Grants and Loans Explained Simply

Paying for college shouldn’t be overwhelming. This page explains the most common types of federal financial aid—including grants, work-study opportunities, and student loans—in simple terms. Whether you’re a student planning for college or a parent helping navigate the process, you’ll find helpful information about eligibility, repayment responsibilities, and how each aid program can help.

Federal Pell Grant

A Pell Grant is a grant from the federal government awarded to students who meet federal eligibility requirements.

• Foundation of award package.
• Does not need to be repaid.
• Awarded only to undergraduate students who have not earned a bachelor’s degree.
• Based on enrollment status (i.e., full-time, three-quarter time, half-time, or less-than-half-time).

The Pell Grant award is finalized after the final add/drop period. Your Pell Grant amount may change if your enrollment status changes.

Federal Supplemental Educational Opportunity Grant (FSEOG)

• Awarded to undergraduate students with exceptional financial need.
• Must also be a Pell Grant recipient.
• Does not need to be repaid.
• Priority given to students with lowest Parent/Student Contribution who have applied for financial aid by the priority date.

Federal Work Study (FWS)

• Provides opportunity to work at LATC, one of the school district buildings, or a nonprofit agency with whom LATC has an agreement.
• Amount on financial aid offer is maximum you are allowed to earn.
• Hours are worked each month and you are paid on the last working day of the month.
• Openings are listed on the LATC Student Portal.

Federal Direct Loan

• You must repay any loans borrowed even if you do not complete your program, do not find employment, or are otherwise dissatisfied with or do not receive the educational or other services that you purchased from the school.
• Funds are borrowed directly from the Federal Government through the Federal Direct Loan Program.
• Can either be subsidized or unsubsidized:
  • Subsidized Direct Loan is based on financial need. Government pays the interest for you while you are attending school.
  • Unsubsidized Direct Loan is not based on financial need. You are responsible for interest from the time the loan is disbursed until it is paid in full.
• Six (6) month grace period begins when you graduate, withdraw, or drop less than half-time.
• Loan repayment will be made to one of the Department of Education Loan Servicers. Log onto your studentaid.gov account for servicer information.
• Annual loan limits of $3,500 (first year) and $4,500 (second year).
• Dependent students may borrow $2,000 in additional Unsubsidized Direct Loan.
• Independent students may borrow $6,000 in additional Unsubsidized Direct Loan
• Must have at least 30 credits toward your current degree program in order to be considered a second-year student.
• Interest rate for Subsidized Direct loans first disbursed on or after 07-01-2026 and before 7-01-2027 is 6.52% fixed. Unsubsidized Direct Loan is 6.52% fixed.
• For loans first disbursed after 10-01-21, there is a 1.057% loan fee deducted from each disbursement.

There is a 1.057% loan fee deducted from each disbursement. For more information on Federal Direct Loans, please visit www.studentaid.gov.

Federal Direct Plus Loan

• Available to parents of dependent students.
• Parent borrows from the federal government.
• Interest rate for PLUS first disbursed on or after 07-01-2026 and before 7-01-2027 is 9.07% fixed.
• Can borrow Estimated Budget minus other aid.
• Starting in 2026-2027, PLUS Loan borrowers are limited to $20,000 annually and $65,000 max aggregate per student.
• Borrower is responsible for interest throughout life of loan.
• Repayment will begin within 60 days after the last disbursement of the loan. (Effective 7-1-08 parents may choose to defer payments on a PLUS Loan until six months after the date the student ceases to be enrolled at least half-time).
• For PLUS loans first disbursed after 10-01-21, there is a 4.228% loan fee deducted from each disbursement.
• Credit evaluation is required.
• Apply at studentaid.gov. Parent must complete application.

For more information on the Federal Financial Aid or to apply, please visit www.studentaid.gov.

Additional Loan Information

Entrance Loan Counseling / Master Promissory Note

The purpose of Entrance Loan Counseling is to ensure that students understand their rights and responsibilities as a student loan borrower. All first-time Federal Direct Loan borrowers must complete Entrance Loan Counseling and a Master Promissory Note before their loan funds can be disbursed. You can complete both the online entrance loan counseling and the Master Promissory Note at https://studentaid.gov/.

Note: When completing Entrance Loan Counseling, select the “I am an Undergraduate Student” option.

Exit Loan Counseling

The purpose of Exit Loan Counseling is to provide student loan borrowers with essential information to ensure they understand their student loan obligations and are prepared for repayment. Within 30 days of graduating or dropping below half-time enrollment status, students with federal direct student loans must complete exit loan counseling. You can complete the online exit loan counseling at https://studentaid.gov/.

Additional Information

Federal Direct Loan Servicer – Student loan borrowers can find out who their Federal Direct Loan Servicer is by logging into https://studentaid.gov/ using their FSA ID and password. Student loan borrowers can then set up an online account with their loan servicer.

Federal Student Aid Ombudsman – Students who have a dispute or other problem involving their federal student loans that they feel has not been resolved by the school or their loan servicer can contact the Federal Student Aid Ombudsman Group for assistance. More information can be found here.

Questions – Students with questions regarding Entrance Loan Counseling / Master Promissory Note or Exit Loan Counseling can contact the LATC Financial Aid Office at 605.882.5284 or 800.657.4344 or via e-mail at financialaid@lakeareatech.edu.