So you want to go to college and know that there are funds available, but you want to know, "What specifically is out there for me?" This question taps into the different types of financial aid offered for undergraduate students. At the most basic level, you have your free aid and you have aid that will be paid back later. Let's try to hammer out the details about all of this college money.
Loans--noun. Money borrowed for college education expenses which will be repaid upon completion of a degree program.
Education loans come in two types:
- Federal Student Loans. Federal loans are those that students are considered for after completing the FAFSA. These loans are sponsored by the government and often the interest is taken care of while you're in school. Repayment begins 6-9 months following graduation, depending on the loan. Commonly known government aid includes the Stafford loan, Perkins Loan and Parent PLUS Loan (taken out by the student's family).
- Private Student Loans. Usually students turn to this type of aid after exhausting all financial aid options (not that it isn't a worthwhile source, mind you). These student loans are applied for and supplied through your bank. The reason for the "last resort" stigma is because private bank loans usually have higher interest rates attached, increasing student loan debt later.
Grants--noun. Funding given to students with no strings attached. Such financial aid need not be repaid after the completion of one's education.Again, this aid falls into various categories. Grant money comes from all over.
- Federal Grants. Like the loans, federal grant money is what you are considered for upon completion of the FAFSA. The money is provided by government agencies, and it's FREE! Well-known federal grants include the Pell Grant (up to $5550 per year) and the FSEOG Grant (for exceptional financial need, up to $4000 per year).
- Institutional Grants. This type of grant comes directly from the college and university a student is attending, and helps balance out attendance costs. Various academic awards recognize academic excellence in the form of institutional grant money.
- Private Grants - These grants come from the private sector. Private and community organizations offer grant opportunities to students for a variety of reasons, including: community involvement, academic achievement, and membership to the organization.
Scholarships--noun. Financial aid typically awarded on the basis of merit. More free money for college.This type of financial aid is highly competitive and is awarded through a variety of means and criteria.
- Essay Contest Scholarship. Writing about a particular subject for an organization (global warming, pollution, economic crisis, etc etc) is a great way to earn scholarships ranging from the $100s to the low $1000s. You may even get to have your work published in the organization's journal!
- Academic Scholarship. Students earning a high GPA or performing well in their major may qualify to apply for such financial aid. To verify the validity of claims and to gain a better understanding of why a student is deserving, professor recommendation letters may be a part of the application process.
Understand that this list is not all-inclusive. If we discussed every financial aid option, no one would ever leave the computer! Nevertheless this should get you on the right track. Need more guidance on financial aid? Maybe you're starting out smaller and want to know what's offered for Community College Financial Aid. Check out the other types on the Go Financial Aid website. If you find yourself getting stuck anywhere along the way, we have the solutions to your financial aid problems!