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The array of higher education financing options available to both parents and students can be confusing. The application process may seem overwhelming.
However, the good news is that there are financial assistance and loan options that are well worth exploring. Take advantage of the help that is available to ease any potential financial strain. Once the college has been selected and the student accepted, talk to the campus Financial Aid Office for additional help in crafting the plan that works best for you. Following is a brief overview of the types of aid and loans available.
This type of grant is available from the federal government, state governments, colleges, and private organizations. Eligibility is based on financial need, which is determined by formulas established by the government and/or school. Need-based grants do not have to be repaid.
The largest source of need-based financial aid is the U.S. government through Federal Pell Grants. With some exceptions, they are awarded to undergraduate students who have not earned a bachelor’s or professional degree such as medicine, law, or dentistry.
Perkins loans are typically provided to students with exceptional financial need. These low interest loans are actually made through the school with government funding, therefore loan repayment is made to the school. Contact the school’s Financial Aid Office for information regarding eligibility as well as guidance through the loan application process.
The subsidized Stafford loan is a need-based loan with a low interest rate available through the federal government. Repayment of the loan does not begin until the student has either left school, or graduated. The school’s Financial Aid Office will provide additional information regarding the Stafford loan as well as guidance through the application process.
The unsubsidized Stafford loan is not based on financial need, therefore everyone is eligible, regardless of income. Therefore, this is a good source of funding to consider. The interest must be paid while the student is in school, or the interest may be deferred until graduation. The interest that accrues is then added to the loan’s principal balance when repayment begins.
Parents of undergraduate dependent children may qualify for this low-interest loan. A credit check is required during the application process. Parents may borrow up to the full cost of college attendance minus any financial aid awarded to the student.
Many private lenders offer loans for financing college with a variety of interest rates, terms and conditions. Look for a reputable lender and carefully compare loan terms, any additional benefits available to the borrower, and whether any fees are associated with the loan.
Scholarships are an attractive type of aid because they do not have to be repaid and many are not based on financial need. They may be awarded to students who have excelled in specific academic areas, or specialty areas such as music or sports.
Thousands of private scholarships are available through various companies, organizations, private foundations, and clubs. Information may be found online at numerous sites, including fastweb.com or scholarships.com . Comprehensive guides are published and updated each year on specific scholarships, eligibility criteria, etc., such as the College Board Scholarship Handbook or Peterson’s Scholarships, Grants and Prizes.
