If you’re going to college or graduate school, there are multiple forms of financial aid you can apply for, including scholarships, grants, and student loans. As you research your options, you might come across the “Title IV” financial aid.
What is Title IV financial aid, and what does it mean for students? Title IV financial aid refers to several federal financial aid programs authorized by the Higher Education Act of 1965.
Here’s what students need to know about Title IV aid, including which financial aid qualifies and the limits on how much you can receive.
Key Points
• Title IV financial aid consists of several financial assistance programs for students, including federal student loans, grants, and work-study programs.
• Eligibility requires attending an accredited institution and, for many types of Title IV aid, demonstrating financial need.
• Applying involves submitting the FAFSA to determine aid types and amounts.
• Types of Title IV aid include Direct Loans, Pell Grants, Federal Supplemental Educational Opportunity Grants (FSEOG), and federal work-study.
• Limits on aid vary by type, with specific caps on Pell Grants, FSEOG, and federal loans.
What Is Title IV Aid?
Title IV financial aid refers to several federal student financial assistance programs available to students attending a higher education institution that has Title IV status. Title IV status is granted by the U.S. Department of Education to a range of institutions, including public and private colleges, as well as trade and technical schools.
Title IV aid is intended to help cover the cost of college for students who can’t afford to pay out of pocket. For that reason, most Title IV aid requires that students demonstrate financial need to qualify.
Which Types of Financial Aid Are Considered Title IV Aid?
Wondering what is Title IV financial aid vs. other forms of financial aid? All Title IV aid involves federal programs that are administered by the Department of Education.
To apply for federal Title IV financial aid, students need to submit the Free Application for Federal Student Aid, better known as the FAFSA.
Here’s a list of the types of federal financial aid that are considered Title IV.
Direct Subsidized and Unsubsidized Loans
Nearly 29% of undergraduate students received federal student loans for the 2022-2023 academic year, according to the latest data from the National Center for Education Statistics.
Direct Subsidized Loans and Direct Unsubsidized Loans are two federal student loans offered by the Department of Education to help students pay for higher education, including four-year college, community college, and trade and technical schools.
The amount of financial aid you can get is determined by your school. The amount you can borrow in federal loans is the cost of attendance minus any other financial aid you receive. Like all student loans, these Title IV loans need to be repaid, but there are some key differences between the two loan options.
With a Direct Subsidized Loan, borrowers aren’t responsible for paying interest on the loan while they’re in school, for the six-month grace period after leaving school, and during student loan deferment. These loans are awarded based on a student’s financial need.
In comparison, Direct Unsubsidized Loans are not based on financial need — they are available to all undergraduate and graduate students. However, interest on these loans accrues while students are in school and during the grace period afterward, and that interest is added to the total principal amount of the loan.
Direct PLUS Loans
The Department of Education offers Direct PLUS loans to grad or professional students (referred to as a Grad Plus loan) and parents of dependent undergraduate students (these are known as Parent PLUS loans). A Direct PLUS loan is an unsubsidized loan with a fixed interest rate that can help borrowers cover the full cost of attendance, minus other financial aid, such as grants and scholarships.
Direct PLUS loans have higher interest rates than other types of federal student loans, so it’s generally recommended that students exhaust all their other Direct Loan options before considering this type of Title IV aid.
Federal Supplemental Educational Opportunity Grants
The Federal Supplemental Educational Opportunity Grant (FSEOG) program is a type of Title IV aid for students with exceptional financial need. Unlike student loans, grants for college don’t need to be repaid.
Students can be awarded between $100 and $4,000 a year in FSEOG grants. The exact amount depends on the other forms of financial aid received and a school’s availability of funds. Applying early can help increase your chance of accessing funds, but keep in mind that participation in the FSEOG program varies by school.
Federal Work-Study
The federal work-study program is a type of Title IV aid that’s available to students based on their financial need. It allows students to earn money through part-time employment, often related to community service or a student’s field of study.
Work-study jobs may be on or off campus, and schools may help find positions or require that students find, apply, and interview for positions on their own. Students are paid at least the minimum wage in their state, and the amount you earn can’t exceed the federal work-study award.
Pell Grants
As mentioned, grants are a type of financial aid that don’t need to be repaid, making them a desirable form of Title IV federal financial aid.
Pell Grants are awarded based on financial need to students who have not yet earned a bachelor’s degree. Aside from demonstrated financial need, students need to maintain satisfactory academic progress toward their degree to keep Pell Grants.
For those eligible for Pell Grants, the maximum award is $7,395 for the 2024-2025 academic year. The amount is subject to change each year.
Are Scholarships Considered Title IV Aid?
Scholarships can come from a range of sources, and like grants, do not need to be repaid. Scholarships are not considered Title IV Aid. However, both merit- and need-based scholarships often require that students complete the FAFSA to be eligible to apply.
Recommended: Student Loan Refinancing Guide
How Do I Find Out If I Qualify for Title IV Aid?
To recap, Title IV aid is awarded based on financial need, with the exception of Direct Unsubsidized Loans. Students also must meet other eligibility criteria to qualify, including citizenship requirements and being enrolled in or accepted at an accredited higher education institution with Title IV status.
Students need to fill out and submit the FAFSA to determine what Title IV financial aid they qualify for. Pell Grants and FSEOG awards are issued on a first-come, first-served basis, so applying early is recommended. Note that students can list multiple institutions on their FAFSA application if they’re still undecided about what school to attend.
Are There Limits to the Title IV Aid I Can Receive?
Some types of Title IV aid, such as Pell Grants and FSEOG awards, have set limits of $7,395 and $4,000 per year, respectively, for all students.
For federal student loans, the total amount you can borrow depends on your academic year, the type of loan, and your dependency status. If you are a dependent student, you can borrow up to $31,000 in federal loans for your undergraduate studies, with a cap of $23,000 for Direct Subsidized Loans.
The amount of Title IV aid you can receive is also limited by the cost of attendance at your school.
If you don’t receive enough financial aid to pay for school, you may want to consider private student loans to help cover the gap. With private loans, you receive a loan from a private lender, such as a bank, credit union, or online lender. The interest rate and terms you get are based on your credit, and borrowers must pass a credit check to qualify. For college students who typically don’t have enough of a credit history, a cosigner on the loan may be required.
Keep in mind that you could always choose to refinance student loans later on when you have a stronger credit history. Ideally, you may be able to get a lower interest rate or more favorable terms. (Just be aware that if you opt to refinance federal loans, that makes them ineligible for federal benefits such as income-driven repayment plans and student loan forgiveness.)
If you can qualify for better rates and terms, refinancing student loans to save money may make sense for you.
Using a student loan refinancing calculator can help you see what your payments might be.
The Takeaway
Title IV aid refers to several federal assistance programs that are intended to help make higher education more affordable. Many of these programs are based on financial need, and students need to complete the FAFSA to find out what federal financial aid they qualify for.
There are limits to how much students can receive in financial aid, however, and students may consider taking out private student loans to fill any funding gaps. Later on, they might consider student loan refinancing to reduce their payments.
Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.
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