07/01/2005

Federal Financial Aid Update for School Counselors

by Gaylynn L. Becker



  • “How can I afford to attend college?”
  • “How can I pay for college when it is so expensive?”
  • “How do I get a grant and some loans?”
  • “My aunt Mabel said that I should be able to get a lot of money to pay for most of my college costs. All I have to do is see my school counselor like her brother did a few years ago. Where is my money?”

    I have heard these and similar questions throughout my 20 years as a school counselor. As a counselor, I cannot snap my fingers and magically have the money appear. My strategy is to educate them about the federal financial aid process.
    Federal financial aid is a constant, yet ever-changing, source of funding for higher education for students. One can get lost in the forms, rules and procedures. The purpose of this article is to help shed light on some of the key areas and issues of the federal financial aid process for newcomers to this area, and to provide an update for those who have worked with it for some time. Like it or not, the federal government is the biggest provider of funding for low and middle-income students in the U.S.

    The Free Application for Federal Student Aid (FAFSA) assists those who wish to obtain the following types of federal financial aid for attending college:

    • Grants
    • Scholarships
    • Work-study
    • Federal loans

    Some of the specific grants and other aid that students may receive as a result of completing the FAFSA include:

    • Pell Grants
    • Supplemental Educational Opportunity Grants (SEOG)
    • state grants
    • College Work-Study
    • Federal Subsidized Loans
    • Federal Unsubsidized Loans


    What Is The Maximum Amount Of Each Type Of Federal Financial Aid?
    The maximum amount of each of these sources of federal aid is:

    Pell Grant $4,050
    SEOG Grant $4,000
    College Work Study Varies

    Federal Subsidized Loan Limit Federal Unsubsidized Loan Limit
    Freshman$2,625 $4,000
    Sophomore$3,500 $4,000
    Third Year$5,500 $5,000
    Fourth Year$5,500 $5,000

    Total Undergraduate Loan Limit$23,000
    Total Graduate Loan Limit$65,500


    All of the types of federal financial aid listed above are need-based. That means that the determination of whether or not a student receives a grant, loan or college work-study is based upon the student’s income and assets. If the student is dependent, it also is based upon the income and assets of the parent(s). The lower the income and assets of the student and the student’s parents, the higher the financial need for the student and as a result the greater the financial aid package the student will receive.

    Determination of Dependent/Independent Student Status
    Currently, the determination is made based upon answers to the following questions:

      1.Were you born before January 1, 1982?
      2.At the beginning of the 2005-2006 school year, will you be working on a master’s or doctorate?
      3.As of today, are you married? (Answer “Yes” if you are separated but not divorced.)
      4.Do you have children who receive more than half of their support from you?
      5.Do you have dependents (other than your children or spouse) who live with you and who receive more than half of their support from you, now and through June 30, 2006?
      6.Are both of your parents deceased, or are you (or were you until age 18) a ward/dependent of the court?
      7.Are you a veteran of the U.S. Armed Forces?

    If the student answered “No” to every question, then the student is considered a dependent and the parent’s income and assets are required and included in determination of need for federal student financial aid.

    Why Is The Amount Of The Loan Sometimes Less Than What Is Listed On The Financial Aid Package From The College?
    Students and parents should be advised that if a loan is being signed, to understand how much of the principal of the loan they (the borrower) are receiving. They should be aware that the lender usually keeps a percentage of the college loan as an up-front fee and the borrower actually receives less than the face amount of the loan. The borrower will pay interest on this fee and will also need to pay this part of the principal that the lender keeps.

    An origination fee (currently 3%) on all federal subsidized and unsubsidized loans is applied. In addition, a guarantee fee (not to exceed 1%) may also be applied.

    Completing the FAFSA Online
    The FAFSA can be completed not only in paper format but can also be completed online at http://www.FAFSA.gov. If students/parents do complete the FAFSA online they will need a Personal Identification Number (PIN). This PIN is their online signature. A PIN can be obtained by going to http://www.fafsa.ed.gov and selecting the button for “getting your PIN” or they can go directly to the PIN website at http://www.pin.ed.gov.


    Gaylynn L. Becker, Ph.D. is a National Certified Career Counselor, National Certified School Counselor, and a Licensed Professional Clinical Counselor. He currently works as a Career Counselor at New Salem & Hebron High Schools in North Dakota. For more career information and links, visit his Career Planning website at http://www.cplanning.org. If you have questions on career, counseling, or assessment topics, you can e-mail him at Gaylynn.Becker@sendit.nodak.edu.

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