“Financial aid” is actually a catch-all term. There’s multiple types of financial aid—scholarships, grants, loans, work study—as well as multiple sources, from federal aid all the way down to employer-granted aid.
Here’s how you can figure out which type and source might be the best fit for your educational goals.
Loans from the federal government often have lower interest rates and more benevolent terms of repayment. You may qualify for subsided or an unsubsidized loan, or both. A subsidized loan (which requires that you demonstrate financial need) means the government will subsidize the interest as long as you are in school—i.e., you’ll pay no interest on your loan as long as you meet the government’s minimum enrollment requirements. An unsubsidized loan (which does not require that you demonstrate financial need) means that your loan will accrue interest as soon as the loan is taken out, even if you’re actively enrolled in school.
Federal grants are a type of aid that do not necessitate repayment. The government offers an array of grants: merit based, need based—even those designed to promote public service and stimulate the economy. For example, TEACH Grants are awarded to students who agree to teach in a low-income community. Something to check out if you’ve always wanted to be a teacher!
Work study is a type of aid that requires that you are employed in exchange for financial assistance. You can find a work-study positions through your school. Your paycheck each week will be funded by the government rather than the school itself.
Like federal aid, state aid can come in different types—grants, loans, or scholarships. However, many state schools offer additional aid to residents of that state. This may be something to consider when you’re compiling your list of dream schools.
You may also qualify for financial assistance through your school itself. Many schools offer scholarships, grants, and loans that are separate from federal and state aid. Check with the financial aid office at your school to see what they have to offer and how you can apply.
Scholarships, like grants, are a type of aid that don’t require repayment. Free money! Scholarships are awarded based on need, merit, extracurricular achievement—and more. For example, student athletes can often receive scholarships for their talents on the playing field. If you’re affiliated with any sort of club, organization, or extracurricular, check to see if they offer a scholarship. See my advice for apply for scholarships here
If you are working and going to school, your employer might be able to offer you some financial assistance. This is often the case when the field you’re pursuing in school relates to your field of employment. Be sure to check with your HR department.
Also, it might be worth checking in at your parents’ places of work, too. My dad’s company, for example, offers scholarships to the children of employees.
Last but not least, there’s private loans—whether through a bank or another private lender. When considering a private loan, be sure to check the interest rates and the terms of repayment. They’re often not as generous as government loans. Also, be sure to compare offers from different lenders so you’re certain you’re making the right choice.
Paying for college is hard. Paying back loans can sometimes be harder. Make sure you’re doing it smartly—which means doing your research before you take out any student loans.