If you are preparing to attend college, one of the biggest concerns you probably have is how you will pay for college. Some students are able to save money throughout their childhood to help with the tuition and fees. The average cost for most colleges and universities is around $20,000 per year and only a few are able to foot the bill without assistance. Generally, most students have to rely on some sort of financial help either from scholarships, loans or grants. We will be exploring both loans and grants and discuss how they can help you pay for your education.
What is a College Grant?
A student grant is different than both a loan and a scholarship. Grants are normally given to individuals based on financial need rather than on merit (IE your GPA) like scholarships are. A grant can be considered as a type of financial gift to help you pay for college. Grants, unlike loans, do not have to be paid back to anyone.
There are several sources in which grants can come from. Some grants come from federal funds, such as the Pell Grant and others come from the college or university you are attending or from a public or private organization. If you apply for a grant, you can use the money for tuition, books, rent and other necessary living expenses while you are attending college.
What is a Loan?
In addition to grants, loans are also helpful in assisting you to pay for college. Loans are generally given from federal funds. A student will apply for student loans with an application called FAFSA, or Free Application for Federal Student Aid. After you apply, they will send you information back on how much federal loan assistance you are eligible for.
There are two main types of federal student loans available. A student can be eligible to receive both Direct Subsidized Loans and Direct Unsubsidized loans. You may be wondering; what does subsidized and unsubsidized mean? A subsidized loan means that the Department of Education pays the interest on the loans while you are attending school at least part time, have just left school no more than six months prior or during a period of deferment (having your loan payments postponed). An unsubsidized loan requires the student to pay the interest that will accrue even while you were in school.
If you are approved for both types of loans, you can decide which you would like to use and which you choose not to. Subsidized loans are great since you have a period of time when you do not have to pay interest. In addition to federal loans, you can also apply for loans from a private lender. These can be helpful, however they often have higher interest rates than those offered by the federal government.
Which Financial Aid is Right for Me?
Paying for college is never easy. Discuss the financial aid options with a school counselor, your parents or a teacher you trust. It is always a good idea to seek grants first instead of loans since you do not have an obligation to pay them back. When possible, it is great to be able to avoid accepting loans to pay for tuition since you will be required to pay them back eventually. No matter what your decision though, you are making a sound investment with attending college to further your education and help you get the job you are striving for.