Financial aid is the money you receive from a variety of sources to cover the cost of your education. The good news is that, regardless of income, most people are eligible for some form of financial aid. The financial aid sources available to a student attending college in Maryland include:
A grant is a need-based form of financial aid that does not have to be repaid. Grants are generally provided by individual states or the federal government and include:
Federal Pell Grants: This is the most common form of federal aid. They are need based, provided by the federal government and awarded by schools.
Federal Supplemental Educational Opportunity Grants (FSEOG): These grants are awarded by schools and provide assistance for undergraduates with the greatest financial need. The program gives priority to students who receive Federal Pell Grants.
A loan is a form of financial aid that must be repaid with interest. The main loan options are student loans, parent loans, and private loans. Federal programs for loans include:
Federal Perkins Loans: These are available to students who demonstrate the most serious financial need. They are federally funded and awarded by the school. Generally, these loans have the best terms and conditions; however, they are usually small in amount due to limited funds.
Federal Stafford (Subsidized and Unsubsidized) Loans: These loans are awarded on the basis of financial need and are regulated by the federal government. Students may be borrowing from a bank, a credit union, or directly from the government. A subsidized Stafford Loan is the loan of first choice, since the government pays the interest while students are in school. Students who do not qualify for a subsidized Stafford Loan may take out unsubsidized Stafford Loans. These students are responsible for paying the interest while still in school, but may postpone payment of interest and principal until after graduation. Any unpaid interest is capitalized once repayment begins.
Federal PLUS Loans: These loans are for parents of undergraduate students. They are based on credit history and require a credit check. The interest rate is low and repayment begins within 60 days after the disbursement of funds to the parent.
Scholarships are a form of aid to help you pay your undergraduate tuition. Like grants, they do not have to be repaid. Generally, scholarships are reserved for students with special qualifications, such as financial need and/or academic, athletic, or artistic talent.
Institutional scholarships can be based on financial need, academic ability, or outstanding talent. Many are offered by private colleges and universities, though thousands of private scholarships are also available from other sources. To find out more about these scholarships visit your high school guidance counselor, college financial aid office, the Internet, your local library, or with the MarylandMentor scholarship search
Work study provides students with employment opportunities both on and off campus. Participation in a work-study program is typically based on the student’s financial need. Funding for work-study programs can come from either the federal or state level:
Federal Work-Study Program: This program allows students to subsidize their tuition and expenses with on-campus jobs. To be eligible, applicants must demonstrate financial need.
State work-study programs work the same as the federal program, the only difference being the source of funding.
Benefits for Specific Groups and Other Options
There are several financial assistance programs benefiting specific groups. Getting creative with your options may also help in paying your way through college.
For more information, visit frequently asked questions about financial aid or the Federal Student Financial Aid Homepage.
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Financial Aid in Maryland
The state of Maryland offers scholarships and grants based on a student’s financial need, talents, or career choice. Colleges and universities also give scholarships to students. A number of civic organizations, associations, clubs, foundations, churches, and businesses also provide financial aid.
In 2002-2003, the state of Maryland will award more than $81 million in financial aid to more than 38,000 Maryland residents. Students use this aid at Maryland community colleges, private colleges and universities, private career schools, and the state’s 13 public four-year institutions. The Office of Student Financial Assistance, a division of the Maryland Higher Education Commission, awards state financial aid funds.
Maryland Prepaid College Trust
The Maryland Prepaid College Trust lets you save for tomorrow’s college education at today’s lower prices. It is a state-sponsored program authorized by state law that allows families to save for higher education expenses — college and career schools — in a way that can accommodate nearly every family’s needs and budget. Through the Prepaid College Trust, you open a savings account that is guaranteed to grow as least as much as the increase in tuition costs between when you make deposits (contributions) and when the beneficiary of your account (student) goes to college. And, due to recent legislative improvements to the program, your savings may now grow even more. It is a safe, simple, and affordable way to meet your family’s future higher education expenses.
For additional information on Maryland’s College Investment Plan and the Prepaid College Trust, visit the College Savings Plans of Maryland website.
Need-Based Financial Aid
All students should apply for need-based financial aid. Many families mistakenly think they may not qualify for this type of aid based on their income and assets. The Free Application for Federal Student Aid (FAFSA) is required to apply for need-based financial aid.
You must complete the FAFSA to apply for Maryland’s need-based grants, federal financial aid, and financial aid from colleges. You must submit your FAFSA no later than March 1 to be considered for need-based aid from the state of Maryland, and you must apply every year. The U.S. Department of Education supplies and processes the FAFSA. The processed information is then sent to the Office of Student Financial Assistance and to all the colleges you list on the form.
On the FAFSA, you must list all the schools that you are thinking of attending. If you do not list a Maryland college, you will not be considered for Maryland financial aid.
You and your parents (if you are a dependent student) must be Maryland residents to receive financial aid from the state. Students and their parents (if you are a dependent student) must reside in Maryland for 12 months prior to attending a four-year college, or three months prior to attending a community college or private career school.
To be considered Maryland residents, you and your parents (if you are dependent) must:
own or rent and occupy living quarters in Maryland,
keep most of your personal property in Maryland,
pay Maryland income tax on any of your earned income,
register all vehicles in Maryland,
have a valid Maryland driver’s license (if you drive),
be registered to vote in Maryland (if you are registered),
receive no public assistance from another state (or entity).
If you or your parents (if you are a dependent student) are active duty military personnel stationed and residing in Maryland, you are considered Maryland residents for financial aid purposes. If you or your parents (if you are a dependent student) are Maryland residents and in the military, then you will be considered for Maryland financial aid whether stationed in Maryland or not.
So you’re thinking, “Great. I know the sources to pay for education are available, but how much do I really need?”
This is a legitimate question and when it comes to possibly borrowing money, you need to budget and borrow sensibly.
ESTIMATE THE REAL COST OF COLLEGE
Financing your college education means much more than just paying tuition expenses. It’s important to understand all of the costs involved, including room & board, books, lab fees, student membership fees, online access fees, spending money, etc.
Estimate a personalized college budget with the worksheet below. You can also calculate your Expected Family Contribution (EFC) or estimated repayment costs.
ESTIMATE THE COST OF YOUR EDUCATION
Create a budget for the full school year.
Dorm or apartment? Meal plan or home cooking? New books or used books? Think about ways to keep your costs down. Then use the table below to realistically estimate what you’ll need for the full school year.
Know your resources.
Discuss what your family can contribute and then aggressively go after “free money” options. Add up your total resources from savings, grants/scholarships and work.
How much more will you need?
Subtract total resources (Box B, above) from total expenses (Box A, above). Enter the total in Box C, below. If your resources can cover your expenses, you’re all set. If not, you’ll need a way to make up the difference from student loans and other sources.
SOME IMPORTANT FACTS ABOUT BORROWING
Once you decide to borrow, borrow only what you need.
Estimate the amount of debt you may be able to afford and your monthly student loan payment before you borrow.
Borrowing is a responsibility – take it seriously!
If a student loan is your first borrowing experience, consider this responsibility seriously – your ability to borrow in the future depends on it. Make sure you read and understand the terms and conditions on your promissory note. You are agreeing to repay the loan with all accrued and capitalized interest and deducted fees. You are obligated to repay your loan regardless whether you complete your education, are satisfied with your education, or are able to find a job. Read and keep all records relating to your loan.
Choose your lender wisely.
Most loans come from banks and there are differences from bank to bank. When choosing a lender consider:
Interest rates and costs
Interest rate savings options (e.g., reductions for consistently making on-time payments)
Variety of loans offered
Experience in student loan financing