Financial Aid and Online Education


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Financial Aid and Online Education

In order to be eligible for Federal Financial Aid you’ll need to satisfy a few basic criteria.

The Basics:

Have a high school diploma or recognized equivalent
Must demonstrate financial need
Be a U.S. Citizen or Eligible Non-Citizen (Green Card Holder)
Have a valid Social Security Number
Be registered with the selective service (if male between 18 and 25)
Be enrolled in an eligible degree or certificate program
Complete and sign the Free Application for Federal Student Aid (FAFSA)
Be enrolled at least half time to qualify for Direct Loan Program funds

Did you know: Not long ago Congress required schools conduct more than 50% of their teaching in classroom settings to qualify as federal financial aid distributors. This requirement was lifted in 2006, allowing online colleges to disburse federal financial aid.

In order to be eligible for Federal Financial Aid, make sure the schools you’re looking at are accredited.

Primary accreditation bodies:

Six primary regional agencies
A number of national agencies
And scores of programmatic agencies

All of which must be endorsed by the Department of Education

For most purposes accredited online colleges offer financial aid comparable to brick and mortar schools.

The Big Picture:

$185 billion in aid is available for college students every year.

73% Federal Government
18% Institutions of Higher Education
5% State Government
4% Private Sources

Types of Financial Aid:


Federal Perkins Loans:
Based on greatest financial need
Available at 1,700 institutions
10 year repayment

Federal Direct Loans (Stafford):
a.) Direct Subsidized:
Low-interest (3.5%-5%)
Not responsible for interest while in school
b.) Direct Unsubsidized:
Low-interest (for undergraduate)
Not based on financial need
Responsible for paying interest during school

Parent PLUS Loans:
Higher interest rates (6%-7.5%)
Borrowed by parents (contingent on their credit)
Cannot exceed cost of attendance minus other financial aid


Multi-state tuition reciprocity agreements:
(for undergraduate)
a.) Academic Common Market
Students of member states can cross state lines to major in specific programs not offered in their home states, paying in-state tuition.
Ala., Ark., Del.,GA.,KY.,LA.,Md.,Miss.,Okla.,SC, Tenn., VA.,WV.
b.) Midwest Student Exchange Program

Discounts to eligible students majoring in specific programs .
c.) New England Student Program

Discounted regional tuition.
d.) Western Undergraduate Exchange

Can apply for reduced tuition that doesn’t take financial need into account.

Ark.,Ariz.,Calif.,Colo.,Hawaii,Idaho, Mont.,NM.,Nev.,ND.,Ore.,SD.,Utah, Wash.,Wyo.

Also: 38 states administer student loans similar to Federal Direct financial aid

Private Student Loans
Higher interest rates (fixed and variable)
Not Subsidized
$150 billion out of $1 trillion in student debt is held in private loans

Aid from Colleges and Universities
Work Study

Many online colleges offer payment reductions:
1.) Tuition deferral for employer reimbursement
2.) Rebates for cash payments
3.) Subscription based payments
4.) Only pay to learn the skills you don’t know

a.) Pell Grants

Based on family’s financial need, cost of attendance and enrollment status

b.) Federal Supplemental Educational Opportunity Grants

Awarded by participating institutions through college financial aid offices

c.) Teacher Education Assistance for College and Higher Education Grants

Awarded to students pursuing teaching in high need fields in elementary education, secondary education, or for low-income students.

d.) Iraq and Afghanistan Service Grants

For students whose parents were members of the U.S. armed forces and died in Iraq or Afghanistan after 9/11.

Private Scholarships

Established in someone’s memory
For underrepresented ethnicities
Contest-based by non-profits or private entities

Sources of undergraduate financial aid:
54% Grants
37% Loans
9% Tax credits, deductions, and Federal Work-Study

Where to Start: the FAFSA

Required Information:
(all that applies)
For Parents:
W-2 from past year
Federal tax returns past year
Records of additional untaxed income
Bank statements
Investment records

For Students:
Driver’s license number
W-2 from past year
Federal tax returns past year
Records of additional untaxed income
Bank statements
Investment records

The Formula:
Cost of attendance minus estimated familial commitment equals your financial need

Places to file the FAFSA:

By Mail
Order by phone: 1-800-4-FED-AID