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There are four primary sources of financial aid. There is federal, state, college, and private. The federal aid programs are usually the most generous.

The Federal Pell Grant

First, the federal Pell Grant is based solely on federal eligibility criteria and does not have to be repaid.

If you are eligible for a Federal Pell Grant, more is allocated if your child is a full-time student or is obtaining a more expensive education. For the 2007 and 2008 school year the range of money available was between $720 and $3,765. In 2007, 23% of college freshmen obtained federal Pell grants; the average award in 2007 was $2,567. In the last 16 years up to 2009 these numbers have increased exponentially as universities are now embracing big business.

The Federal Supplemental Education Grant

The second type of financial aid is the Federal Supplemental Educational opportunity Grant (FSEOG). This Grant provides between $100 and $4000 a year and it also does not have to be repaid. It is available only to undergraduates, and although the money comes mostly from the Fed, schools also must provide matching SEOG funds. The college determines which students receive SEOG money. Over 7% of college freshmen received SEOGs in 2007, and the average award in 2008 was $800.

The Federal Perkins Loan

The third type of federal aid is a Federal Perkins Loan, which provides up to $3000 a year and it is need-based for undergraduate or graduate students. This program used to be called the National Direct Student Loan Program (NDSL). Also in 2007, 7% of college students received Federal Perkins Loans, with an average in 2007 of $1261 loaned per student.

The Federal Stafford Student Loan

The fourth program is the Stafford loan, formerly called the Guaranteed Student Loan Program (GSL). For many many years prior to the 2007-2008 academic year, Federal Stafford loans were based only on need. Now there are two versions - need-based (subsidized) and non-need-based (unsubsidized). In 2007, the average award was $6,362. In the 2007 to 2008 school year, first-year students could receive up to $6,765, with second-year students receiving up to $7,489 and other students receiving as high as $8,129.

The Supplemental Loan for Students (SLS)

You may have heard of another program called the Supplemental Loan for Students (SLS), which provided non-need-based loans totaling up $20,000. Unfortunately this program eliminated back in 1994. I know of many families in Ohio who had counted on this program as a loan source, and their education funding strategies had to be changed because the SLS program is no longer available. This is a good example of why you can’t count on any kind of financial program to pay your child’s future college costs; chances are the student loan program will have very different rules for (or be eliminated altogether) by the time you need it.

The Parent Loan for Undergraduate Students

The fifth type of federal aid available is the PLUS program (Parent Loan for Undergraduate Students), which is available only to parents of undergraduates and provides funds up to the cost of attendance minus aid received each year.

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Each of these financial aid programs has different repayment provisions; with most student loans (except the PLUS program), interest is paid by the government while the child is in school, the payments do not begin until a certain period of time after the child is in school, and payments to not begin until a certain period of time after the child graduates. The interest rates are usually lower than those of regular unsecured loans.

The Federal Work Study Program

In addition to these federal grants and loan programs, there is the Federal Work Study Program in which 11 percent of college freshmen participated in the last decade (per year basis). These work-study jobs pay at least minimum wage, and often the jobs are related to the student’s area of interest. These federal programs are available regardless of the students planned course of study, but other federal government programs are tied to specific areas of interest.

Most notably, a number of grants and loans are available if your child is planning to enter the medical profession. These include Health Education Assistance Loans (HEAL) for graduate students, nursing student loans, health professions student loans (HPSL), and others.

With Barack Obama only 30 days from his inauguration these numbers are greatly rumored to be changing. Barack Obama’s ideas about the Peace Corps and about the way to fund college educations has been made very clear. As his campaign rhetoric constantly reminded us (when speaking to young people), “you invest your time in the United States in the United States will invest in your college education”. One can only hope that this was an empty campaign promise and that this may be the future of financial aid system for college educations of the future.

Ending part two Different Financial Aid Options and Student Loans [2]