Awareness of financial aid important

by Molly Tinker
For The Post

Each spring, Ohio University students receive notification of the financial aid they are eligible to receive for the following year.

Aid is awarded after students complete the FAFSA, or Free Application for Federal Student Aid. Aid is calculated according to a formula that considers family size, income, number of family members in college and the parents' ages, among other things, to create a family-expected contribution, according to the U.S. Department of Education's Web site (http://www.ed.gov). This contribution is based on the amount of money that the family should be able to put towards a student's education, said Sondra Williams, OU director of financial aid.

Financial aid then is awarded with contributions from the federal and state governments, as well as the school, she said.

But OU sophomore Megan Wagner said she does not understand the financial aid process.

"I don't understand why I'm eligible for the Pell Grant but not for work-study," Wagner said.

The most common type of financial aid is a loan, according to OU's 1999-2000 Financial Aid summary.

"A lot of people don't consider loans financial aid, but they truly are," Williams said.

OU participates in the Federal Direct Loan Program, which is awarded by the federal government to students at all colleges and universities. The interest rates for the direct loans vary but cannot go above 8.25 percent. Federal Direct Loans can be subsidized or unsubsidized, depending on the recipient's need, Williams said.

With a subsidized loan, the government pays the interest while the student attends school; the student does not begin paying interest until after graduation. Unsubsidized loans require the student to pay back interest during school as well as after, according to the U.S. Department of Education's Web site.

Paying the interest on unsubsidized loans every year, even while in school, is a very good idea, Williams said. Otherwise debt adds up and makes the loan more difficult to pay back later because of the larger amount.

Students can choose one of four payment options with Federal Direct loans, she said. The standard option is a 10-year payment plan. Extended repayment, a 30-year plan, is also an option. Another choice is an income-contingent plan, which determines the payments based on the income of the borrower.

A graduated plan is available as well. The payments in this plan increase every two years with the assumption that a graduate's income will increase with time.

OU freshman Gretchen Rusnak is currently a recipient of both subsidized and unsubsidized loans.

"Loans are helpful, but I wish I didn't need them," Rusnak said.

The Federal Direct loan program makes borrowing more flexible, Williams said. The four repayment options were implemented in 1994. Students can switch payment plans if necessary to the one that best suits them.

Another common type of loan is the Perkins Loan, which is funded by the federal government and the school. A Perkins Loan is unsubsidized, but has a lower fixed interest rate of 5 percent, Williams said.

Also available are PLUS Loans, or Parent Loans for Undergraduate Students. These loans are taken out by parents to pay for college expenses of their dependent children. The amount of a PLUS loan is determined by subtracting other financial aid from the total cost of tuition and room and board. The PLUS loan has a variable interest rate that changes every July 1 and cannot be more than 9 percent. Repayment for PLUS Loans begins within 60 days after the final loan disbursement of the year, she said.

Unlike loans, grants, another form of financial aid, do not require repayment. Grants are awarded based on need. The Federal Pell Grant is the most common and can be as much as $3,300 a year, Williams said.

Also available for some students is the Ohio Institution Grant. In order to receive this grant, students must be Ohio residents and enrolled full-time in a Pennsylvania or Ohio college or university. The maximum amount for this grant is $1,866, she said.

Students determined by the FAFSA to have the most need also are eligible for the Supplemental Education Opportunity Grant, a campus-based program. Amounts are set by each university and were worth a maximum of $1,000 at OU in 2000-2001.

OU Grants and OU Access Grants also are available for students with the most need. The OU Grant is awarded to non-minority students and can range up to $600 while the Access Grant is awarded to minority students and ranges up to $1,000.

Some types of student employment also are considered financial aid. The work-study program allows students to work up to 10 hours a week at an assigned campus job. Alden Library, Ping Center and Hudson Health Center, among others, employ students in various positions through the program. The students receive minimum wage rates.

While most financial aid automatically is credited to a student's tuition bill, work-study is not. Even though work-study is listed on the financial aid package, the student receives a paycheck for the amount of hours worked instead of subtracting the amount from tuition.

OU freshman Bill Fulk, who works at Alden Library, said he enjoys being a part of the work-study program. "Work-study is a great opportunity to meet people and make a little spending money so you don't have to bug your parents for cash," Fulk said.

Scholarships are another form of financial aid. Many different scholarships are available from within and outside of the university. Scholarships are awarded to students based on merit. Grade point averages, test scores and extra-curricular activities all factor into scholarship assignments. Requirements for scholarships can vary, but a 3.4 GPA and 16 credit hours per quarter are necessary to be considered for the most common one, the Dean's Scholarship, said Valerie Miller, associate director of scholarships and client services in the Financial Aid office.

But forms of financial aid sometimes can conflict. OU sophomore Colleen Skirtich said she was awarded a new scholarship based on academic merit, but this made her ineligible for the loan she had received previously based on financial need.

"Scholarships are rewards for academic work, but this one hurt me as much as it helped," Skirtich said.