What You Need to Know About Federal Student Aid

A year of college in the United States costs an average of $23,091, according to the National Center for Education Statistics.

American students today often pay for higher education through some combination of scholarships, part-time employment, and other financial assistance — including federal student aid.

Key Takeaway: Read the fine print for details

• Aid can be used for tuition, fees, room and board, books, supplies, and transportation.
• FAFSA forms are due on June 30.
• More information can be found on studentaid.gov.

What is federal student aid?

Federal student aid is financial help from the government available to students enrolled at an eligible college or career school.

What can you use federal student aid for?

Aid from the federal government goes toward tuition, fees, room and board, books, supplies, and transportation.

How do you qualify for federal student aid?

Students must complete the FAFSA form to apply for federal aid. You can find the FAFSA on the studentaid.gov website.

Some of the financial aid eligibility requirements include demonstrating financial need, being a U.S. citizen or eligible noncitizen, and being enrolled or accepted for enrollment in an eligible degree or certificate program.

What happened to studentloans.gov?

In December 2019, the U.S. Department of Education combined resources from several locations into studentaid.gov. Studentaid.gov contains the FAFSA, student loan consolidation, entrance counseling, exit counseling, a Master Promissory Note, PLUS loan applications, and income-driven repayment plan applications.

What information do you need to apply for federal student aid?

Students will need their Social Security number; driver’s license number (if they have one); federal tax returns; records of untaxed income; and information on their cash, savings and checking account balances, investments, and other assets.

Dependent students will also need their parents’ Social Security numbers; tax returns; records of their untaxed income; and information on their cash, savings and checking account balances, investments, and other assets.

Students that aren’t U.S. citizens will also need their Alien Registration number.

When is the FAFSA deadline?

Online FAFSA forms are due by 11:59 p.m. Central Time on June 30, 2020 for the 2019–2020 school year and June 30, 2021 for the 2020–2021 school year. Also keep in mind that each college and state may have its own deadline.

What federal student aid programs are available?

Federal financial aid can take the form of grants, loans, or work-study programs.

How does federal student aid work?

After a student fills out the FAFSA, they receive their aid offer and accept the offers they want to use.

If the student decides to take out loans, their college’s financial aid office will put their financial aid toward the amount the student owes the school. Then, the school sends the student what's left over for other costs. Borrowers don't have to begin repaying their student loans until they drop below half-time attendance or six months after leaving college.

Students who participate in a work-study program will receive payments directly from their college once per month.

What are the types of federal loans you can receive?

The Department of Education offers direct subsidized loans, direct unsubsidized loans, and direct PLUS loans.

What is a direct subsidized loan?

Direct subsidized loans are for eligible undergraduate students who demonstrate financial need, such as low-income students. Students who qualify pay no interest as long as they're in school at least half-time and for the first six months after they leave school, or during a period of deferment. Eligible students can receive up to $5,500 annually at an interest rate of 4.53 percent for subsidized loans disbursed between July 1, 2019 and July 1, 2020.

What is a direct unsubsidized loan?

Direct unsubsidized loans are not based on financial need and can go to eligible undergraduate, graduate, and professional students. Unlike with direct subsidized loans, students who qualify for unsubsidized loans pay interest during all periods. Unsubsidized loans can provide up to $20,500 annually at an interest rate of 4.53 percent for a loan disbursed between July 1, 2019 and July 1, 2020.

What is a direct PLUS loan?

Direct PLUS loans are available to graduate students, professional students, and parents of dependent undergraduate students to pay for education costs that aren't covered by other financial aid. Like direct unsubsidized loans, eligibility does not depend on financial need, but borrowers will need to submit to a credit check, and those with poor credit will need to meet additional requirements. The interest rate for direct PLUS loans is 7.08 percent for loans disbursed between July 1, 2019 and July 1, 2020, and borrowers can receive up to the maximum cost of attendance, minus any other financial aid the student receives.

What is a direct consolidation loan?

Direct consolidations loans are a way for students to combine all their eligible federal student loans into a single loan. This allows the borrower to make a single monthly payment, simplifying their debt.

What's a Master Promissory Note?

A Master Promissory Note is a legal document that contains the terms and conditions of your loan from the Department of Education. When you sign the document, you promise to repay your loan. 

What is a work-study program?

Work-study programs are one time of financial aid the Department of Education offers based on financial need. They are available to undergraduate, graduate, and professional students. Students who receive a work-study award work part-time while enrolled in school. Jobs may be on on- or off-campus and typically focus on civic education and the student's chosen field, when possible.

What are the benefits of using federal student aid?

Interest rates on federal student loans tend to be lower than those on private student loans. Direct subsidized and direct unsubsidized loans don't require a credit check. If you qualify for a direct subsidized loan, the Department of Education pays the interest on the loan until you drop below half-time or have been out of college for six months, or during a period of deferment.

Federal student aid can also be used to supplement other scholarships or grants you might have that don’t quite cover the cost of your educational expenses.

How do you contact federal student aid customer support?

Studentaid.gov has a contact center with answers to frequently asked questions.

You can contact the Federal Student Aid Information Center at 800-433-3243, studentaid@ed.gov, or via live chat The center is open Monday through Friday 8 a.m. to 11 p.m. Eastern Time and Saturday through Sunday 11 a.m. through 5 p.m. Eastern Time.