Understanding Different Types of College Financial Aid

As the cost of higher education rises, applying for financial aid has never been more crucial. When it comes to paying for college, financial assistance can make your education more affordable.

Before you apply for aid, it is a good idea to understand the cost of your education and how much financial aid you need. Look into the cost of tuition, books, and other college-related expenses.

StudentLoan_iStock_000009470337MediumApplying for Aid
Once you know approximately how much you will be spending on college, you can make more educated decisions when applying for financial assistance. The first step in applying for financial aid is to complete the federal Free Application for Federal Student Aid (FAFSA). Financial aid representatives at your school of choice can assist you in filling out the information if you need help.

After you submit your FAFSA, you may receive financial aid offers from a variety of sources. Working through your different options can be confusing, so below is a list of some of the more common sources, with brief definitions to help you understand each. They include:

The U.S. Federal Government – The federal government offers many aid programs to help reduce your out-of-pocket cost, including:

  • Federal Pell GrantsGrants based on financial need for low-income undergraduate students
  • Federal Supplemental Educational Opportunity Grants (FSEOG) – Those based on financial need for low-income undergraduate students
  • Federal Work-Study (FWS) – Part-time job opportunities for undergraduate and graduate/professional students
  • Federal Perkins Loans – Low-interest loans based on financial need for undergraduate and graduate/professional students
  • Direct Subsidized Stafford Loans – Low-interest loans based on financial need for undergraduate students. Interest on the loans is paid by the government while borrowers are in school. Repayment does not start until six months after graduation or when a student falls below part-time status.
  • Direct Unsubsidized Stafford Loans – Low-interest loans for undergraduate and graduate/professional students. Interest starts immediately after the loan is received.  Repayment does not start until six months after graduation or when a student falls below part-time status.
  • Direct PLUS Loans – Loans to the parents of dependent undergraduate and graduate/professional students. Loans are not based on income, but borrowers must pass a credit check or obtain an endorser. Repayment begins 60 days after borrowers receive the full amount of the loan.

The State of Your Residence – Even if you are not eligible for federal aid, you may be eligible for aid provided by your state government. Contact your state grant agency for more details.

The College You Attend – A number of U.S. colleges offer grants and scholarships. Ask your college’s financial aid office for more details.

Nonprofit or Private Organizations – Many organizations offer grants and scholarships for college students, but these types of aid generally require you to reach out to these programs and apply. Contact your college’s financial aid office for guidance.

As you can see, there are a number of financial aid services available to students. Knowing how much aid you need to cover your higher education costs, and taking the steps to apply for that aid, can have a large impact on your financial life and the decisions you make about your education. Whether you are looking to complete a couple classes or a graduate degree, financial assistance can help you realize your academic goals.

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