Avoid Out-of-Pocket Fees

As you know colleges and universities charge fees for tuition, admissions applications, enrollment, books, technical support, labs, transcripts - the list goes on. What you may not know is that if you don't use military tuition assistance, you, not DoD or VA, are  responsible for paying  all of these fees. The schools hold you responsible for paying these fees because the GI Bill is paid directly to you, the student, not the school. This means the school has no guarantee that they are going to be paid.

Note: Each school's policies differ on how this money is collected, but in most cases you will be asked to sign a promissory note, apply for student aid, or both.

That is why it is important for you the servicemember or veteran to apply for Federal Student Aid (FSA). FSA can help defer your out-of-pocket expenses until your GI Bill payments start coming in. In addition to low interest loans,  FSA also offers grants that do not require repayment. You can see a list of available FSA options below.

The key here is to make sure you avoid long-term student debt and interest charges by paying off the FSA "Direct Loans" as soon as the GI Bill payments start hitting your bank account.

FSA Eligibility

You are eligible for FSA if you are all of the following:

     
  • A high school graduate, or have a General Education Development (GED) certificate;  
  • Working toward a degree or certificate;  
  • Enrolled in an eligible school or program;  
  • A U.S. citizen or eligible non-citizen (must have a valid Social Security Number);  
  • Registered with the Selective Service if required (you can use the paper or electronic FAFSA to register)

Applying for FSA

Once you have enrolled in college, you need to start the application process. You can apply for all of the available FSA by filling out the FAFSA form online. After you have submitted the Free Application for Federal Student Aid (FAFSA), your school will tell you which types of loans, grants and the total amounts you are qualified to receive. When you get this notification from the school, simply select to loans and grants you want and the school will finish the loan process.

Tip: Applying for FSA is easy if you use the FAFSA Pre-Application Worksheet to guide you. Without the worksheet the FAFSA process can be complicated. You will need to gather your tax forms from previous years, including W-2s, bank statements and investment statements to complete the form.

Money Saving Tip: FAFSA is a Free Application for Federal Student Aid. However, there are some shady websites that offer to complete the FAFSA for you, for around $50. Don't do it! the FAFSA form only takes a relatively short time to complete. It is worth your time to complete it yourself. Click here for more information on the FAFSA process.

Every accredited school that is recognized by the Education Department will be eligible for some form of FSA. But the search for the right school and program can be time-consuming. Let Military.com help you, you can get free information on schools that fit your needs by filling out one simple form to find the schools that are eager to send you free information on how to get the funding you need to cover the cost of your education goals.

Available FSA Loans and Grants

the following table gives you a quick breakdown on the types of loans and grants, applications, interest rates and monetary limits:
(Note: the amounts listed are subject to change)

Loan/Grant Program

Application
Process
& Forms

Loan Fees?

Interest

Monetary Limits

Loan Source

Direct Loans
Stafford
(Unsubsidized*)

FAFSA
(Worksheet)

Yes

Variable up to 8.5%

$6,625 1st Yr
$7,500 2nd Yr
$10,500 3rd Yr

Federal Govt.

Direct Loans
Stafford
(Subsidized**)

FAFSA
(Worksheet)

Yes

Variable up to 8.5%

$6,625 1st Yr
$7,500 2nd Yr
$10,500 3rd Yr

Federal Govt.

Federal Family
Education Loan
(FFEL)
(Unsubsidized*)

FAFSA
(Worksheet)

Yes

Variable up to 8.5%

$6,625 1st Yr
$7,500 2nd Yr
$10,500 3rd Yr

Private Banks

Federal Family Education Loan
(FFEL)
(Subsidized**)

FAFSA
(Worksheet)

Yes

Variable up to 8.5%

$6,625 1st Yr
$7,500 2nd Yr
$10,500 3rd Yr

Private Banks

Perkins Loan

FAFSA
(Worksheet)

No

Fixed 5%

Up to $4000 @ Year

Schools

PELL Grant

FAFSA
(Worksheet)

No

N/A

Up to $4,000 @ Year

Federal Govt.

Federal Student
Education Opportunity
Grant (FSEOG)

FAFSA
(Worksheet)

No

N/A

Up to $4,000 @ Year

Federal Govt.

FSA Loans

FSA Loans are Financial Aid that is either funded or backed by the federal government, and paid directly through the school. Each type of loan has different fees (a percentage charged up front), interest rates and payment deferment plans.

Direct (Stafford) Loans - There are two different types of Direct Loans: Unsubsidized and Subsidized. These loans are identical in most ways, except how and when you begin to be charged interest.

*Unsubsidized - With the Unsubsidized Stafford loan, the interest begins compounding as soon as your school receives the money. When considering which loans to accept, you need to know that the interest on an unsubsidized loan can  add up over four years. If you choose to take an unsubsidized Direct Loan, we recommend that you consider making monthly interest payments as you go.

**Subsidized - With the Subsidized Stafford loan, you are not charged interest until 6 months after you leave school. This can mean a huge savings, considering you may be in school for more than four years.

FFEL Loans - the only difference between the Stafford Loans and the FFEL is the source. Private banking institutions fund FFEL loans. FFEL is also available in unsubsidized and subsidized forms.

Perkins Loans - Are loans funded by participating schools and have a fixed interest rate of 5 percent. All of the billing and payment arrangements are made directly through the school's business office.

Grants

Grants are free money for school paid by the Federal Government through the school's business office. After your school bills are paid, the remaining balance goes to you.

PELL Grants - Depending on your financial need and tuition costs, you can receive up to $4,000 each school year.

FSEOG Grants - these grants are reserved for the most needy candidates, and are paid in addition to PELL grants. Like the PELL, FSEO Grants are also limited to $4,000 per school year.

Related Topics

Student Aid Tuition Assistance

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