Financing Your Future

Everything you need to know about Financial Aid

What is Financial Aid?

  • Financial Aid is a selection of financial tools available for students to finance their education.
  • Financial Aid consists of scholarships, need-based awards, student loans and work-study employment. 

How to Receive Financial Aid

  • To apply for ANY financial aid, the first step is to complete a FASFA form.
    • What is FASFA?
      • The Free Application for Federal Student Aid is a form prepared annually by current and prospective college students to determine their eligibility for financial aid.
      • The amount of financial aid awarded is determined by the total cost of education and the family’s ability to pay.
  • What is the process?
    1. Complete FASFA as soon after January 1st until the deadline of June 30th
    2. The information is forwarded to the Office of Student Financial Aid
    3. The Office of Student Financial Aid processes the information & sends award letters to students stating the amount of financial assistance applicants will receive.
    4. The applicants then accept or decline the loans they are offered.
  • Eligibility Requirements for the University of Illinois
    • Must have completed a FAFSA form
    • U.S. Citizen or an Eligible Non-Citizen
      • What is an Eligible Non-Citizen?
        • A native of America, Samoa or Swain’s Island
        • A permanent resident with Alien Registration Receipt Card
        • Have an I-94 or I-94A with one of the following designations:
          • Refugee
          • Asylum granted
          • Indefinite Parole
          • Humanitarian Parole
          • Cuban-Haitian entrant, status pending
          • Conditional entrant
    • Male students (ages 18-25) must be registered for Selective Service (Military Draft)
    • Student must have a high school diploma or a General Education Development (GED)
    • Student must be working towards a degree or certificate
    • Student must not be in default on any federal educational loans or owe a refund on a federal grant.
    • Students must maintain a minimum GPA of 2.0 (on a 4.0 scale)
    • Student must not have been convicted of a drug offense while receiving aid.

Fun ways to find financial aid!

Important terms to know when dealing with Financial Aid

Award Letter

The official document issued by the Office of Student Financial Aid that lists all the financial aid awarded to the student.

Cancellation

There are certain circumstances in which the government will cancel all of one’s Direct federal loans. This is called loan forgiveness. In order to qualify for this a borrower must be employed full-time in the public service sector for 10 years and in that time they need to have made 120 payments.

FinAid.Org's Guide to Loan Forgiveness

A common assumption is that filing for bankruptcy will discharge your student loans; however this is not the case.  The only instances in which you can get your loans cancelled are if you were enrolled in a school and it closed down, suffered a permanent disability or death.

Direct Loan's Conditions to Loan Cancellation

Other types of loans like Perkins loans or Grad PLUS loans are eligible for forgiveness if they are consolidated into Direct Loans. See below for more information on consolidation.  Public service programs like AmeriCorps or the Peace Corps offer partial loan forgiveness benefits.

Overall, there are a variety of loan forgiveness programs (some employers offer their own private programs) so it’s important to do research and talk with an advisor about what the best route is for you.  Keep in mind that that this public service loan forgiveness program is all or nothing! In other words, you must work the full ten years in order to receive this benefit.

Besides this loan forgiveness program it is very hard to get your loans cancelled. 

Consolidation

This is a process which combines several student loans into a single larger loan, from a single lender to simplify loan repayment.  The benefits of consolidating your loans are that it lowers your monthly payments and makes repayment easier to manage. However, keep in mind, consolidation for federal student loans is a different process than private loans and you can’t consolidate the two together.

Default

This is failing to make payments as scheduled and becoming delinquent after a specific number of days.  For Federal Direct Stafford Loans, if a borrower has not made their fixed monthly payments for 270 days then it will go into default. Every loan has their own terms for default (particularly private loans) and it is important to know what these are to avoid this at all costs. 

The consequences of a defaulted loan are very serious and include amongst others: no longer eligible to receive any more financial aid, ineligible for deferments or forbearance, ineligible for loan forgiveness, a damaged credit rating (making it difficult to buy a home or car), and collection agency placement. 

Federal Student Aid's Guide to Default

What if you have already defaulted on your federal loans?

First, do not throw away or avoid any delinquent notices.  Remember, if you don’t pay it doesn’t mean it goes away! Instead, contact your loan provider or agency that is billing you, explain your situation and ask them what your options are to resolve this.  It’s important that you let them know you are willing to repay your loan and want to work with them to do so.  A viable option for those in default status is the loan rehabilitation program. Under this program you and your loan holder agree on a payment plan (9 payments over 10 months) that outlines your responsibilities to get your loan rehabilitated.  After you have made the 9 payments on time your default status will be removed and you’ll regain all benefits of your loan program including any remaining eligibility for deferment or forbearance. Basically, once your loan has been rehabilitated it is as if you were never in a default status! Keep in mind, that you can only rehabilitate your loan once.

Federal Student Aid's Guide to Getting out of Default

Deferment

This simply means a postponement on loan payments.  In order to be eligible for deferment the student must be enrolled at least half-time in an approved postsecondary program, unemployed or meet the requirements for financial hardship. For unemployment and financial hardship they must fill out a deferment request with proof of eligibility before the loans are deferred. Also, loans may be eligible for deferment if the student is serving time in the U.S. Armed Forces or National Guard. 

Federal Student Aid's Guide to Deferment

Financial Need

Cost of Attendance – Expected Family Contribution = Financial Need

Fixed Rate

An interest rate that remains the same for the life of the loan.

Forbearance

If a student doesn’t qualify for a deferment, but can’t make a scheduled loan payments this plan may be for them. In forbearance, a student can temporarily stop making payments, temporarily make smaller payments or extend the time for making payments. Those eligible for forbearance include: falling ill, financial hardship or being in a medical/dental residency program.  A forbearance request must be filled out and sent to their loan service provider in order to receive it.

Grant

Free monetary gifts to people who are pursuing higher education. Unlike student loans, grants do not require repayment.

Merit Based

Financial aid based on the student’s academic, artistic, or athletic merit, and does not depend on financial need.

Need Based

Financial Aid based on financial standing.

Promissory Note

A binding legal document, which states the terms and conditions of the loan, that must be signed by the student borrower before loan funds are disbursed by the lender.

Repayment Term

A period of time during which the borrower is required to repay their loan through monthly payments.

Scholarship

A grant of financial aid awarded to a student for the purpose of attending a college. Oftentimes, scholarships are presented to students within a specific line of study or a group of students who demonstrate academic excellence.

More Terms can be found at FinAid.Org

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