Learn about financial aid
Financial Aid Basics
Most people need some type of financial aid in order to pay for college. There are several types of aid available, which differ in how they are awarded and paid back:
Learn more about eligibility for federal financial aid, the FAFSA (applying for financial aid), federal tax benefits, private loans, other types of financial aid and other resources about financial aid.
Grants are a form of gift aid – meaning you won’t need to pay the money back. They’re usually awarded based on financial need and sometimes on merit. Many of the colleges where you’re applying may offer grants, and the federal government has several that you may be eligible for:
- Pell Grant. Students with the most financial need can receive up to $4,731 for the 2008-09 school year.
- Supplemental Educational Opportunity Grant (SEOG). This grant is awarded to students who are eligible for a Pell Grant who demonstrate the most financial need. You can receive between $100 and $4,000 a year, depending on when you apply, your financial need, the funding at the school you're attending, and the policies of the financial aid office at your school.
- Academic Competitiveness Grant. To receive this grant, you must be a first-year and second-year student, eligible for a Pell Grant, and graduated from a rigorous high school curriculum.
- National Science and Mathematics Access to Retain Talent Grant (National SMART Grant). To receive this grant, you must be a third-year or fourth-year student, eligible for a Pell Grant, and majoring in physical, life, or computer sciences, mathematics, technology, engineering, or in certain foreign languages. You also must maintain at least a 3.0 GPA in coursework required for your major.
The following are state aid programs in North Dakota:
- North Dakota State Grant – Need-based grant awarded to ND residents attending ND schools full-time. Must complete the FAFSA by March 15 to be considered.
- North Dakota Scholars Program – Merit-based grant awarded to residents who score in the upper fifth percentile of all North Dakota ACT test takers.
- North Dakota Indian Scholarship Program – Assists American Indian students in obtaining a college education.
- Federal Grants – There are five types of federal student aid grants. To apply you will need to complete a FAFSA.
- Pell Grant – Need-based grant for undergraduate students.
- Supplemental Educational Opportunity Grant (SEOG) – Awarded to undergraduates with exceptional financial need. Complete your FAFSA early because funding can be limited. Check with your school’s financial aid office to find out its priority deadline.
- Academic Competitiveness Grant (ACG) – Awarded to first- and second-year Pell-eligible undergraduate students who have completed a rigorous secondary school program of study.
- SMART Grant – Awarded to third- and fourth-year Pell-eligible undergraduate students who are majoring in physical, life or computer sciences, mathematics, technology, engineering or in a foreign language determined critical to national security. Must maintain a cumulative grade point average (GPA) of at least 3.0.
- TEACH Grant – Awarded to students who intend to teach in a public or private elementary or secondary school that serves students from low-income families. Must maintain a cumulative grade point average (GPA) of at least 3.25.
Scholarships are a great way to help pay for school, because unlike loans, they do not have to be paid back. Keep in mind that it takes time, effort, and often creativity to find and apply for scholarships. They usually do NOT just fall in your lap. Don't pay anyone to find a scholarship for you. There are enough opportunities out there that are FREE!
With initiative you can find out about scholarship programs yourself. Private scholarships are often based on different criteria such as grades, age, gender, race, major, interests, and membership in clubs. There are even unusual scholarships for almost everything you can imagine.
Colleges often have grants and scholarships which are unique to their institution.
Visit NDCAN Scholarships to find useful scholarship information. Call College Information Service at (800) 554-2717 for additional help.
You can earn money to help cover school expenses through the Federal Work-Study program, which provides part-time jobs to students, often on campus. Work-Study is awarded based on your financial need.
There are four main types of federal direct loans available to help you and/or your parents pay for college:
- Perkins loans are low-interest loans offered to students with the most financial need. The federal government pays the interest on Perkins loans while you're enrolled in school at least half-time.
- Subsidized Stafford loans are low-interest loans offered to students with significant financial need. The federal government pays the interest on subsidized Stafford loans while you're enrolled in school at least half-time.
- Unsubsidized Stafford loans are low-interest loans available to all eligible students, regardless of financial need or family income. You’re responsible for paying the interest on unsubsidized Stafford loans as soon as the money is received. Just like with Subsidized Stafford Loans, you don’t have to start making payments until 6 months after you leave school.
- PLUS loans are low-interest loans available to parents of dependent students and to graduate and professional students. PLUS loans may be helpful if you still have uncovered expenses after adding up all your financial aid and borrowing the maximum amount in Stafford loans.
- GRAD PLUS loans are available to graduate/professional students (PLUS rules apply).
- Consolidation loans allow you to combine all of your federal student loans into a single new loan after you graduate or leave school. They can be a great way to simplify repayment since you will only make one monthly payment to one lender. Also, your payments can be considerably lower because the payback term can be much longer. On the other hand, increasing the amount of time you have to pay back your loans means you will make more payments and pay more interest over time.
For more detailed information on these loan programs, visit Federal Student Aid.
Eligibility for Federal Financial Aid
To be eligible for federal financial aid, you must:
- Be a citizen or eligible non-citizen.
- Have a high school diploma or a General Education Development (GED) certificate.
- Be enrolled at least half-time in an institution that participates in the financial aid program.
- Be registered for Selective Service (applies only to males 18-25).
The Free Application for Federal Student Aid (FAFSA) is an application that all students must submit in order to be eligible for most types of aid.
The FAFSA asks you questions about your finances and your family's finances from the previous year. Schools use this information to determine what type of financial aid you're eligible for, for example, grants, work-study, and federal student loans. Because the FAFSA requires information from your parents, you should enlist help in completing it.
You will need to complete a FASFA as soon as possible after January 1 every year you need financial aid. You can complete it online at www.fafsa.ed.gov. If you can, it's a good idea to complete it online because you can easily reuse information from previous years, making the renewal process simple. Plus, it's much faster this way too! And even if you don't think you'll need or qualify for financial aid, you should apply anyway. You never know.
Private loans are offered by lenders directly to students and their parents. Private loans are useful for bridging the gap between the cost of college and the amount of other financial aid available. In general, it's a good idea to max out all other types of financial aid before taking out a private loan.
In addition to the traditional forms of financial aid, there are a number of tax benefits available to offset the cost of education. Parents and some students who pay for college and pay taxes in the same year may qualify for generous federal and state education tax benefits. These include:
- Federal Tax Credits. Tax credits directly reduce the federal taxes you owe. For example, if you owe taxes at tax time, a credit is a dollar-for-dollar reduction of the amount you owe.
- Federal and State Tax Deductions. These benefits reduce your taxable income. By reducing your taxable income, a deduction may also reduce the taxes you owe.
Consult the IRS publication "Tax Benefits for Education" for more information.
With private or alternative loans, you can borrow money to cover the gap between the cost of your education and the amount of financial aid you receive in the form of grants, scholarships, and federal student loans.
Because alternative loans are offered through private lenders, the terms and conditions vary from lender to lender, as do the eligibility requirements. Some alternative loans can have higher interest rates and less payment flexibility than others. You should only consider them after you have exhausted all of your federal loan options.
Student Loans of North Dakota guarantees Bank of North Dakota's Dakota Education Alternative Loan (DEAL) alternative loan program that offers the choice of a fixed or variable interest rate.
You might be interested in participating in a program during or following college that will provide funds to pay for college:
- Armed Forces. The military has programs that provide you with money for college in exchange for service. The Montgomery GI Bill provides money that active-duty members of the armed forces can use towards higher education. The Reserve Officers’ Training Corps (ROTC) also gives you money to pay for college. You learn skills for the military while in college and serve for four years after graduation. Each branch of the service also offers its own scholarships.
- Peace Corps. The Peace Corps gives individuals the opportunity to volunteer in foreign countries. Volunteers with Perkins loans are eligible for a 15 percent cancellation of their outstanding balance for each year of Peace Corps service. The Peace Corps is a full-time commitment, so people volunteer after they’ve graduated from college.
- AmeriCorps. The AmeriCorps program provides money for education (currently up to $4,725 per year) in exchange for community service. It’s similar to the Peace Corps, except you volunteer in the United States. There are opportunities to volunteer full- or part-time over a 10- to 12-month period, either before or after college.
- Benefits for Teachers. There are several financial aid opportunities available to students who go into teaching. For example, people who teach in low-income schools or in certain subject areas are eligible to have parts of their federal loans canceled. People who teach in areas where there are teacher shortages may qualify for deferment or forbearance of loan payments.
Check out the North Dakota University System for information on North Dakota loan forgiveness programs such as Technology Occupations and Teacher Shortage.
- Studentaid.ed.gov. The official home page for the federal student aid programs administered by the US Department of Education.
- FastWeb.com. Make sure you’re getting some of the millions of dollars available in scholarships! This free scholarship search engine is a great place to begin your search.
