By: Yara Zakharia, Esq., Contributing EditorFor today's college-bound, high tuition costs seem to be the price to pay for obtaining a quality post-secondary education. For many financial aid borrowers, federal loans are not sufficient to put the lid on their school expenses. The average college student usually needs extra money to cover books, round-trip flights as well as transportation needs, computer hardware/software, unexpected tuition hikes, and tutoring services. Fortunately, alternative and flexible sources of funding are available to fill in the financing gap. Student borrowers may choose from among the following financing options to supplement their standard college aid package:
1. Private student loan
Private student loans are offered by numerous lenders, including Sallie Mae. The loan limits tend to be generous, and the approval rate is usually very high (i.e., more than 80% for Sallie Mae's private student loans). The extent of credit that students are eligible for depends on whether they have a co-signer on the loan. Applicants must be enrolled at a 4-or 5-year university or college at least half-time. A private student loan enables individuals to borrow up to the college attendance cost minus other financial aid obtained. The annual amount that undergraduate and graduate students may borrow is the lesser of $30,000 ($40,000 for some universities where the cost of attendance exceeds $30,000) or the cost of attendance. Those without a co-signer may borrow up to $100,00; this loan limit includes their private and federal student loan debt). Students with a co-signer are not subject to any aggregate loan limit.
One credit-based private education loan available to undergraduates is the Act Education Loan. To lower their interest rate and increase their eligibility potential, students should consider applying with a credit-worthy co-signer.
2. Grants
One of the advantages of obtaining a grant is that it has no repayment requirement. This type of financial aid is awarded mainly on the basis of financial need. Undergraduates are usually the recipients of Federal Pell Grants. For the 2007-2008 academic year, the maximum Pell Grant award is $4,310. The amount that an applicant receives depends not solely on his or her financial need, but also on attendance costs, full or part-time attendance, and plans to enroll for one academic year or less. Academic Competitiveness Grants provide qualifying students $750 for their freshman year and up to $1,300 for their sophomore year.
To be eligible, a student must 1) have received a Federal Pell Grant, 2) be enrolled full-time at a two or four-year college, 3) have graduated from a challenging high school program, and 4) have a minimum 3.0/4.0 grade point average, if he or she is a second-year student. A recently-introduced grant is the National Science & Mathematics Access to Retain Talent Grant (National SMART Grant) which is offered to full-time, third and fourth year undergraduate students. Eligible applicants receive up to $4,000 in undergraduate funds each year (3rd and 4rth academic year). One of the requirements for qualification is that students be majoring in engineering, math, technology, computer, physical or life science, or a critical foreign language. Another type of grant is an institutional grant, better known as a merit award or merit scholarship. This is provided by universities on the basis of scholastic achievement. Some merit awards are awarded to college students on the basis of financial need, while others are offered irrespective of their family's finances.
3. Campus-based programs
The leading campus-based aid available to students seeking additional financing are the Federal Work-Study (FWS), the Federal Perkins Loan, and the Federal Supplemental Educational Opportunity Grant (FSEOG). Students should find out if their university participates in any or all of the programs. Undergraduate students with exceptional financial need may qualify for a Federal Supplemental Educational Opportunity Grant (FSEOG), and Federal Pell Grant recipients are given priority. The annual award ranges from $100 to $4,000, depending on applicants' financial need, the policies of the financial aid office and the available funding at the school.
Students who are awarded an FSEOG need not pay it back. Undergraduate and graduate students can obtain part-time jobs through the Federal Work-Study (FWS), a popular supplemental aid program which helps defray their educational expenses. Finally, both undergraduate and graduate students with exceptional financial need may avail themselves of a low-interest (5 percent) Federal Perkins Loan. Undergraduate students can borrow an annual amount up to $4,000, and graduate students are eligible for $6,000 per year of professional study.
4. College scholarships
Unlike a student loan, a scholarship does not have to be repaid and is generally not need-based but rather, merit-based. Scholarships can finance a substantial chunk of a student's college education. The internet contains a wealth of scholarship resources from countless organizations and foundations. One scholarship service that has helped millions of students locate scholarships is Scholarships.com. More than 2.7 million grants and scholarships valued at more than $19 billion are at students' disposal. Another popular and free service is StudentScholarshipSearch.com, which provides 633 links offering scholarship awards totaling $9,524,949,362.00.
