Topic:
GRANTS; STUDENT FINANCIAL AID; BANK LOANS; HIGHER EDUCATION; TUITION;
Location:
SCHOLARSHIPS AND LOAN PROGRAMS;

OLR Research Report


STUDENT FINANCIAL AID

(Revised 12/5/06)

By: Saul Spigel

This report describes the types and sources of college financial aid and presents national and state trends in the amount of aid distributed.

SUMMARY

Student financial aid addresses diverse policy purposes: providing access to college for students who cannot otherwise afford it, relieving parents' financial burden, supporting colleges, attracting particular students and rewarding specific types of students, and retaining students in state. To address these many purposes, aid takes varied forms: need-based and merit grants, subsidized and unsubsidized loans to students and parents, work opportunities, tuition waivers, and tax breaks.

Over the past decade, college costs rose nationally while most families' incomes stagnated. The total amount of federal and state grants increased and partially bridged the growing gap between costs and income. But the number of students receiving grants grew even more, which meant that per student grant aid did not keep pace, especially after adjusting for inflation's effects. Consequently, students and families increasingly resorted to government-subsidized and private loans, and colleges tapped their revenue to give out more institutional aid to make up the difference.

Connecticut's experience matches these national trends. Connecticut families at all income levels must now spend more of their income to send a child to a college, especially one in Connecticut, which typically cost more to attend than those in other states. While state aid increased over the decade, inflation and growing numbers of recipients diminished its effects. Colleges spent more of their own money to fill the aid gap.

TYPES AND SOURCES OF AID

Student financial aid serves several public policy purposes. It (1) enables students who could not otherwise afford to go to college the opportunity to attend; (2) reduces the financial strain on middle-income families, potentially giving their children more college options; (3) enables colleges to attract particular students; and (4) enables states to support their colleges, retain state residents as students, attract students from other states, and reward specific groups, like veterans. To address these varied purposes, financial aid takes diverse forms: grants based on financial need, academics, or other skills; subsidized and unsubsidized loans to students and parents; tuition waivers; tax breaks; and work opportunities.

Loans and grants are the principal types of aid. They are available from state and federal governments, colleges, and private sources. Work-study programs and tax credits and deductions help students and their families offset college costs. Some people, like veterans, receive tuition waivers at public colleges and universities. Several aid programs, such as Pell Grants and student loans, are also available to students attending private occupational schools.

Attachment 1 displays the array of financial aid programs available to Connecticut students, many of which are referenced in this report.

Loans

A variety of loans are available to undergraduate, graduate, and professional school students and those attending other postsecondary schools (e.g., proprietary trade schools) and their parents. They can obtain loans through financial institutions, colleges, the U.S. Department of Education (DOE), and the Connecticut Higher Education Supplemental Loan Authority (CHESLA, funded through state general obligation bonds).

The federal government sets the interest rate on some loans and subsidizes interest payments on them while students remain in school. And, acting through the quasi-public Connecticut Student Loan Foundation (CSLF) and similar agencies, it guarantees repayment of loans. Students who take out multiple loans during their college careers can consolidate them once they leave school.

Grants

Grants can be based on financial need, other criteria (academic or athletic talent), or a combination of these factors. Some state-funded grants go directly to students; others go to individual colleges based on a formula, and the colleges use them as part of a package to help meet individuals' financial need. In addition, state policy requires each public college or university to use at least 15% of its tuition revenue for need-based financial aid.

NATIONAL FINANCIAL AID TRENDS

Students need financial aid because (1) they cannot otherwise attend college at all or (2) the cost of attending the institution of their choice is a financial strain. Consequently, an examination of financial aid trends must look at multiple factors—college costs, family income, and the amount and sources of available aid.

(Except where noted, amounts are presented in constant dollars, that is, adjusted for inflation.)

College Costs and Family Income

College costs climbed faster than most families' incomes over the past decade, but increased financial aid narrowed the potential gap. Tuition and fees rose 59% at public four-year colleges between the 1994-95 and 2004-05 academic years and 42% at private, four-year colleges. But the median income of all families with heads of households between age 45 and 54 (those most representative of families with children in college, according to the College Board) rose just 2% during that period.

But available financial aid funds doubled between 1994-95 and 2004-05, closing the gap between rising college costs and stagnating income. Thus, the net cost of college for a full-time student (tuition, fees, and room and board minus average grant and education tax benefits) rose 21% at private four year colleges; 29% at four-year public colleges (16% for commuting students); and only 7% at public community colleges.

Because family income grew unevenly across income groups, the decade's changes in net college costs affected families differently. While all families paid a greater percentage of their income to send a child to college in 2003 than in 1992, the pinch was much greater on lower income families than higher income families.

In 1992-93, a family in the lowest median income quartile ($19,100 or less) had to spend 41% of its income for tuition, fees, room and board, and other expenses at a public four-year college; 10 years later it had to spend 47%. In contrast, a family in the highest quartile ($136,000 or more) paid 11% of its income to send a child to a public college in 2002-03, up just 1% from 1992-93.

An even greater divergence faced families sending a child to a private college. By 2003, this choice would cost a family in the lowest quartile 83% of its income, up from 60%, while a high-income family would spend 19% (up from 17%).

Total Aid

In 2004-05, total student aid—grants from all sources (federal, state, institutional), loans, work-study, and federal tax benefits—amounted to nearly $129 billion. Federal sources accounted for most ($90 billion) of this total: $63 billion in loans, $18 billion in grants, $8 billion in tax credits, and $1 billion in work-study. Grants from states, colleges, and employers (about $40 billion) accounted for the remainder. The 2004-05 aid total was twice that of 1994-95.

The sources of federal aid shifted during the decade. In 1994-95, grants constituted 23% of federal aid, loans 75%, and work-study, 2%. A decade later, newly adopted tax benefits (credits and deductions) accounted for 9% of all federal aid; grants dropped to 20%, loans to 70%, and work-study to 1%.

Table 1 shows the array of financial aid sources and their funding history over the past 10 years.

Table 1: Postsecondary Financial Aid, 1994-94 to 2004-05, constant dollars (millions)

Source: College Board, Trends in Student Aid, 2005

Grants. From a student's (and parent's) perspective, grants are the best type of aid—they provide a pure subsidy and need not be repaid. More grant aid is available now than 10 years ago, but more students are competing for it. Nonneed-based grants are growing faster than need-based grants, but the latter still account for most awards.

Grants come from college, state, and federal sources. Colleges grant the most money, over $24 billion in 2004-05, up 83% over the past decade. And states added another $6.2 billion, up 78% during the decade.

Federal grants constituted the second largest grant source in 2004-05. The $18 billion that year was 76% higher than 1994-95. This growth was due mainly to more students receiving Pell grants. The maximum Pell grant grew by 38% during the decade, to $4,050 a year. It now covers about 36% of college costs, down from 42% in 2001-02.

Pell grants are based entirely on a student's financial need. State and institutional grants, though, can be based on need, merit, or a combination of these factors. State need-based aid nearly doubled in the past decade, to nearly $5 billion (in current dollars), according to a National Association of State Grant and Aid Programs survey. But nonneed-based aid grew by about 350% and now totals over $1.775 billion. It now constitutes about 25% of all grants compared to 10% in 1993-94.

Loans. Federal and private loans account for over 50% of all financial aid. The total amount of federal loans nearly doubled between 1994-95 and 2004-05, rising from $33 billion to nearly $63 billion. Most of that growth came from unsubsidized Stafford ($9.2 to $25.7 billion) and PLUS loans to parents ($2.3 to $8.3 billion). Subsidized Stafford loans still constitute (barely) the largest source of loans, but they grew only 38% during the decade.

This shift reflects Congress's decision in 1992 to allow more students to borrow more money. It did this by creating unsubsidized loans available regardless of need, opening subsidized loans to more borrowers, and raising borrowing limits.

Private loans (those made outside the federal loan structure) are a relatively new feature in the college financing picture. In 1995-96, these loans totaled $1.7 billion; in 2004-05 they totaled $13.8 billion, a 735% rise. Professional school students (e.g., medical and law students) are most likely to use them, the American Council on Education reports. Thirty percent of such students took out private loans in 2003-04 compared to just 8% of undergraduates.

Aid Per Student

Grants and Tax Benefits. While the total amount of grants and tax benefits grew during the past decade, the number of students eligible to receive them grew even faster. Consequently, the amount of aid per student rose more slowly than total aid.

The Pell grant fund pool grew by 76%, but the average grant grew only 29%, to $2,469 in 2004-05. While this was $555 higher than the 1994-95 average, it was nearly $100 less than in 2002-03. The average award for other federal grants and work-study funds and the average amount of federal tax benefits barely increased or actually dropped after adjusting for inflation.

Loans. Today, more students and parents are taking out loans to pay for college than 10 years ago. After accounting for inflation, the average undergraduate is borrowing less per year (Stafford Loans), but his or her parents are borrowing more (PLUS loans). Table 2 shows these trends.

Table 2: Number of Federal Loan Borrowers and Loans; Total and Average Loans (in millions), 1994-95 to 2004-05

Source: College Board, Trends in Student Aid, 2005

Most students now graduate with more debt than their peers 10 years ago, although debt levels have dropped for many since the 1999-2000 academic year. Table 3 shows these trends. (Note: the table does not contain data on loan defaults, which are an important measure of debt burden.)

Table 3: Cumulative Federal Student Loan Debt by Degree Recipients, 1995-96 to 2003-04 (constant dollars)

Degree & Institution Type

1995-96

1999-2000

2003-04

% Graduating with Debt

Median Amount Borrowed

% Graduating with Debt

Median Amount Borrowed

% Graduating with Debt

Median Amount Borrowed

AA (public)

22

$4,742

25

$5,716

28

$5,879

             

BA

           

Public

49

$12,553

58

$16,321

58

$14,671

Private, nonprofit

52

$17,164

66

$18,623

69

$17,125

             

PhD (all)

45

$14,827

40

$30,880

48

$44,743

             

Professional

           

Public

68

$57,020

90

$65,291

89

$63,500

Private, nonprofit

75

$65,301

79

$78,593

81

$71,317

Note: Figures do not include private loans. They reflect loan borrowing as of the year indicated. Graduate students' debt includes debt incurred as undergraduates.

Source: American Council on Education, “Federal Student Loan Debt, 1993 to 2004,” June 2005

Recent Changes in Federal Law

Congress made several significant changes in federal financial aid policy in 2006.

It fixed the interest rate on new student loans at 6.8%; interest rates on loans made before July 1, 2006 were variable but capped at 8.25%.

It increased the amount of subsidized loans students can borrow in their first two years of college to $3,500 from $2,625 for freshmen and to $4,500 from $3,500 for sophomores. But it kept the $23,000 gross limit on such loans for undergraduates. (They can borrow another $23,000 in unsubsidized loans.) This means students who borrow the maximum in their first two years can obtain only smaller subsidized loans thereafter (or rely on unsubsidized or private loans) to pay for rising college costs.

It permitted graduate and professional school students to take out PLUS loans (which could lower their reliance on higher interest private loans).

It created two new grant programs for Pell Grant-eligible students. One gives freshman $750 and financially needy sophomores $1,300 if they completed a “rigorous” secondary school program and maintain a 3.0 point average in college. The other provides up to $4,000 a year for juniors and seniors who major in certain subjects and maintain a 3.0 point average.

CONNECTICUT FINANCIAL AID TRENDS

College Costs and Family Income

Attending college in Connecticut costs more than most other states. UConn and the Connecticut State Universities (CSUs) each rank among the 10 most expensive public universities of their type in the nation, while the community-technical colleges (CTC) are in the top 20, according to the Department of Higher Education (DHE). But they may still be relatively affordable compared to their peers because family income in Connecticut is among the highest in the nation. And UConn is the second least expensive public flagship institution in New England.

Between 1996 and 2006, DHE reports UConn's tuition and fees grew 64%, the CSUs, 86%, and the CTCs, 54% (in current dollars). Most of this growth occurred between 2003 and 2006. But Connecticut colleges'

tuition grew more slowly than their peers across the nation, and UConn, for example, remains less expensive than the colleges with which it competes for students.

Connecticut families, like their peers across the country, must spend more of their income to send a child to college here today than they did in 2000, according to Measuring Up, a biennial report from the National Center for Public Policy and Higher Education. Today, an average-income Connecticut family must spend 25% of its income to send a child to a community college (up from 20% in 2000), 33% to send a child to a public four-year college (25%), and 76% to a private college (61%).

These averages, though, mask the effect of Connecticut's income disparities. As in the rest of the nation, increasing college costs affect the state's lower income families more than upper income families. According to Measuring Up, Connecticut's lower-middle income families (those with incomes in the second lowest quintile, averaging $37,230 in 2005) must now use 34% of their income to send a child to a public four-year college in Connecticut; just five years ago they used 27%. Sending a child to a private college now costs 78% of their income, up from 68% in 2000. In contrast, the burden on upper income families (whose income averaged $154,000 in 2005) for sending a child to a public college rose from 7% to 9% and from 16% to 19% for a private college.

Total Aid

As a group, UConn, CSU, and CTC students received more than twice as much financial aid in 2006 as they did in 1996. Aid grew from $89 million to $216 million (in current dollars) during that time, according to DHE, a 142% increase. Institutional aid accounted for over half of this increase, particularly since 2002 when state aid declined slightly and federal aid leveled off. It now comprises nearly 60% of all financial aid to students in Connecticut public colleges.

Need-based aid comprises about 60% of all aid, DHE reports. This proportion has remained steady over the past 10 years, but the ratios at each constituent unit changed during that time. UConn's need-based aid declined slightly, from 44% to 42%, between 1999 and 2006 largely due to flat federal and state funding. It increased at both CSUs and CTCs—from 70% to 75% and 88% to 91%, respectively. Most of UConn's nonneed-based aid goes to graduate students.

State Grants

Connecticut has three college grant programs: Connecticut Aid to Public College Students (CAPSC), Connecticut Independent College Student (CICS) Grants, and Capitol Scholarships. The first two are based solely on financial need; the latter addresses both financial need and academic ability. (See attachment 1 for more details).

As Table 4 shows, total funding for all three grants rose from 1997 to a peak in 2002, then dropped through 2004. Funding increased in FYs 05 and 06 but is still below its peak years. This decline, coupled with inflation and more students receiving aid, means the average award for CIGS Grants and Capital Scholarships has dropped or remained flat (in constant 2006 dollars). And, while the average CAPSC grant grew about 33% (inflation adjusted) over the entire decade, it has dropped significantly since its peak in 2000.

Table 4: Total Spending and Average Awards for State Financial Aid Programs, 1997-2006

Capitol Scholarship

FY

Expeditures*

(Current $)

Expenditures*

(Constant 2006 $)

#

Recipients

Average Award

(Constant $)

1997

$2,678,557

$3,353,553

2,341

$1,433

1998

$3,380,649

$4,158,198

3,093

$1,344

1999

$5,429,986

$6,564,853

4,259

$1,541

2000

$5,548,918

$6,519,979

4,247

$1,535

2001

$5,826,289

$6,618,664

4,215

$1,570

2002

$6,193,344

$6,917,965

4,385

$1,578

2003

$5,360,530

$5,859,059

3,709

$1,580

2004

$5,299,517

$5,665,184

3,629

$1,561

2005

$5,198,761

$5,391,115

3,584

$1,504

2006 (est)

$6,838,510

$6,838,510

4,716

$1,450

*Expenditures include federal LEAP & SLEAP funding in addition to state funds

CT Aid to Public College Students

FY

Expenditures

(Current $)

Expenditures

(Constant 2006 $)

#

Recipients

Average Award

(Constant $)

1997

$5,562,888

$6,965,686

6,531

$1,067

1998

$8,696,397

$10,698,149

8,037

$1,331

1999

$11,327,414

$13,696,843

9,585

$1,429

2000

$14,552,940

$17,104,338

9,060

$1,888

2001

$19,759,261

$22,454,819

12,510

$1,795

2002

$19,759,261

$22,065,315

12,314

$1,792

2003

$17,539,728

$19,164,258

11,821

$1,621

2004

$16,039,728

$17,148,876

11,087

$1,547

2005

$16,520,920

$17,148,612

12,043

$1,424

2006 (est)

$16,520,920

$16,520,920

12,015

$1,375

Table 4: continued

CT Independent College Student Grant

FY

Expenditures

(Current $)

Expenditures

(Constant 2006 $)

# Recipients

Average Award

(Constant 2006 $)

1997

$12,168,017

$15,234,357

3,795

$4,014

1998

$14,512,259

$17,850,079

4,073

$4,383

1999

$16,259,531

$19,657,773

4,309

$4,562

2000

$17,104,199

$20,097,434

4,484

$4,482

2001

$18,776,929

$21,330,591

4,787

$4,456

2002

$18,776,929

$20,973,830

4,769

$4,398

2003

$15,938,482

$17,420,761

4,400

$3,959

2004

$15,067,492

$16,107,149

4,517

$3,566

2005

$15,519,517

$16,093,739

4,283

$3,758

2006 (est)

$15,519,517

$15,519,517

4,311

$3,600

Source: DHE

Institutional Aid

While state General Fund spending on financial aid has remained relatively flat, its public colleges and universities have tried to fill the growing gap with their own funds. The increased levels of institutional aid they give results, in part, from two factors: (1) the Board of Governors of Higher Education's policy that each school set aside at least 15% of its tuition revenue for need-based aid and (2) schools' need to increase tuition to offset reduced state support for their operations.

UConn. As table 5 shows total financial aid at UConn, excluding loans, increased by over $40 million (51%) between FY 02 and FY 07. The bulk of this increase came from (1) private and other nonuniversity scholarships and statutory tuition waivers ($16.5 million) and (2) grants funded by need-based tuition set-asides, which rose by nearly $15 million. Federal aid and Capitol Scholarships grew slightly during this period but are expected to rise in FY 07; CAPSC funds declined slightly.

Table 5: UConn Institutional Aid, FY 02-07 (current dollars)

 

FY 02

FY 03

FY 04

FY 05

FY 06 (est.)

FY 07 (est.)

Tuition Set-Aside1

$17,473,905

$19,060,101

$23,682,617

$26,898,710

$29,344,047

$32,363,179

Federal Aid2

8,200,000

9,000,000

9,400,000

$9,500,000

9,800,000

10,800,000

CAPSC

5,815,106

5,614,205

5,134,077

5,400,176

5,612,499

5,612,499

Capitol Scholarship

2,420,400

2,201,000

2,222,000

2,195,000

2,904,200

4,000,000

Merit/Other Scholarships

4,297,545

4,694,695

5,145,925

5,973,369

5,945,961

7,257,005

Other3

36,648,090

40,423,964

45,626,294

50,324,552

51,235,562

53,182,471

Total Financial Aid

74,855,046

80,993,965

91,210,913

100,291,807

104,842,269

113,215,154

1 Scholarships, tuition remission, SEOG matching funds, work study match, and internal funds

2 Pell grants, federal SEOG funds, and federal work study funds

3 Aid from private and other nonuniversity sources and statutory waivers

CSU. As Table 6 shows, total financial aid, excluding loans, at the CSUs increased by about $16 million (42%) between FY 02 and FY 07. The bulk of this increase ($7 million) came from need-based tuition set-asides, which nearly doubled, and from tuition waivers the CSU board authorized for part-time students, which grew by $5 million. Federal aid grew slightly while CAPSC and Capitol Scholarship funds were stagnant or diminished.

The number of students receiving these funds increased from 4,337 to 5,486. Even so, because of the increased funding, the average set-aside grant for each recipient also rose substantially, from $1,917 to $2,786.

Table 6: CSU Institutional Aid, FY 02-07 (current dollars)

 

FY 02)

FY 03

FY 04

FY 05

FY 06 (est.)

FY 07 (est.)

Tuition Set-Aside1

$8,316,120

$9,804,439

$11,339,581

$12,598,487

$14,077,745

$15,286,259

Federal Aid2

12,705,464

13,863,213

14,070,635

14,766,928

15,322,985

15,115,840

CAPSC

7,340,697

6,682,815

5,757,927

6,091,619

5,511,468

6,065,054

Capitol Scholarship

1,316,000

1,236,600

1,205,300

1,210,057

1,526,700

1,490,000

Merit/Other Scholarships

3,569,462

3,499,349

3,680,387

4,375,199

4,138,788

5,012,101

Other3

5,276,244

8,739,609

7,796,186

9,911,834

11,642,669

11,822,939

Total Financial Aid

$38,523,987

$43,826,025

$43,850,016

$48,954,124

$52,220,355

$54,792,193

1 Scholarships, tuition remission, SEOG matching funds, work study match, and internal funds

2 Pell grants, federal SEOG funds, and federal work study funds

3 Private, need-based aid; statutory waivers; and other (board awarded) waivers

CTCs. As Table 7 shows, total financial aid at the CTCs increased by about $19 million (54%) between FY 02 and FY 07. The bulk of this increase ($13.4 million) came from Pell Grants and need-based tuition set-asides, which nearly doubled to $10.9 million. State aid decreased slightly.

But the number of students receiving aid also grew significantly; consequently, the aid amount per student remained flat. The total number of aid recipients grew by 6,000 between 2001-02 and 2005-06. Now, over 40% of CTC students receive financial aid; but they receive virtually the same amount as students five years ago ($2,606 vs. $2,595).

Table 7: CTC Institutional Aid, FY 02-07 (current dollars)

 

FY 02

FY 03

FY 04

FY 05

FY 06 (est.)

FY 07 (est.)

Tuition Set-Aside1

$5,968,455

$7,130,735

$9,025,111

$9,549,589

$10,160,716

$10,871,966

Federal Aid2

18,990,710

23,247,042

25,723,233

28,294,536

30,235,537

32,352,024

State Aid3

6,479,414

5,533,208

5,085,750

5,307,639

5,360,077

5,735,282

Other Aid, including Scholarships

703,630

376,246

422,219

452,312

435,443

465,924

Statutory Waivers

2,522,868

2,877,196

3,175,323

3,489,503

3,812,055

3,961,714

Total Financial Aid

$34,665,077

$39,164,427

$43,431,636

$47,093,579

$50,003,828

$53,386,910

1 Scholarships, tuition remission, SEOG matching funds, work study match, and internal funds

2 Pell grants, federal SEOG funds, and federal work study funds

3 Includes CAPSC and Capitol Scholarships

SOURCES FOR FURTHER INFORMATION

A US DOE publication, Funding Education Beyond High School, is a detailed guide to federal aid programs, particularly how to fill out a FAFSA and apply for loans. It is available at http://studentaid.ed.gov/students/attachments/siteresources/StudentGuide.pdf.

Most of the information on national trends comes from The College Board's Trends in Student Aid, 2005 an annual look at the financial aid system that provides detailed information on the total amount of student aid, aid per student, the composition and distribution of aid, and college costs. The complete report is available at http://www.collegeboard.com/prod_downloads/press/cost05/trends_aid_05.pdf.

The College Board also publishes Trends in College Pricing each year. This publication examines tuition, fees, and other charges; enrollment patterns; and cost impact on family incomes. The 2005 edition is available at http://www.collegeboard.com/prod_downloads/press/cost05/trends_college_pricing_05.pdf.

Aggregate state grant information comes from the National Association of State Grant and Aid Programs' (NASSGAP) annual survey of state-sponsored financial aid for the 2004-05 academic year. It is available at http://www.nassgap.org/.

The American Council on Education published an information brief in June 2005 on trends in federal student loan debt from 1993 to 2004. It is available at http://www.acenet.edu/AM/Template.cfm?Section=CPA&Template=/CM/ContentDisplay.cfm&ContentID=10777

The liberal Center for Economic and Policy Research issued a briefing paper, “Student Debt: Bigger and Bigger,” in September 2005. It is available at http://www.cepr.net/publications/student_debt_2005_09.pdf.

“Costs, Prices and Affordability,” one of the issue papers commissioned by the secretary of education's Commission on the Future of Higher Education, identifies broad issues affecting prices, costs and the growing challenge of student affordability to postsecondary education. It is available at http://www.ed.gov/about/bdscomm/list/hiedfuture/reports/wellman.pdf. Another paper discusses the complexity and strategic goals of federal aid programs. It is available at http://www.ed.gov/about/bdscomm/list/hiedfuture/reports/burgdorf-kostka.pdf.

Internal Revenue Service Publication 790 describes federal education tax benefits. It is at http://www.irs.gov/pub/irs-pdf/p970.pdf.

Two DHE publications provide information about financial aid in Connecticut. System Trends 2006 provides data on state grant programs and overall trends. Higher Education Counts, 2006 reports the state's and constituent units' progress toward achieving six, statutorily defined state goals, one of which is to ensure access and affordabilty. They are available at http://www.ctdhe.org/info/pdfs/2006/2006SystemTrends.pdf and http://www.ctdhe.org/info/pdfs/2006/2006AccountabilityReport.pdf.

Attachment 1: Major Sources of Financial Aid for Connecticut Students*

GRANTS & SCHOLARSHIPS

Source: Program

Who is Eligible

Amount

Basis of Selection

How to Apply

Federal:

Pell Grant

U.S. citizen or permanent resident alien enrolled as a undergraduate

Up to $4,050 a year

Financial need

Submit a FAFSA

Federal: Supplemental Educational Opportunity Grant (SEOG)

U.S. citizen or permanent resident alien enrolled as a college undergraduate

Up to $4,000 a year

Exceptional financial need

Apply at college financial aid office

Federal:

Robert C. Byrd Scholarship

High school senior who ranks in top 2% of class or who has SAT scores above 1,400

$1,500 per academic year

SAT scores & class rank

File applications through high school guidance office

State:

Capitol Scholarship

CT resident, U.S. citizen or permanent resident alien who is a high school senior or graduate with a rank in top 20% of class or SAT scores of at least 1,200

Up to $3,000 a year to be used at a CT college or at colleges located in states which have reciprocity agreements with CT

Financial need & academic talent

File applications through high school guidance office

State:

CT Aid for Public College Students

CT resident attending a CT public college or university

Up to amount of unmet financial need

Financial need

Apply at college financial aid office

State:

CT Independent College Student Grant Program
 

CT resident attending a CT independent college or university

Up to $8,500 a year

Financial need

Apply at college financial aid office

State:

CT Minority Teacher Incentive Grant

Minority junior or senior enrolled in a CT college or university teacher preparation program

Grants up to $5,000 a year for 2 years; loan reimbursement of $2,500 a year for up to 4 years of teaching in a CT public school

Nomination by education dean

Contact education deans at CT colleges that offer teacher preparation programs

State:

Tuition Set Aside Aid

Student attending a CT public college or university

Up to amount of unmet financial need

Financial need

Apply at college financial aid office

LOANS FOR STUDENTS

Source: Program

Who is Eligible

Amount

Basis of Selection

How to Apply

Federal:

Perkins Loan

U.S. citizen or permanent resident alien enrolled at eligible postsecondary institution.

Undergraduate: up to $4,000 a year; $20,000 total with a 5% fixed interest rate.

Graduate: up to $6,000 a year; $40,000 total including undergraduate loans

Available federal funds & financial need

Apply at college financial aid office

Federal: Subsidized Stafford Loan (interest paid by government while borrower is in school)

U.S. citizen or permanent resident alien enrolled at eligible postsecondary institution.

Undergraduate: Up to $2,625 for first-year students, $3,500 for second-year students, $5,500 a year for third-year students and beyond. Total amount for undergraduate study: $23,000.

Graduate: $8,500 per year; total amount for undergraduate and graduate study: $65,500.

Interest: 6.8% fixed on loans made after 6/30/06; interest on loans made from 7/1/98 to 6/30/06 was variable, capped at 8.25%

Financial need

Obtain a Master Promissory Note from college financial aid office or contact the CT Student Loan Foundation

Federal: Unsubsidized Stafford Loan (borrower responsible for paying interest paid while in school, but can allow it to accrue and added to principal)

U.S. citizen or permanent resident alien enrolled at eligible postsecondary institution.

Dependent undergraduates: annual and aggregate limits are the same as those for the subsidized Stafford Loan (see above).

Independent Undergraduates: up to $6,625 for first-year students, $7,500 for second-year students, $10,500 a year for third-year students and beyond. Total amount for undergraduate study: $46,000.

Graduate: up $10,000 a year. Total amount for undergraduate and graduate study combined: $138,500.

Interest: 6.8% fixed on loans made after 6/30/06; interest on loans made from 7/1/98 to 6/30/06 was variable, capped at 8.25%

Cost of attendance

Obtain an application from a CT bank or contact the CT Student Loan Foundation

State:

Connecticut Family Education Loan Program (FELP)

Student enrolled at least half-time in a CT nonprofit college or a CT resident enrolled at least half-time in a nonprofit college anywhere in the U.S.

Up to full cost of education less other aid. Interest: 5.5%. Family pays only interest during in-school years; graduate and professional students may capitalize interest while in school.

Ability to repay loan & credit history

Contact Connecticut Higher Education Supplemental Loan Authority (CHESLA)

LOANS FOR PARENTS

Source: Program

Who is Eligible

Amount

Basis of Selection

How to Apply

Federal:

PLUS Loan

Parents who wish to borrow to help pay for their child's education

Up to full cost of education less other aid. Interest: 7.94% or 8.5% fixed on loans made after 6/30/06 (depending on loan source)

Credit history

Obtain an application from a CT bank or contact the CT Student Loan Foundation

WORK OPPORTUNITIES

Source: Program

Who is Eligible

Amount

Basis of Selection

How to Apply

Federal:

Work-Study

U.S. citizen or permanent resident alien enrolled as an undergraduate or a graduate student

Varies, based on wages & hours worked

Financial need

Apply at college financial aid office

TAX BENEFITS

Source: Program

Who is Eligible

Amount

Conditions

How to Apply

Federal:

Hope Credit

Taxpayer with income under $53,000 ($107,000 joint) who paid qualified education expenses during tax year for self, dependent, or spouse

Up to $1,500 credit annually for each eligible student during first two years of education

Student must be enrolled at least time in undergrad program or pursuing other education credential

File federal tax return

Federal:

Lifetime Learning Credit

Taxpayer with income under $53,000 ($107,000 joint) who paid qualified education expenses during tax year for self, dependent, or spouse

Up to $2,000 credit per tax return; available for all years of postsecondary education & courses to acquire or improve job skills

Available for 1 or more courses

File federal tax return

Federal:

Tuition & Fee Deduction

Taxpayer with income under $80,000 ($160,000 for joint filers) who paid tuition, fees, or qualified education expenses

$4,000 deduction from income

Cannot claim deduction and credit in same year

File federal tax return

Federal & State:

Qualified Tuition Plans (529 Plans)

Anyone who contributes to a qualified plan (a CHET account in Connecticut) for a designated beneficiary

Earnings on qualified accounts are exempt from federal & CT income tax;

Contributions up to $5,000 ($10,000 for joint filers) can be deducted from income for CT income tax purposes beginning in 2006

Contributions cannot exceed the qualified education expenses for the beneficiary

File federal or state tax return

Federal:

Coverdale Educational Savings Account

Taxpayer with income under $110,000 ($220,000 for joint filers) who contribute to trust account for designated beneficiary under age 18

Earnings on account not taxed

Up to $2,000 in annual contribtions permitted

 

* Amounts may vary, information is current as of 7/1/06

Source: CT Dept. of Higher Education, US Dept. of Education

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