Federal Student Aid

Overview

Federal Student Aid (FSA) is a part of the United States Department of Education and is the largest provider of student financial aid in the United States. It provides more than $120 billion in federal grants, loans, and work-study funds each year to more than 13 million students. These funds cover expenses such as tuition and fees, room and board, books and supplies, and transportation. Aid also can help pay for a computer and for dependent care.

A busy financial aid office in a university. Students are seen discussing their financial aid options with advisors.

History

The Federal Student Aid program was created with the signing of the Higher Education Act of 1965 by President Lyndon B. Johnson. The act was intended to strengthen the educational resources of colleges and universities and to provide financial assistance for students in post-secondary and higher education.

Types of Federal Student Aid

Federal Student Aid includes grants, work-study funds, and loans.

Grants

Grants are a type of financial aid that does not have to be repaid, unless, for example, a student withdraws from school and owes a refund. The most common federal grants are the Pell Grant and the Federal Supplemental Educational Opportunity Grant (FSEOG).

Work-Study

The Federal Work-Study Program provides part-time jobs for undergraduate and graduate students with financial need, allowing them to earn money to help pay education expenses. The program encourages community service work and work related to the student’s course of study.

Loans

Federal student loans are borrowed funds that must be repaid with interest. The two main types of federal student loans are the Direct Subsidized Loan and the Direct Unsubsidized Loan.

Application Process

To apply for federal student aid, students must complete the Free Application for Federal Student Aid (FAFSA). The information provided on the FAFSA determines a student’s eligibility for federal student aid.

Eligibility

To be eligible for federal student aid, a student must meet several criteria, including being a U.S. citizen or eligible noncitizen, having a valid Social Security number, and being enrolled or accepted for enrollment in an eligible degree or certificate program.

Repayment

Repayment of federal student loans typically begins six months after a student leaves school or drops below half-time enrollment. There are several repayment plans available, including income-driven repayment plans, which base a borrower's monthly payment amount on their income and family size.