Federal Student Aid , an office of the U.S. Department of Education, plays a central and essential role in America's postsecondary education community. Some of the most visible and essential services are the development, distribution, and processing of the Free Application for Federal Student Aid (FAFSA), the fundamental qualifying form used for all federal and government-guaranteed commercial lenders' programs—as well as for many state, regional and private student aid programs. By filling out the online or paper FAFSA, applicants start the process of qualifying for aid. Each year FSA's staff processes approximately 14 million FAFSAs.
Mission
Federal Student Aid's (FSA) core mission is to ensure that all eligible Americans benefit from federal financial assistance—grants, loans and work-study programs—for education beyond high school. The programs they administer comprise the nation's largest source of student aid: during the 2004-05 school year alone, FSA provided approximately $74 billion in new aid to nearly 10 million postsecondary students and their families. A staff of 1,100 is based in 10 cities in addition to their Washington headquarters.
While overseeing $448 billion of outstanding student loans, FSA ensures that all partners in the student aid community—schools, lenders, servicers and guaranty agencies—operate fairly, honestly and efficiently. Another key role they perform is to make students and their families aware that financial aid is available and is a necessary first step to further education. They distribute numerous publications, host multiple Web sites and run several customer call centers. Most of these services are provided in Spanish as well.
The Federal Student Aid team is committed to making education beyond high school more attainable for all Americans, regardless of socioeconomic status.
Student Aid
Federal Student Aid is financial help for students enrolled in eligible programs at participating schools to cover school (a four-year or two-year public or private educational institution, a career school or trade school) expenses, including tuition and fees, room and board, books and supplies, and transportation. Most federal aid is need-based. The three most common types of aid are grants, loans, and work-study.
Grants are a type of financial aid that does not have to be repaid. Generally, grants are for undergraduate students and the grant amount is based on need, cost of attendance, and enrollment status.
- Federal Pell Grants are designed for low- and middle-income undergraduate students. Pell Grants for the 2006-2007 school year range from $400 to $4,050.
- The Federal Supplemental Educational Opportunity Grant (FSEOG) is a program in which Federal Student Aid provides funds to schools, who in turn offer the grant to students. FSEOG grants range from $100 to $4,000 during the 2006-2007 school year.
- The Academic Competitiveness Grant (ACG) is for full-time undergraduate students. First-year students may receive up to $750, while second-year students may receive up to $1,300.
- The Science and Math Access to Retain Talent (SMART) Grant provides up to $4,000 for third- and fourth-year full-time undergraduate students who are studying physical, life or computer sciences, mathematics, technology, engineering, or a foreign language critical to national security.
Loans are borrowed money that must be repaid with interest. Both undergraduate and graduate students may borrow money. Parents may also borrow to pay education expenses for dependent undergraduate students. Maximum loan amounts depend on the student's year in school.
- Federal Stafford Loans are made to students and PLUS Loans are made to parents through two loan programs:
- William D. Ford Federal Direct Loan (Direct Loan) Program: Eligible students and parents borrow directly from the federal government at participating schools. Direct Loans include Direct Stafford Loans, Direct PLUS Loans, and Direct Consolidation Loans.
- Federal Family Education Loan (FFEL) Program: Private lenders provide federally guaranteed funds. FFELs include FFEL Stafford Loans, FFEL PLUS Loans, and FFEL Consolidation Loans.
- Federal Perkins Loans are offered by participating schools to provide students who demonstrate the most need with low-interest loans.
Work-study lets you earn money while enrolled in school to help pay for education expenses.
History of Financial Aid
- 2006 The single holder rule was repealed as part of Public Law 109-234, the Emergency Supplemental Appropriations Act for Defense, the Global War on Terror, and Hurricane Recovery, 2006. The repeal is effective June 15, 2006. All borrowers may now consolidate their loans with any lender. Previously, borrowers who had all their loans with a single lender were required to consolidate their loans with that lender. This increases competition for student loans, and may lead to improved benefits and lower costs for borrowers.
- 2005 Higher Education Reconciliation Act of 2005 (HERA 2005) (part of the Deficit Reduction Act of 2005) cuts $12.7 billion from student aid: switches Stafford and PLUS interest rates to fixed rates of 6.8% and 8.5%, keeps maximum Pell Grant at $4,050 for fourth year in a row, gradually reduces loan fees from 4% to 1%, increases some annual loan limits without increasing cumulative loan limits, changes financial aid treatment of prepaid tuition plans, allows graduate and professional students to borrow PLUS loans, eliminates floor income guarantee and some 9.5% loan recycling, adds SMART Grants for less than 10% of Pell Grant recipients, repeals early repayment status loophole, and adds restrictions to School as Lender, among other changes.
- 2005 Student loan interest rates reach historical low, allowing borrowers who consolidate during the in-school period to lock in a rate of 2.88%. Early repayment status loophole allows continuing students to consolidate.
- 2003 US Supreme Court rulings on affirmative action cases Grutter v. Bollinger and Gratz v. Bollinger
- 2001 Economic Growth and Tax Relief Reconciliation Act of 2001 (enhanced section 529 plans and other education tax credits, renamed Education IRAs as Coverdell accounts)
- 2000 College Scholarship Fraud Prevention Act of 2000 (Public Law 106-420)
- 1998 Higher Education Amendments of 1998 (renamed SSIG as LEAP, created GEAR UP, suspended student aid eligibility for drug convictions, added Extended Repayment)
- 1997 Taxpayer Relief Act of 1997 (Hope Scholarship, Lifetime Learning Tax Credit, Education IRAs, income exclusion for $5,250 in employer education benefits, tax deduction for up to $2,500 in student loan interest)
- 1997 Need-Based Educational Aid Antitrust Protection Act of 1997 (limits exchange of financial information between colleges)
- 1996 FTC Project ScholarScam launches crackdown on scholarship scams
- 1996 US 5th Circuit Court of Appeals ruling in Hopwood v. Texas prohibits the use of race or ethnicity in admissions and financial aid in Texas, Louisiana, and Mississippi
- 1996 California voters adopt Proposition 209 , banning the use of race in college admissions and financial aid at California public colleges and universities
- 1994 US 4th District Court of Appeals decision in Podberesky v. Kirwan requires that evidence of past discrimination must be clearly evident in a case involving a race-based scholarship
- 1993 Student Loan Reform Act (established direct lending, added income contingent repayment)
- 1993 National Service Trust Act (AmeriCorps provides education grants for students age 17 and over who perform community service)
- 1992 Higher Education Amendments of 1992 (required FAFSA be free, added Direct Lending pilot project, added unsubsidized Stafford loans, replaced two federal need analysis formulas — the Pell Grant Formula and the Congressional Methodology — with a single Federal Need Analysis Methodology, changed definition of "independent student", added community service requirement to Federal Work-Study, eliminated PLUS loan limits)
- 1991 Veterans' Educational Assistance Amendments of 1991
- 1990 Omnibus Budget Reconciliation Act of 1990 (elimination of student aid eligibility at high default schools)
- 1989 Student Loans Reconciliation Amendments
- 1988 Tax Reform Technical Amendments (created Education Savings Bonds)
- 1988 Supplemental Loans to Students Reform Bill
- 1987 GSL Program renamed the Stafford Loan Program
- 1986 Michigan Education Trust established as the first prepaid tuition plan
- 1986 Reauthorization of the Higher Education Act (added Congressional Methodol
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