U.S. Markets closed

Financial aid help for undocumented students

Christina Couch

Editor's note: For this story, we will also be using the term "undocumented students" to refer to those students living in the country without legal permission.

For legal U.S. residents, winning the battle against college costs is tough. But for college students living in the country without legal permission, it can be nearly impossible. The American Association of State Colleges and Universities reports that approximately 65,000 students without residency status graduate from U.S. high schools annually.

Five percent to 10 percent are estimated to go to college. The argument as to whether these students should be allowed to attend U.S. colleges and access financial aid programs is one that divides parents, policy analysts and states alike. Here's a look at the current state of affairs for undocumented college students.

Getting in

No federal laws prohibit students living in the country without legal permission from gaining admission to public or private U.S. colleges, reports the College Board . However, the American Association of State Colleges and Universities reports that some states, such as South Carolina, ban students without legal residency from some or all public institutions. Others, such as Georgia, only allow these students to attend if no other qualified applicants were denied admission.

A study by the National Association of State Financial Aid Administrators, or NASFAA, shows that 13 percent of private institutions openly admit undocumented students, though 75 percent did not know their admissions policies toward students without legal residency. Among public institutions, 32 percent had open admissions policies toward undocumented students, while 44 percent didn't know.

Undocumented students aren't eligible for federal grants, loans or work-study jobs. It's also harder to secure private student loans, says Apri Medina, associate director of financial aid and scholarships for the University of California, Santa Cruz. Only a few banks and lending institutions make student loans for this population, and the eligibility requirements can be tricky for families without Social Security numbers, permanent residency or U.S. citizenship.

"For the very few institutions that do offer (loans to undocumented students), it's still hard for undocumented students to qualify because typically they're having to pass a credit check," Medina says. "For the ones that are a little bit more lenient, the interest rates are going to show it. They'll typically be higher."

Medina says private scholarships and grants that aren't tied to state and federal resources are available. Certain schools, such as Metropolitan State University of Denver, offer special tuition rates for undocumented in-state students. Other schools, including Hampshire College in Amherst, Mass., offer scholarships earmarked for undocumented students. Many schools also allow undocumented enrollees to compete for the same private awards as legal residents, provided the award isn't restricted to U.S. students only.

Undocumented students may also find fiscal support through outside organizations. Nonprofits such as the Mexican American Legal Defense and Educational Fund offer scholarships for these students, and on-campus student groups and community organizations may offer additional support.

State aid

With regard to financial aid for undocumented students, states create their own rules.

"These individuals, their parents, families, their network (need) to be aware of their state's admissions, tuition and financial aid policies as it affects undocumented students," says Daniel J. Hurley, director of state relations and policy analysis for the American Association of State Colleges and Universities, an alliance of state-supported schools. "There are a number of states that don't have a whole lot to say on that topic, but there are many states that do."

Currently, states including Arizona and Georgia ban in-state benefits for undocumented students, according to the National Conference of State Legislatures, but a handful, including California and Nebraska, offer them to certain students regardless of residency status. To access tuition benefits, students must have graduated from a high school in that state and attend an in-state public college or university.

Some states allow undocumented students to access state financial aid programs, including scholarships, grants and student loans. Laws vary drastically among states, making it crucial for undocumented students to research their state's policies before applying, says Hurley.

Other resources

Many of these students don't get the maximum help from their school's financial aid office because they're afraid to out themselves as living in the country without legal permission. Recent legislative changes have made self-identification easier, says NASFAA president Justin Draeger. As of June 2012, President Barack Obama issued an executive directive that granted a renewable, two-year stay to the Development, Relief and Education for Alien Minors, or DREAM Act, students younger than 30 who came to the U.S. before age 16 and have lived here for at least five years without a significant criminal conviction.

"(The directive) still doesn't give them access to federal financial aid, but it's a large step forward in that it allows them to self-identify without the risk of deportation," Draeger says.

In addition to seeking help from their school's financial aid office, Medina recommends that undocumented students network with other students in the same position to make contact with local advocacy groups and save as much as they can to defray college costs without financial aid.

"We tell all of our students, live like a student now so you don't have to live like a student later," she says. "(Undocumented) students have to live even more frugally."

More From Bankrate.com