are not sponsored by or agencies of the United
States. More information about Sallie Mae is available at
http://www.salliemae.com .
The following is a sample financial aid award letter(1) for a freshman
attending classes full time and living on campus. The annual cost of
attendance is $15,000 and includes tuition and fees, room and board, books and
supplies, and personal expenses.
SLM UNIVERSITY
Office of Student Financial Aid
John E. Student Social Security Number: 123-45-6789
25 College-Bound Drive
University College, VA 20000
Dear Student:
After reviewing your FAFSA, we are pleased to provide you with the
following financial aid offer. This award is contingent upon anticipated
annual renewal of funding from federal, state and private sources. You
may accept or decline any of the awards offered(2).
Financial Aid Award
Type of Aid Fall Spring Total Accept Decline
Federal(3)
Pell Grant 600 600 1200 ( ) ( )
Federal SEOG 800 800 1600 ( ) ( )
SLM Grant 1000 1000 2000 ( ) ( )
Federal Work-
Study Program 700 700 1400 ( ) ( )
Federal Perkins
Loan 600 600 1200 ( ) ( )
Federal
Subsidized
Stafford
Loan(4) 1300 1300 2600 ( ) ( )
5,000 5,000 10,000
Please sign this letter and return it to the financial aid office within
two weeks. Read the enclosed information on how to apply for and receive
the Stafford Loan. If you need additional funding to supplement this
offer, please refer to the attached list of Additional Funding Options.
(1) This letter contains some of the more common financial aid sources
found in award packages. The type and amount of federal aid awarded
depends on many factors including the cost of education, family
information provided on the FAFSA and the availability of funds.
(2) Students generally receive the conditions that govern the award and
are given the opportunity to accept or decline the awards offered.
(3) All federal programs listed on the award letter are based on need.
Award packages also may include non-need-based financial aid.
(4) Interest rates are based on the T-Bill + 1.7 percent during in-school
periods and T-Bill + 2.3 percent during repayment. Rates are variable,
reset every July 1, and capped at 8.25 percent.
Notes:
With an annual cost of $15,000, SLM University will bill this student
$7,500/semester. The student received a financial aid award of $10,000/year
or $5,000/semester, but must work part time to earn the $1,400/year or
$700/semester work-study award. Even with grants, students loans and work-
study, the student will need an additional $5,000/year or $2,500/semester.
Additional Funding Options
If family savings and income can't cover the out-of-pocket expense,
students may consider the following additional funding options:
* Monthly Payment Plans: Extend payment of college costs not covered
by financial aid, over a period of time determined by the college.
Many schools offer 10-month payment plans.
* Parent Loan for Undergraduate Students (PLUS): Federal loan that
allows parents of dependent students to borrow up to the full cost
of the students' education minus financial aid received. Credit-
worthy parents are eligible to borrow a PLUS loan for students
regardless of family income.
* Private Loans: Non-federal loans available to credit-worthy students
and parents from banks, credit unions and other private sources.
Interest rates on private loans are usually slightly higher than
federal loans. Sallie Mae offers the Signature Education Loan
Program(SM) to help students cover the cost of their education.
SOURCE Sallie Mae
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Related links:
http://www.wiredscholar.com
Company News On-Call:
http://www.prnewswire.com/comp/147826.html or fax,
800-758-5804, ext. 147826
CONTACT:
Erin Love of Sallie Mae, 703-810-7136, or
erin.b.love@slma.com
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