When a student is approved for a Federal student loan for the first time, they’re required to complete Student Loan Entrance Counseling (SLEC), an online course offered by the Office of Federal Student Aid (FSA), the agency within the U.S. Education Department (ED) that’s responsible for student aid programs. The SLEC is intended to ensure that students understand their rights and responsibilities for Federal loans prior to entering into a loan agreement. When a student successfully completes the SLEC, a record is sent to the college that they indicated. When the record is received, the student is authorized to execute agreements and receive funds for their education.

In the last post, we reviewed the contents of Module 1 of the SLEC course, in which students are taught about the direct and indirect costs of attending college and how to manage their costs in order to minimize their loan burden. This post reviews Module 2, “Paying for Your Education”, in which students are taught about loans, interest, repayment options, delinquency, and default. It also covers other types of financial aid programs so that students are aware of the variety of funding sources available to them.

“Paying for Your Education”

In Module 1 of the SLEC, students learn about the estimated Cost of Attendance (COA) of the college they plan to attend. Module 2 reviews how a student can use financial aid the help pay for their education.

  1. Grants and Scholarships

Students need to apply for scholarships and grants, but they don’t need to repay them. This is why they’re often referred to as “gift” aid. Students should meet with a guidance counselor, financial aid officer, or consultant regarding Federal and state scholarships and grants for which they may be eligible.

A grant is a form of financial aid that doesn’t have to be paid back unless the student breaches the agreement under which the funds were granted. A variety of Federal grants are available, including Pell Grants, Federal Supplemental Educational Opportunity Grants, Teacher Education Assistance for College and Higher Education Grants, and Iraq and Afghanistan Service Grants.

A scholarship is an amount of public or private funds that is given to a student. The student doesn’t need to repay it unless they fail to meet the stipulations under which it was awarded, such as earning a 3.0 GPA or majoring in biochemistry. In addition to public and institutional (college-funded) scholarships, there are private scholarships for which a student may be eligible based on their employment, military service, proximity to civic organizations, or affiliation with national organizations. This type of scholarship can be based on need, academic merit, talent, interest in a specific area of study, or other factors.

  1. Work-Study Programs

The Federal Work-Study (FWS) program provides part-time jobs for students with financial need. It enables them to earn income to help pay educational expenses. The program encourages service to the local community and work related to the student’s major. Students should check with the financial aid office of a college to find out if they participate in the program.

Below are features of the FWS program:

• It provides part-time employment while a student is enrolled.

• It is available to undergraduate and graduate students.

• It is available to full-time or part-time students.

• It is administered by colleges participating in the FWS program but is funded by the ED.

If a student’s job is on-campus they’ll be working for the college itself. If they work off campus, they’ll be working for a private organization or a public agency, and the work performed will be in the public interest.

Students earn at least the current Federal minimum wage. A student may earn more than that depending on the type of work performed and the skills required. Students are paid differently depending upon whether they’re an undergraduate or graduate student.

• Undergraduate students are paid wages by the hour.

• Grad students are paid hourly wages or salary, depending upon the job.

• Colleges must pay students at least once a month.

• Colleges must pay the student directly unless they request that that it send payments directly to an account at the college that pays their institutional charges such as tuition, fees, and room and board.

Students can only work up to the number of hours and earn only up to the amount stipulated in their FWS award. In assigning work hours, employers and the college’s financial aid office take a student’s class schedule and academic status into account.

Students interested in obtaining an FWS job should apply for financial aid early because funds for FWS are limited. FWS awards depends on when the student applies, their level of financial need, and the college’s funding level.

  1. Loans

When a student receives a Federal loan, they’re borrowing money from the United States. They must repay the loan and the interest that it accrues. Students should understand repayment options so they can successfully repay the loan.

Students may apply for Federal loans through the FAFSA process on the studentaid.gov website. Below are the four current Federal loan programs that address the needs of students in different circumstances, as follows:

• Direct Subsidized Loans,
• Direct Unsubsidized Loans,
• Direct PLUS Loans, and
• Direct Consolidation Loans.

Module 1 contains more information about Federal student loan programs.

  1. Aid for Military Service Members

The Federal government and certain nonprofit organizations offer money for college to veterans, future military personnel, active duty personnel, and family members of veterans and active duty personnel. Details on the programs offered by the military to fund the education of service members and veterans will be the topic of a future post.