Types of Financial Aid
There are a variety of types of
financial aid available for college students including scholarships,
grants and loans.
Scholarships are traditionally based
on academic achievement or some other form of achievement such as music,
athletics or community service. There are also scholarships that
are need-based which are awarded to underprivileged students or
minorities. Scholarships are awarded by a variety of different
groups including the state and federal governments, public and private
organizations, as well as colleges and universities. You will find
that they vary in their amounts from hundreds of dollars to thousands of
dollars. There are literally thousands of scholarships
available so you should spend a great deal of time seeking and applying
Grants for College
Grants are normally awarded based on
financial need. They can be funded by the federal or state
government as well as the college you will be attending. Grants do
not need to be repaid. Grant eligibility is determined based on
information provided on your free application for federal student aid
form (FAFSA). This is a mandatory form to fill out if you are
interested in aid from any school across the country.
Loans for College
To be considered financial aid, an
education loan must be repaid with interest. These loans
come in three major categories: student loans, parent loans and private
Student Loans: Stafford and Perkins Loans
Federal loans usually have the lowest
interest rate and the payments are deferred until after graduation.
Many students borrow money through the Federal Stafford Loan program
which awards aid based on the financial need of the student. The
Stafford loan has two variations:
Federal Family Education
Loan Program (FFELP) and Federal Direct Student Loan Program (FDSLP)
Loans are either subsidized which means the government pays the interest
while you're in school or unsubsidized where you are responsible for
paying all of the interest but the payments deferred until after
are loans provided by private lenders (banks, credit unions and savings
& loans) and are guaranteed against default by the federal government.
Whereas Direct Loans are administered by "Direct Lending Schools" and
are provided by the US government directly to students and their
The best student loan available is
the Perkins Loan which is awarded to those with exceptional financial
need. This is a school based loan which means the school acts as
the lender using a pool of funds provided by the federal government, and
the school's financial aid department determines the amount of loan that
Parent PLUS loans allow parents to
borrow money to cover school costs for their dependent child not already
covered by the student's financial aid package. These loans are
either provided by private lenders (FFELP) or the federal government
(Direct). Repayment of PLUS loans are the responsibility of the
parents not the student.
begins 60 days after the funds are fully disbursed, and the repayment
term is up to 10 years. However there is an option to submit an
application for an in-school deferment. this is where parents can defer
payments while their undergraduate student, on whose behalf they borrowed
the money, is in-school and for a six-month grace period after the student
graduates. Note that interest will continue to accrue while deferred since
it is not subsidized by the government.
Private Student Loans
These loans, also known as Alternative Education Loans, are offered by
private lenders and often depend on your credit score. They help
to bridge the gap between money received from government programs and the
actual cost of the education.
education loans tend to cost more than the education loans offered by the
federal government. Private lenders are banks, credit unions and savings and
completed the FAFSA and you're eligible for financial aid, then you may be
entitled to be part of your school's federal work study program.
FWS-approved colleges receive funding to create campus
jobs for students. This means that you are given the opportunity to
help defer some college expenses by working part-time, usually on campus, while
you are attending school.