Types of Financial Aid
When your school financial aid office sends you an aid offer, they’ll ask you to indicate which financial aid you want. Look carefully at your options and make an informed decision.
Choosing the Best Financial Aid to Accept
Keep the following in mind when you get an aid offer and are deciding which aid is the best to accept:
Accept Financial Aid in this Order:
Free money first (e.g., scholarships, grants)
Earned money second (e.g., work-study)
Borrowed money last (e.g., federal student loans)
Explore Scholarships and Grants
Make sure you understand the conditions you must meet to stay eligible for the scholarship or grant. For instance, you might have to maintain a certain grade-point average to continue receiving a scholarship, or your TEACH Grant might turn into a loan if you don’t teach for a certain number of years under specific circumstances.
Explore Work Study
You don’t have to pay the money back, but you do have to work for it, so take into account that you’ll have to balance your time between work and studying. Bonus: Research has shown that students who work part-time jobs manage their time better than those who don’t!
Explore Federal Student Loans
You’ll have to repay the money with interest. Subsidized loans don’t generally start accruing (accumulating) interest until you leave school (or drop below half-time enrollment), so accept a subsidized loan before an unsubsidized loan. Next, accept an unsubsidized loan before a PLUS loan.
Explore Loans From Your State or Local College
You’ll have to repay the money with interest, and the terms of the loan might not be as good as those of a federal student loan. Be sure to read all the fine print before you borrow.
Explore Private Loans
You’ll have to repay the money with interest, and the terms and conditions of the loan are usually NOT as good as those of a federal student loan. Be sure to read all the fine print and borrow wisely.
Good to know:
Many schools also offer tuition payment plans (a monthly interest-free payment toward tuition). This type of plan may help reduce the amount you need to take out in loans. Ask your financial aid office if such a plan is available.
A variety of financial aid sources are available to help you pay for college or career school. Financial aid can come from federal, state, school, and private sources to help you pay for college or career school.
Besides financial aid, you should also think about what you can do to lower your costs when you go to college.
Grants
A grant is a form of financial aid that doesn’t have to be repaid (unless, for example, you withdraw from school and owe a refund, or you receive a TEACH Grant and don’t complete your service obligation). A variety of federal grants are available, including Pell Grants, Federal Supplemental Educational Opportunity Grants (FSEOG), Teacher Education Assistance for College and Higher Education (TEACH) Grants, and Iraq and Afghanistan Service Grants.
Scholarships
Many nonprofit and private organizations offer scholarships to help students pay for college or career school. This type of free money, which is sometimes based on academic merit, talent, or a particular area of study, can make a real difference in helping you manage your education expenses.
Loans
When you receive a student loan, you are borrowing money to attend a college or career school. You must repay the loan as well as interest that accrues.
It is important to understand your repayment options so you can successfully repay your loan.
Work-Study Jobs
The Federal Work-Study Program allows you to earn money to pay for school by working part-time.
Aid From Your College or Career School
Many schools offer financial aid from their own grant and/or scholarship funds. Find out what might be available to you:
Visit your school’s financial aid page on its website, or contact the financial aid office.
Ask at the department that offers your course of study; they might have a scholarship for students in your major.
Fill out any applications your school requires for its own aid programs, and meet your school’s deadlines.
Additional Input:
This is done independently by you as the student - the more time you research the more funds you could possibly qualify for. Colleges and universities will not advertise this freely with everyone, as it will be placed upon on your responsibility to find additional aid from each of the colleges / universities you apply too!!
Informing Your School About Aid You’ll Accept
Your student aid offer will include directions on accepting aid. Follow those directions carefully. You might have to enter the amounts you’re accepting in an online form and then submit the form. If you receive a paper aid offer, you might have to sign it and mail it back to the school.
Accepting a loan or grant listed in the aid offer may involve additional steps, which vary depending on the type of loan or grant you’re receiving. Saying yes may be as simple as signing a promissory note—a contract between you and the lender (The organization that made the loan initially; the lender could be the borrower's school; a bank, credit union, or other lending institution; or the U.S. Department of Education) that specifies the terms and conditions of the loan—or it may include entrance counseling (A mandatory information session that takes place before you receive your first federal student loan that explains your responsibilities and rights as a student borrower) if this is your first federal loan.
By signing the promissory note (The binding legal document that you must sign when you get a federal student loan. It lists the terms and conditions under which you agree to repay the loan and explains your rights and responsibilities as a borrower. It’s important to read and save this document because you’ll need to refer to it later when you begin repaying your loan or at other times when you need information about provisions of the loan, such as deferments or forbearances), you are promising to repay your student loan.
The financial aid office will guide you through the paperwork or direct you to the online Master Promissory Note if appropriate.
*If you take out a loan from the Direct Loan Program (A federal student loan, made through the William D. Ford Federal Direct Loan Program, that eligible students and parents borrow directly from the U.S. Department of Education at participating schools. Direct Subsidized Loans, Direct Unsubsidized Loans, Direct PLUS Loans, and Direct Consolidation Loans are types of Direct Loans), the U.S. Department of Education will be your lender.