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FINANCIAL AID
Master the Financial Aid Process
by Cameron Huddleston

Applying for financial aid can be intimidating and confusing. That's why so many scams offer to do the work for you -- for an up-front fee, of course.

There are legitimate services out there, too, but you could get the same information yourself free. Just make sure you get the most financial aid possible by learning about the various sources of aid and the application process. And don't delay.

"The best thing to do is get started early," says David Cooper, a managing director at Sallie Mae, which provides education loans. The sooner you can apply the better, because "aid is not an infinite bucket," Cooper says.

Sources of aid

Your final aid package could come from a variety of federal or state agencies, private lending institutions or, in the case of scholarships, your employer, club or church. The Department of Education provides the majority of financial aid - about 70% annually. About $67 billion in student aid is handed out each school year, according to the DOE. The remainder of the aid comes from other federal agencies, state agencies, private loans and scholarships.

Department of Education. Federal aid includes loans, grants and campus-based programs and is based, for the most part, on financial need rather than scholastic achievement.

There are three types of loans: Stafford student loans and PLUS loans for parents and Perkins loans for high financial need students. The Federal Pell Grant, which doesn't have to be repaid, usually is awarded only to undergraduate students based on financial need, cost of attendance and other factors. Campus-based programs such as work-study let you earn money to pay for school. To receive any of these forms of aid, students must first fill out the Free Application for Federal Student Aid, or FAFSA, which is discussed below.

Federal agencies. U.S. government agencies such as the Department of Health and Human Services, the Department of Veterans Affairs and many others provide a variety of scholarships, loans and education benefits.

State agencies. Aid programs vary from state to state. For information, check with your state's education department.

Private loans. There are an abundance of private education loans from banks and lending institutions, that can be used to fill the gaps left by federal programs, Cooper says. Rates on private loans tend to be a little higher than federal loans. Check with your bank or the national education lenders such as Sallie Mae, Nellie Mae and The Education Resources Institute.

Sallie Mae, Nellie Mae b>Scholarships. Finding and applying for scholarships is a time-consuming project that's often not as rewarding as you might hope. Most scholarships tend to be narrowly focused, extremely competitive and financially meager ($500 or less). And some colleges subtract the value of outside scholarships from need-based aid. If you do decide to seek scholarships, check with your school guidance c's, the and or on paper -- you can generalk">pick upivepnd to be narrowly f, high proje as rewardyou planuto attend or by calling the Federal Student Aid Information Ceutsi (800-433-3243).

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