Federal Student Aid

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Federal Student Aid (FSA), an office of the U.S. Department of Education, is the largest provider of student financial aid in the United States. Federal Student Aid provides student financial assistance in the form of grants, loans, and work-study funds. FSA is a Performance-Based Organization, and was the first PBO to be established in the US government. [1]

Contents

Federal Student Aid is also responsible for the development, distribution, and processing of the Free Application for Federal Student Aid (FAFSA), the fundamental qualifying form used for all federal student aid distribution programs, as well as for many state, regional, and private student aid programs. Each year Federal Student Aid's staff processes approximately 22 million FAFSAs. Additionally, Federal Student Aid is responsible for enforcing the financial aid rules and regulations required by the Higher Education Act of 1965 and the U.S. Department of Education and managing the outstanding federal student loan portfolio.

Mission

Federal Student Aid's core mission is to ensure that all eligible Americans benefit from federal financial assistance—grants, loans and work-study programs—for education beyond high school. The programs Federal Student Aid administers comprise the nation's largest source of student financial aid: during the 2010–11 school year alone, Federal Student Aid provided approximately $144 billion in new aid to nearly 15 million postsecondary students and their families. A staff of 1,200 is based in 10 cities in addition to the Washington, DC, headquarters. In 2021, U.S. Education Secretary Miguel Cardona appointed Richard Cordray, the former head of the U.S. Consumer Financial Protection Bureau (CFPB), to the post of chief operating officer of Federal Student Aid. [2] Cordray said he would work to "create more pathways to education…not burdened by insurmountable debt." The program, as of September 2020, had 5.5 million individuals in default for $122 billion. The Federal Reserve Bank of New York reported that 20% of all student debt – mostly in the federal program – is at least 90% delinquent. [3]

While overseeing $864 billion in outstanding student loans, Federal Student Aid ensures that all partners in the student aid community—schools, servicers and guaranty agencies—operate fairly, honestly and efficiently.[ citation needed ] Another key role the organization performs is ensuring students and their families are aware that financial aid is available and is an important first step to education beyond high school. Federal Student Aid distributes numerous publications both in print and online and runs several customer call centers. Most of these services are provided in Spanish as well.

Student aid

Federal Student Aid provides financial assistance to students enrolled in eligible programs at participating postsecondary schools (accredited four-year or two-year public or private educational institutions, career schools or trade schools) to cover the cost of education expenses, including tuition and fees, room and board, books and supplies, and transportation. Most federal aid is need-based. The three most common types of aid are grants, loans, and work-study funds.

Grants are a type of financial aid that does not have to be repaid. Generally, grants are for undergraduate students and the grant amount is based on need, cost of attendance, and enrollment status.

Loans are borrowed money that must be repaid with interest. Both undergraduate and graduate students may borrow money. Parents may also borrow to pay education expenses for dependent undergraduate students.

Campus-Based Aid includes types of aid that schools are responsible for administering on behalf of the federal government.

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<span class="mw-page-title-main">Student loan</span> Type of loan for educational expenses

A student loan is a type of loan designed to help students pay for post-secondary education and the associated fees, such as tuition, books and supplies, and living expenses. It may differ from other types of loans in the fact that the interest rate may be substantially lower and the repayment schedule may be deferred while the student is still in school. It also differs in many countries in the strict laws regulating renegotiating and bankruptcy. This article highlights the differences of the student loan system in several major countries.

The Free Application for Federal Student Aid (FAFSA) is a form completed by current and prospective college students in the United States to determine their eligibility for student financial aid.

Student financial aid in the United States is funding that is available exclusively to students attending a post-secondary educational institution in the United States. This funding is used to assist in covering the many costs incurred in the pursuit of post-secondary education. Financial aid is available from federal and state governments, educational institutions, and private organizations. It can be awarded in the form of grants, loans, work-study, and scholarships. In order to apply for federal financial aid, students must first complete the Free Application for Federal Student Aid (FAFSA).

A Pell Grant is a subsidy the U.S. federal government provides for students who need it to pay for college. Federal Pell Grants are limited to students with exceptional financial need, who have not earned their first bachelor's degree, or who are enrolled in certain post-baccalaureate programs, through participating institutions. Originally known as a Basic Educational Opportunity Grant, it was renamed in 1980 in honor of Democratic U.S. Senator Claiborne Pell of Rhode Island. A Pell Grant is generally considered the foundation of a student's financial aid package, to which other forms of aid are added. The Federal Pell Grant program is administered by the United States Department of Education, which determines the student's financial need and through it, the student's Pell eligibility. The U.S. Department of Education uses a standard formula to evaluate financial information reported on the Free Application for Federal Student Aid (FAFSA) for determining the student's Expected Family Contribution (EFC).

A Federal Perkins Loan, also referred to as a Perkins Loan, was a need-based student loan offered by U.S. Department of Education from 1958 until 2017. Created as part of the Federal Direct Student Loan Program, the Perkins Loan served to assist American college students fund their post-secondary education. The program was named after Carl D. Perkins, a former member of the U.S. House of Representatives from Kentucky.

The National Science and Mathematics Access to Retain Talent (SMART) Grant was a need based federal grant that was awarded to undergraduate students in their third and fourth year of undergraduate studies. The National SMART grant was introduced to help maintain the edge that United States has in the fields of Science and Technology. Only specific majors were eligible for the SMART grant, the complete list is given below.

The Federal Supplemental Educational Opportunity Grant, more commonly known by its acronym SEOG, is a federal assistance grant reserved for college students with the greatest need for financial aid to attend school. To be eligible for this grant, applicants must meet all of the following criteria:

  1. To be a United States citizen or eligible non-citizen,
  2. To not have a bachelor's degree,
  3. To not be in default of any federal student loan,
  4. To not have a Federal Pell Grant overpayment,
  5. To file their FAFSA.

A Stafford Loan was a student loan offered from the United States Department of Education to eligible students enrolled in accredited American institutions of higher education to help finance their education. The terms of the loans are described in Title IV of the Higher Education Act of 1965, which guarantees repayment to the lender if a student defaults. As of July 1, 2010, Stafford Loans are no longer being offered, having been replaced with the William D. Ford Federal Direct Student Loan Program.

A PLUS Loan is a student loan, which is part of the Federal Direct Student Loan Program, offered to parents of students enrolled at least half time, or graduate and professional students, at participating and eligible post-secondary institutions. The original, now obsolete, meaning of the acronym was "Parent Loan for Undergraduate Students".

The Federal Family Education Loan (FFEL) Program was a system of private student loans which were subsidized and guaranteed by the United States federal government. The program issued loans from 1965 until it was ended in 2010. Similar loans are now provided under the Federal Direct Student Loan Program, which are federal loans issued directly by the United States Department of Education.

The William D. Ford Federal Direct Loan Program provides "low-interest loans for students and parents to help pay for the cost of a student's education after high school. The lender is the U.S. Department of Education ... rather than a bank or other financial institution." It is the largest single source of federal financial aid for students and their parents pursuing post-secondary education and for many it is the first financial obligation they incur, leaving them with debt to be paid over a period of time that can be a decade or more as the average student takes 19.4 years. The program is named after William D. Ford, a former member of the U.S. House of Representatives from Michigan.

Graduate PLUS is a type of federal student aid, in the form of student loans, which is available to graduate and professional students. Similar to the Parent PLUS loan for parents of dependent undergraduate students, the Graduate PLUS loan is an unsubsidized federally guaranteed education loan with no annual or aggregate limits. It has no grace period and it goes into repayment as soon as the funds are disbursed to the borrower. It has the same deferment and forbearance options as the federal Stafford loan program. As such, graduate and professional students can postpone repayment using in-school deferment while enrolled at least half-time in a degree or certificate program of study.

In the United States, the Federal Direct Student Loan Program (FDLP) includes consolidation loans that allow students to consolidate Stafford Loans, Graduate PLUS Loans, and Federal Perkins Loans into one single debt.

<span class="mw-page-title-main">Student loans in the United States</span> Loans incurred to pay for higher education

In the United States, student loans are a form of financial aid intended to help students access higher education. In 2018, 70 percent of higher education graduates had used loans to cover some or all of their expenses. With notable exceptions, student loans must be repaid, in contrast to other forms of financial aid such as scholarships, which are not repaid, and grants, which rarely have to be repaid. Student loans may be discharged through bankruptcy, but this is difficult. Research shows that access to student loans increases credit-constrained students' degree completion, later-life earnings, and student loan repayment while having no impact on overall debt.

The Federal Work-Study Program originally called the College Work-Study Program and in the United States frequently referred to as just "Work-study", is a federally-funded program in the United States that assists students with the costs of post-secondary education. The Federal Work-Study Program helps students earn financial funding through a part-time employment program. Approximately 3,400 institutions participate in the program.

Title IV of the Higher Education Act of 1965 (HEA) covers the administration of the United States federal student financial aid programs.

Income-based repayment or income-driven-repayment (IDR) is a student loan repayment program in the United States that regulates the amount that one needs to pay each month based on one's current income and family size.

Pay As You Earn (PAYE) is a federal student loan relief program signed into law on December 21, 2012, by President Barack Obama.

The Teacher Loan Forgiveness program is a student loan forgiveness program by the United States Department of Education. This program is intended to encourage individuals to enter and continue in the teaching profession. Under this program, teachers who provide direct classroom teaching, or classroom-type teaching in a nonclassroom setting full-time for five complete and consecutive academic years in a Title 1 eligible school or school district may be eligible to receive loan forgiveness for their federal student loans.

References

  1. ↑ Hegji & Hogue 2019.
  2. ↑ Douglas-Gabriel, Danielle (May 4, 2021). "Former CFPB director Richard Cordray tapped to head federal student aid office". Washington Post. Washington DC: Nash Holdings.
  3. ↑ Mitchell, Josh (May 3, 2021). "Richard Cordray to Head Student-Loan Agency". Wall Street Journal. New York NY: Dow Jones and Co.
  4. ↑ https://studentaid.gov/understand-aid/types/grants/pell
  5. ↑ https://studentaid.gov/understand-aid/types/grants/iraq-afghanistan-service
  6. ↑ https://studentaid.gov/understand-aid/types/grants/teach
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