Different Types of Financial Aid

 

Paying for college can be a challenging task. I am convinced that almost every college students asks him/herself if there is another way they can get money for school. While I think it is important to reduce your spending in college, it is also important to understand the different forms of financial aid that is available. It’s essential to understand the differences between them because if you misunderstand a loan for a grant, you could be stuck later paying back that money (and some).

Scholarships and Grants

Scholarships and grants are basically free money. There are many different forms of scholarships or grants. Some are awarded based on financial need, while others are based on merit (academic achievements). While I won’t take the time to explain the best approach to obtain scholarships and grants, it is important to understand that this form of financial aid does not need to be paid back. For whatever reason, consider it a gift. While there are certain scholarships that require you to work X amount of hours per week, these are often a great deal. For example, I graduated from college debt free in part because of a scholarship that awarded me a lot of money for 5-10 hours of work a week. Trust me, you will have a hard time finding a better hourly rate than some of these scholarships.

Loans

Loans also come in various shapes and sizes. If not already understood, loans require that you pay money back to them with interest. As with any form of a loan, you are given a certain amount of money now with the agreement that you will pay all of the money back with interest in the future. Many people take this route to pay for school because it means that they are able to focus on school and not worry about the stress that may come with figuring out how to pay for school. If you fill out a FAFSA, you will automatically qualify for some form of loan. Some loans do not start compounding interest while others do. It is important to understand the fine print on any loan before you use this method. If you ask me, I say avoid this at all costs. It may not be possible for everyone, but this will provide you greater flexibility in the future.

Work Study

Work study is a federal funded job. It is usually an on campus job. While these sorts of positions do not offer the highest salary, it does provide you with extra income that does not take away from qualifying for financial aid in the future. On campus work study positions often provide flexible hours so that you can focus on your studies. If you don’t qualify for work study, you may find that it is hard to find employment on campus. Often because of budgetary issues, certain departments can only afford to hire work study students because the wage is funded by the government. If your parents make too much money, you may find it difficult to find a job. While I didn’t qualify for work study, I was able to land several on campus jobs. While difficult, it’s not impossible.

Payment Plan

While this isn’t money in any form, universities often offer payment plans. If you are working while in school and can’t afford to pay your school bill all at once, the university’s payment plan may be the right option. Often there will be a small fee to buy into this plan, but it is a great service for working students. This allows you to pay your bill over the course of the semester or year. If you know you don’t make enough money to keep up the with the payments, make sure to take this into consideration and find another form of financial aid to supplement your approach for paying for school.

If you have already graduated from college, what form of financial aid did you utilize?

*featured image provide by: Images_of_Money via flickr

16 Responses to Different Types of Financial Aid

  1. Great list! My sister is about to attend college, so I’ll definitely have her read this.

  2. My brother applies for a lot of scholarships. It really is amazing how many of them are out there if you just look.

    For me, I paid cash but that is because I did classes in the evening while working full time. It is an odd situation but has worked well.

  3. I received grants, work-study (in the library–a fantastic college job if you can get it), scholarships, and loans. For a $32,000 liberal arts college I came out owing $36,000. Not bad! I paid the last of it in 2010.

  4. Most schools will work with the students as far as work study is concerned. If not college towns are full of jobs for students and usually willing to work around scheduling issues.

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  6. I put myself through college and had Pell grants, work study, and student loans. Took me 10 years to pay off those loans and I still remember making that last payment!

  7. Jackie says:

    I got a full scholarship for undergrad, and then for graduate school my employer paid for the first part. (They would have paid for the 2nd year too, but I was dumb and quit to go full time. So I took out a loan for that…)

  8. Jeffrey says:

    For undergrad, I got mostly scholarships based on merit and other ones that I had to apply for.

    For grad school, I was lucky to get a Teaching Assistantship that covered my full tuition and paid a nice stipend, too. I had to work 10-20 hours a week, but it was well worth it!

  9. YFS says:

    I received nothing for college and had to pay entirely out of pocket. It didn’t help that I went to an out of state school either ;-(. If I was a bit more diligent I would have looked into scholarships and grants while in High school to help shoulder some of my debt.

  10. The country I got my education in had education state subsidized, never paid much from pocket. Only a nominal tuition and staying cost and the actual food cost, that’s it.

    State of Florida run a tuition fund. Basically you can open one account as soon as your child is born with a lumpsum amount and this will take care of the college degree in entirety.

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