Most people who want to attend college but need financial aid find themselves swimming in an ocean of information. Since there’s so many different types of financial aid, it can be easy to feel like you’re about to drown in confusion. Here’s a very simple explanation of the differences between the major types of financial aid for college. Bear in mind that for each category, some funding is needs-based while other funding may be based upon your grade point average, skills, religious affiliation, nationality, race, gender, or other criteria.
First, let’s talk about ‘free’ money for college. There are two categories of monies that you are not required to pay back: grants and scholarships. There is not a lot of difference between grants and scholarships. Grants are distributed by either the federal or state the government and are almost always based upon financial need. Scholarships, on the other hand, are funded by private organizations or individuals. Businesses, clubs, community organizations, corporations, and individuals offer scholarships ranging from a few hundred dollars to full support. Scholarships may be awarded based upon need, merit, affiliation, or something else.
Federal work study programs are awarded based upon financial need. These opportunities are limited, so it’s important to learn about them as soon as possible. Work-study programs might place students in their chosen fields of study, or offer employment to help cover the cost of education.
There are also two types of loans that will help you pay for your college education: federal and private. Federal loans are preferable because they offer a very low interest rate. A federal loan that is subsidized doesn’t begin to accrue interest until you’ve completed your education, and you don’t begin to make payment until six months after graduation. Unsubsidized loans, while a bit more costly, are also a good deal. With these, interest accrues but is deferred until you’ve completed school, and is counted as part of your payments. Private loans should be your last choice, and should only be used to bridge the gap between what you have and what you need, because they are based upon credit and have higher interest rates.
Tuition forgiveness is the final category of financial support for college. These programs take care of part or all of your college loan payments, or may pay for your tuition up front. In exchange, you agree to work at a certain location for a certain number of years. These are typically offered to teachers and medical workers who are willing to accept employment in an underserved area.
A combination of these financial aid opportunities can go a long way toward making your college education affordable-or possibly even free!