What exactly is financial aid? You hear admission reps talk about it, school counselors say how it’s important for seniors to know about it, and how some believe they will not qualify for it. All seem like vague statements if you’re not familiar with the terminology and all of its complexities. Simply put, financial aid is money to help pay for college or a career school. Grants, work-study, loans, and scholarships help make college or career school affordable.
Now let me break down each different type of aid for better understanding and to feel confident in reviewing financial aid award packages. More about that in the third and final blog in this series.
This is a type of financial aid that needs no introduction! I’m sure seniors are tired of hearing about them, but it’s one of the best ways to pay for college. Plus, they don’t need to be repaid. There are thousands of them offered by schools, employers, individuals, private companies, nonprofits, communities, religious groups, and professional and social organizations.
Some scholarships are merit-based. You earn them by meeting or exceeding certain standards geared toward academic achievement, for example above average test scores. While others are based on financial need. A scholarship might cover the entire cost of your tuition (some like to call them full-ride scholarships), or it might be a one-time award of a few hundred or thousand dollars. Either way, all those scholarships add up and are worth applying for because they’ll help reduce the cost of attendance.
*Shameless plug coming in 5, 4, 3, 2…* ScholarshipQuest is a great resource in securing the bag.
A grant is a form of federal aid that doesn’t have to be repaid, but it is one of the hardest to receive as it’s based on income. A variety of federal grants are available, including Pell Grants, Supplemental Educational Opportunity Grants (SEOG), Teacher Education Assistance for College and Higher Education (TEACH) Grants, as well as state-based and college-based grants. To apply, complete the Free Application for Federal Student Aid (FAFSA). The first blog in this series explains that process.
Federal Work-Study is a great opportunity for students (with financial need) to work a part-time job on campus to help pay education expenses or earn extra spending money. Plus, the wages students earn do not count against them on the FAFSA.
Pro tip: always answer ‘yes’ to work study on your FAFSA as it’s easier to decline the aid at a later time if you decide you no longer want to participate.
Regardless of your financial need, you can qualify for a federal loan as part of your school’s financial aid package. A loan is money you borrow and must pay back with interest once you graduate.
Direct Subsidized Loans are available to undergraduate students who demonstrate financial need, and the interest is paid by the federal government while the student is in school at least part time.
Direct Unsubsidized Loans are loans made to eligible undergraduate, graduate, and professional students, but eligibility is not based on financial need, which means interest accrues while the student is in college.
If you decide to take out a loan, educate yourself about the process. For example, know the interest rate, who is servicing your loan, and most importantly keep track of how much you borrow each year. This Loan Chart should be helpful as well.
Stay tuned for the next blog in our series about how colleges award financial aid.