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College financing tips: federal, state and institutional programs offer aid.

WANDERING THROUGH the maze of financial aid can be confusing, but is necessary as the cost of education continues to rise. Here is an overview of some federal, state and institutional financial aid to get you started.

Federal programs.

"Unfortunately the most common form of federal financial aid is the student loan," says Kenneth Nieman, director of student financial services at Anderson University, "because any student can qualify for a student loan."

The Stafford Loan, the old standby, is not need-based, but students who can show financial need may qualify for the "subsidized" version in which the federal government pays the loan interest as long as the student is enrolled in school and meets the requirements. Students receiving the "unsubsidized" version can opt to make interest-only payments while in school or have the interest added to their loan balance.

Eligibility for the Federal Pell Grant is need-based. The grant amount has not kept pace with the costs of education.

The federal government also has three programs collectively referred to as "campus-based" programs. All are need-based and all are awarded and administered by the higher-education institutions.

The Federal Perkins Loan is a no-interest loan while the student is in school. Once the student graduates or no longer meets the requirements, the loan must be paid back based on a 5 percent fixed interest rate. The other two campus-based programs are the Federal Work-Study Program and the Federal Supplemental Educational Opportunity Grant, which, like the Pell Grant, is designed for needy students.

The Federal PLUS Loan or "parent loan" is an option for parents who finance the education of their children. "The Federal PLUS Loan can be taken out up to the cost of attendance," says Jeff Berggren, vice president of enrollment management and marketing at Huntington University "So the amount can be pretty significant. We caution people to use it with discretion."

Potential students must complete the Free Application for Federal Student Aid (FAFSA) to apply for both federal and Indiana state aid. Application can be made online at or via paper copy and must be processed by March 10.

State programs. While federal financial-aid awards make up two-thirds of all financial awards, states and higher-education institutions also make major contributions.

State grants and scholarships are a good source for Indiana residents to tap, providing they plan to attend Indiana schools. The need-based Frank O'Bannon Grant Program is the lifeblood of Indiana financial aid.

"Almost a third of our student population receive an Indiana state grant," says Berggren, "which is a much higher percentage than those that would receive the Federal Pell Grant. A Pell Grant can provide up to $4,000, but it tends to be heavily indexed toward students with a high need. But, the Indiana state grant will actually impact folks who fall into that middle-class and lower-middle-class area."

Two awards fall under the umbrella of the Frank O'Bannon Grant Program: the Higher Education Award, for use in eligible public or proprietary colleges, and the Freedom of Choice Award, for use in eligible private colleges.

The need-based 21st Century Scholar Program provides tuition to a participating public state school to participants who graduate from high school alcohol- and drug-free. It's not an option, however, unless the student has signed a pledge in the seventh or eighth grade and fulfilled it.

There are numerous specialty grants and scholarships available that are merit-based or geared to special vocations or organizations, such as the Indiana National Guard Supplemental Grant, Nursing Scholarship and the Hoosier Scholar Award. Visit for more options.

College programs. "It's all about access," says Alan P. Hill, vice president for enrollment and marketing at Franklin College. "You make access available to all students who want to go to school. So with the combination of federal, state and institutional aid, we're going to try to put together competitive packages at each of the schools to make it attractive for students to be able to go to the school of their choice."

Franklin College offers a full array of scholarships that range from $500 to full tuition.

Anderson University has a specialty scholarship in partnership with churches. Its Matching Church Scholarship matches up to $1,500 per year of scholarship money granted to a student by a church.

Indiana State University is focusing on "guaranteed" scholarships so students will know upfront their eligibility for institutional financial aid. Its newest program is the Laptop Award. Starting in fall 2006, students who complete a college-prep curriculum with a 3.0 or better cumulative grade point average and are admitted before March 1st will be awarded a business-grade laptop upon enrollment.

"The laptop not only will help them financially, but it will also be a useful tool throughout their entire college curriculum," says Richard Toomey, director of admissions for Indiana State University.

Last year the university instituted the Indiana Top Scholar Program. Students ranked No. 1 through 5 in their graduating class are guaranteed a $4,000 per year scholarship.

Although the average "sticker" price of an education at a private school is considerably more than at a public school, the financial aid offered may place it in the realm of possibility for lower-income students.

"The reality is that the average parental income is $3,500 lower at independent colleges in the state of Indiana than it is at state schools," says Berggren. "Institutions often have pretty significant sources of institutional aid. The average tuition discount, which is basically the percentage of tuition given back to the student by the institution, is nearly 40 percent nationally for private colleges. Students should at least take a look at independent schools."

Huntington University has a tuition freeze program which allows students to lock in their tuition at the end of their freshman year, and its top academic scholarship, which goes up to $8,500 per year, can cover a third of the university's tuition, fees and room and board.

Berggren says the range of financial aid offered by institutions of higher education is dramatic. "It really would behoove people to check into all possibilities."
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Title Annotation:EDUCATION
Author:Held, Shari
Publication:Indiana Business Magazine
Date:Nov 1, 2005
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