The government education loan programs that are less-well-known to many students 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 FSEOG’s are relatively limited, and are generally reserved only for students with the greatest financial need. 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).
A FSEOG grant can be $100. up to $4,000. for one academic year, though you may get a bit more if you have certain costs for studying abroad that are in addition to your normal school costs. Like a Pell Grant, an FSEOG does not have to be repaid. But this grant is only available to you if your school participates by providing 25% of the funding.
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. SMART stands for “Science and Mathematics Access to Retain Talent”. You can receive SMART grant money only during the third and fourth years of a four-year undergraduate degree program, and only if you maintain a grade average over 3.0. To qualify, you also have to 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. Perkins loans are given at a fixed 5% interest rate, and as of the 2009-2010 school year, loan limits were $5,500. per year for undergrads and $8,000. per year for graduate students. 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. Interest payments are tax deductable, but your parents need to have good credit to stand a real chance of getting this type of education loan. It takes some research, usually starting online, to start locating potential sources of funding of this type. The problem with many types of college financial aid is that if you or your parents fall over certain income and asset ownership thresholds, you don’t qualify. That puts tuition aid out of the reach of many people who are actually far from being wealthy. PLUS loans do not present this problem, as your parents can take one out regardless of how high their income is.
Federal Work Study Program (FWS)
Under this program, the federal government gives money to about 3,400. colleges and universities so they can hire students to work for them and earn extra money for school. If your college or university participates in FWS, they may be able to hire you to either work on campus or for a non-profit group in your community, for a maximum of 20 hours per week. This would obviously not apply to online degree students. Ask your financial aid office if your school participates in the FWS program.
Watch Out About Dropping Out
Most of the government (and private) loan programs require you to remain in school on at least a par-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. The good news is that the recent Obama health care bill also included provisions that allowed students much more time to pay back some types of education aid loans.
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 or 20% of your total education cost from the amount of money you claim on your tax return if you are enrolled in an eligible school. In other words, you wind up paying tax on a lower income than you would without this credit.
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. You can also take this credit for any tuition you pay for your spouse, and your parents may take it if you are dependent on them and they are directly paying some of your college costs.