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Student Loans

Are Pell Grants And Student Loans Really Constitutional?

The Pell grants is a type of post-secondary educational federal grant which is sponsored by the US Department of Education. The Pell grants are constitutional as they are covered by the legislation titled the Higher Education Act of 1965. Pell grants originally known as the Basic Educational opportunity Grant Program are awarded on formula based on financial need. This formula is determined by the congress using criteria submitted the Free Application for Federal Student (FAFSA).

Federal Pell grants are awarded to the undergraduate students who don’t have a bachelor or professional degree. The amount of money that you can receive under the federal Pell grant is based on your need, the cost of Attendance at your school for both part time and full time students. The US Department of Education has a standard formula to determine if one is eligible or not to get approved for Pell grants.

In the United States, the federal loans are authorized under the title IV of the Higher Education Act. They can be subsidized by the US government depending on the student’s financial need. Both subsidized and unsubsidized loans are guaranteed by the US Department of Education. Almost all the students are eligible to receive them. Subsidized federal loans are offered to the ones who come with a demonstrated financial need. Federal government makes interest payments for these students while the students remain in the college. Unsubsidized federal loans, on the other hand, are also guaranteed by the US government but on these loans the government does not pay interest for the students, rather interest accrues on the loans. Interest begins accruing on $12, 000. There are basically two distribution channels for federal student loans i.e. Federal Direct Student Loans and Federal Family Education Loans.

Federal Direct Student Loans are funded from public capital originating with the US Treasury. FDLP are distributed through a channel beginning with the US Treasury Department, goes to the U.S Department of Education and passing through the college or university goes to the students.

Federal Family Education Loan programs are funded with private capitals which come from banking institutions. Through these loans, students are able to take payment options like allowing a discount for automatic payments or a series of on time payments.

Private student loans are not funded or guaranteed by government agencies but advocates of private student loans suggest that they combine the best elements of different government loans into one.

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Student Loans

Financial Aid – The Pell Grant

The Federal Pell Grant is one of the post-secondary education grant programs run under the auspices of the United States Department of Education. The name itself comes from a US Senator, Claiborne Pell, while the program was originally called the Basic Educational Opportunity Grant program.

The fact that it is a grant means that it does not require repayment, and it is awarded on the basis of financial need, which is calculated via a formula devised and overseen by the US Congress. A student’s application is considered after his or her submission of the Free Application for Federal Student Aid (more commonly known as the FAFSA) form, which may be downloaded from the Internet.

Due to the fact that the Grants are aimed principally at students from lower-income families, the receipt of a Pell Grant is often used for research purposes to gauge the attendance of low-income students as well as to gauge how economically diverse the student body of a college is. In early 2006, Federal budget legislation served to cut the financial aid budget a staggering $12.5 billion, although the maximum limit was upped to $5,800 until the end of 2011.

Despite this, however, maximum Grants are not funded at such a high amount, and the highest Pell award that can be made to students has remained at $4,050 since the 2003-04 academic year. The maximum award given under the Grant program can change from year-to-year, and is entirely dependent on available program funding. The current indications are that the maximum Pell Grant will rise to $5,400 by the year 2012. Due to increasing cost posed by fees and tuition, however, a Pell Grant only covers around 31% of a student’s attendance cost as compared to around 60% twenty years ago.

For a student to qualify to receive a Pell Grant they should demonstrate financial need, and this is calculated against Expected Family Contribution, which is determined from the information the student provides on their submitted FAFSA form. A student may only receive Federal Pell Grant support from one school at a time.