Campus-Based Aid

Campus-based aid programs include loans, grants, and work-study dollars which are first allocated to institutions, who then distribute the money to students at their discretion. Not all schools participate, and funding is awarded to schools on the basis of past participation, and a ratio of average student need and total price. Because of these provisions, most of the funding is allocated to older institutions and is biased in favor of schools with either high prices, high student need, or both. Students must fill out the FAFSA to receive these dollars, and the institution allocates these dollars based on student need. 

The Federal Supplemental Educational Opportunity Grant (SEOG) Program provides federal funds for need-based grants directly to approximately 4,000 participating institutions of higher education. The government uses a statutory formula to determine how much each institution receives, and then universities and colleges are required to contribute institutional funds equivalent to 1/3 of the federal allocation. In contrast to Pell Grants and student loans, SEOG grants are campus administered. Recipient institutions have flexibility in deciding how to distribute the funds as long as they prioritize students with exceptional financial need. 

The Work-Study Program provides federal funds to institutions of higher education to support part-time employment for low-income students as part of their financial aid package. Students at participating institutions may be eligible for Work-Study aid based on their financial information submitted in the Free Application for Federal Student Aid (FAFSA). Institutions may use federal Work-Study funds to subsidize employment opportunities for students at either the school or with outside employers.

Congress sets total available funding for the Work-Study program through the annual appropriations process. The Department of Education allocates funds to each institution according to that school’s past funding levels under the program and the total financial need of eligible students enrolled in the school during the previous year. Approximately 3,300 institutions participate in the program. Usually, the participating school or employer must fund at least half of each student’s wages, which must be at least the federal minimum wage. Institutions of higher education determine a student’s Work-Study award based on the student’s financial need and the amount of funding the school receives through the program.

Perkins Loans are made to students from lower-income families by a participating college or university. Schools have some discretion in determining which students receive a Perkins loan and the size of the loan offered.

Funding for Perkins loans is provided by the federal government directly to colleges and universities, which must match one-third of the funding. The funding establishes a revolving loan fund, from which new loans are made as older loans are repaid. Repayment can be no longer than 10 years, interest rates are fixed at 5 percent, and annual borrowing limits are set at $4,000 for undergraduates and $6,000 for graduate students. The federal government also provides separate funding to forgive Perkins Loans if borrowers are employed in certain high-need jobs.