What Is Title IV Funding for Federal Student Aid?

What Is Title IV Funding for Federal Student Aid?

Title IV funding refers to a section of the Higher Education Act of 1965, which established federal student aid programs. Its purpose is to make higher education more financially attainable for a broad range of students.

Components of Federal Student Aid

Grants

Federal student aid available under Title IV is primarily categorized into grants, loans, and work-study programs. Grants generally do not need to be repaid. Examples include the Pell Grant, which provides need-based aid to undergraduate students, and the Federal Supplemental Educational Opportunity Grant (FSEOG) for students with exceptional financial need. Other grants, such as TEACH Grants, require specific teaching service obligations, while Iraq and Afghanistan Service Grants are for students whose parent or guardian died as a result of military service.

Loans

Federal student loans, in contrast to grants, are funds borrowed that must be repaid, typically with interest. Direct Subsidized Loans are available to undergraduate students demonstrating financial need; the U.S. Department of Education pays the interest on these loans while the student is in school at least half-time, during the grace period, and during deferment periods. Direct Unsubsidized Loans are available to undergraduate and graduate students regardless of financial need, but interest accrues from the time the loan is disbursed. Direct PLUS Loans are offered to graduate or professional students and parents of dependent undergraduate students to help pay for education expenses not covered by other financial aid.

Work-Study

Federal Work-Study provides part-time employment opportunities for students to earn money for educational expenses. These jobs are often located on campus or with non-profit organizations. Students are paid at least the current federal minimum wage, and total earnings depend on the student’s award amount and hourly wage.

Student and School Eligibility

Student Requirements

To receive Title IV federal student aid, students and educational institutions must meet specific criteria. For students, general requirements include U.S. citizenship or eligible non-citizen status, a valid Social Security Number, and a high school diploma or equivalent. They must also be enrolled or accepted for enrollment in an eligible degree or certificate program at a participating institution.

A fundamental requirement for students is maintaining Satisfactory Academic Progress (SAP) as defined by their institution. This typically involves maintaining a minimum grade point average, successfully completing a certain percentage of attempted coursework, and completing their program within a maximum timeframe. Additionally, male students between the ages of 18 and 25 must register with the Selective Service System to be eligible for federal student aid. Certain drug-related convictions can affect a student’s eligibility for federal student aid, potentially leading to a period of ineligibility.

Institutional Requirements

Educational institutions must also meet strict requirements to disburse Title IV funds. Schools must be accredited by a U.S. Department of Education-recognized agency and offer eligible degree or certificate programs. Institutions must also enter into a Program Participation Agreement (PPA) with the U.S. Department of Education, outlining their responsibilities for administering federal student aid and ensuring compliance.

Applying for Federal Student Aid

Gathering Information

The Free Application for Federal Student Aid (FAFSA) is the primary application for federal student aid. Before beginning, applicants and their parents, if dependent, need to gather specific documents and information. Required items typically include the applicant’s Social Security Number and, for non-citizens, their Alien Registration Number.

Crucial financial information includes federal tax returns, such as IRS Form 1040 and W-2 forms, and records of untaxed income, like child support or veterans’ noneducation benefits. Applicants should also have current bank statements and records of investments. An FSA ID, which serves as a username and password, is necessary for electronic signature and accessing federal student aid websites.

Submission and Review

Once all required information is entered into the FAFSA, the application can be submitted electronically through the official federal student aid website. After submission, the applicant will receive a Student Aid Report (SAR), which summarizes the information provided. Applicants should review their SAR for errors or omissions, which can be corrected online.

Award Letters and Verification

Following the FAFSA submission, schools listed on the application will use the data to determine eligibility and calculate financial aid awards. Students will then receive an award letter from each school outlining the types and amounts of aid offered, including grants, loans, and work-study. In some cases, the Department of Education or the school may select an application for verification, which requires submitting additional documentation to confirm the information reported on the FAFSA.

Receiving and Managing Your Aid

Once federal student aid has been awarded, schools typically disburse the funds directly to the student’s account. The aid is first applied to institutional charges like tuition, fees, and on-campus room and board. Any remaining balance is then paid directly to the student. Disbursements usually occur at the beginning of each academic term, such as a semester or quarter, to align with billing cycles.

Maintaining eligibility is crucial for students to continue receiving federal student aid. This primarily involves upholding Satisfactory Academic Progress (SAP) standards, including maintaining a minimum grade point average and successfully completing a specific percentage of attempted credits. Students must also maintain the required enrollment status, such as full-time or half-time, as specified by their aid package. Failure to meet these academic or enrollment criteria can result in the loss of federal student aid eligibility.

Federal student loans, unlike grants, must be repaid. While students are enrolled in school at least half-time, repayment is generally not required. After a student graduates, leaves school, or drops below half-time enrollment, there is typically a grace period before loan repayment begins. This grace period usually lasts for six months.