The Many Faces Of Aid
Fully 55 percent of students receive some financial aid, at an average value of more than $6,000 a year. A quick guide:
GRANTS
Most of the free money handed out to students is in the form of grants, which are awarded on the basis of need. The federal government doled out 4.8 million Pell grants worth an average of $2,400 last year. And schools, mostly private colleges, dispense about $20 billion in aid, most of which is need based. To apply for federal aid, families must fill out the Free Application for Federal Student Aid (www.fafsa.ed.gov). Many private colleges also require the similar Profile (profileonline.collegeboard.com). It's not necessarily too late to apply for the fall semester, since many schools set aside a little money for procrastinators.
SCHOLARSHIPS
A growing number of states and schools offer merit scholarships. Typically, these programs require that students maintain a B average. Many service and community groups, corporations, and foundations also hand out checks to students who, say, win an essay contest. Web sites like www.fastweb.monster.com are good places to start searching for these opportunities.
LOANS
The subsidized Stafford federal loan is available only to students who qualify as needy. Others can apply for an unsubsidized Stafford, which, unlike its subsidized cousin, starts accruing interest charges right away. But it has a current low variable rate of about 4 percent. Students who need to borrow more than Stafford allows ($2,625 for freshmen, more for older students) should apply for a federally backed Perkins loan, which has a fixed rate of 5 percent. Parents with good credit can borrow from the federally insured PLUS program.
WORK-STUDY
Needy students are awarded federally funded jobs through their schools. The jobs, which are usually on campus, pay an average of $6.10 an hour and typically require 11 hours per week.
TAX RELIEF
Tax credits and deductions can relieve part of the tuition bite by trimming a student's or parent's income tax bill. A caveat: The credits come with income limits.
This story appears in the April 19, 2004 print edition of U.S. News & World Report.
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