Other Government Loans For School:
SMART Grants, Perkins Loans, Tax Breaks & More
Government loan programs that are less-well-known than Pell or Stafford grants include:
The Federal Supplemental Education Opportunity Grant
A need-based award to undergraduate students enrolled in their first
bachelor’s degree program. Funds for SEOG’s are
relatively limited. While you are required to fill out the FAFSA form
for these, the grants, when available, are administered directly
through your school’s financial aid office (they’re
known as “campus-based” grants).
National SMART Grant
If you’re already getting a Pell Grant, you may qualify for
an extra $4,000 per year in aid through this grant, which you will
receive only during the third and fourth years of a four year course of
undergraduate study, and only if you maintain a grade average over 3.0.
To qualify, you must be studying physical or computer science,
engineering, math, technology or a major foreign language. Application
is through FAFSA.
Federal Perkins Loan
A “needs based” loan program using a mix of
government and private funds. You must be in school at least half time.
If you are, the government will pay the interest on your loan until you
complete school. Application is made through the FAFSA form. Your
school will then inform you if you have received a grant.
Federal Plus Loan
Federal Plus Loans are available not to you, but to your parents. They
can borrow an amount up to the difference between your total cost of
attendance and the amount of financial aid you are receiving from any
program. The loans are backed by the government, but administered by
private lenders, who offer a very wide variety of repayment options.
This type of loan can be found at institutions ranging from your local
bank up to Sallie Mae. It takes some research, usually starting online,
to start locating potential sources of funding of this type.
Watch Out About Dropping Out
Most of the government (and private) loan programs require you to
remain in school on at least a part time basis. If you stop school
completely for any reason, you may be required to start paying back
both the principal and interest on an accelerated schedule. Again,
it’s good to talk about this with your school’s
financial aid office before accepting any loan money so you know what
you’re getting into. You should also be aware that if you are
truly unable to keep up with your loan payments, many states have
“advocacy units” that can help you consolidate
loans and deal with your lenders.
Don’t Forget About Tax Breaks
Beyond the low-interest federal loans available, there are several tax
brakes that are particularly good for adult online students. The
“Lifetime Learning Credit” allows you to subtract
up to $2,000 per year from the amount of money you claim on your tax
return if you are enrolled in an eligible school. You wind up paying
tax on a lower income than you would otherwise.
That’s a plus for elearners, most of whom are working and
earning money while they study. To get this credit, your school must
file a 1098-T statement with the IRS, and you must submit a Form 8863
with your federal tax return. A particular bonus for adults who are
gradually working towards a degree online is that there is no limit to
how many years you can claim this tax benefit for.
The credit can also be applied to some non-degree courses. Your
school’s financial aid office should be able to tell you
which courses qualify you for this deduction. Keep in mind, however,
that you can’t claim it if you are earning more than $55,000
per year as an individual or $110,000 per year as a couple filing
jointly. This is a tax credit you can claim for your own education,
unlike most other tax credits that are meant for families paying for a
child’s college education.
Next: Private loans for online degrees
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