Part: 1 - - General Information
SectionTitle: The SFA Programs
The SFA Programs
The SFA Programs are authorized by the Higher Education Act of 1965, as amended (the law). For 1997-98, the SFA Programs delivered approximately $42.8 billion in aid to 7.6 million students. Other important sources of aid may also be available to students. A student should check the reference section of the school library or public library for information on these sources. Appendix A of this publication has some helpful references.
The Department administers the following major SFA Programs:
- Federal Pell Grants
- Campus-Based Programs
- Federal Supplemental Educational Opportunity Grants (FSEOGs)
- Federal Work-Study (FWS)
- Federal Perkins Loans
- William D. Ford Federal Direct Loans (Direct Loans)
- Federal Direct Stafford Loans
- Federal Direct PLUS Loans
- Federal Family Education Loans (FFELs)
- Federal Stafford Loans
- Federal PLUS Loans
Grants (Pell Grants and FSEOGs) do not have to be repaid; loans (Perkins Loans, Direct Loans, and FFELs) must be repaid. FWS provides students with income from part-time jobs.
Federal Pell Grants are awarded through strict rules set by the Department. If a student is eligible on the basis of these rules, an eligible school pays the student his or her Federal Pell Grant using federal funds.
For the campus-based programs, the Department funds participating schools annually at a specified level. The school then awards these funds to students following federal guidelines. When those funds are spent, no more campus-based aid is available at that school. Therefore, the earlier an eligible student applies, the more likely he or she is to receive campus-based aid.
There are two types of federal student loans: subsidized and unsubsidized. Subsidized loans are awarded to students on the basis of financial need. The federal government covers the borrower's interest during some significant periods, such as when the student is in school, thereby subsidizing these loans. Unsubsidized loans are not need-based; the borrower is charged interest throughout the life of the loan. Subsidized and unsubsidized loans are available to students; PLUS Loans (for parents) are always unsubsidized.
Direct Loans enables eligible students and parents to borrow from the Department instead of a bank or other lending institution. Thus, borrowers work with a single entity, the U.S. Department of Education, through its Servicing Centers. The Direct Loan Program offers a range of flexible repayment options to meet borrowers' varied financial circumstances.
The funds lent under the FFEL Program are provided by banks and other lenders, and are guaranteed by state agencies and reinsured by the federal government.
A student cannot borrow from both the FFEL Program and Direct Loans at the same time. Similarly, a parent cannot borrow from both programs at the same time for the same student. The school a student plans to attend will tell him or her from which program he or she can borrow at that school.
See The Student Guide for more information on the Department's major federal student aid programs.