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Got Financial Aid?

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GOT FINANCIAL AID?

What is financial aid? Financial aid is money you can use to help pay for school. So whether you are a high school or college student, you can benefit from learning more about financial aid.

The basic forms of financial aid consist of loans, grants, scholarships, and work-study programs. Financial aid can come from a variety of sources, including the federal government, the state in which you live, private sources, such as churches and community organizations, and your college of choice.

In this section, you will become familiar with financial aid "lingo" and learn some important strategies for getting the most out of the financial aid process.

Your Financial Aid Dictionary

Loans—These are financial aid awards that must be paid back, usually after you graduate. College loans can come from a variety of sources including the federal government, your state or college, or a bank. Many college loans are considered low-interest loans, meaning that you pay less for the privilege of borrowing these funds because you are in college. Also, the interest usually doesn't begin accruing until after you graduate.

The three main federal student loans include: Federal Perkins Loans, Federal Stafford Loans, and Federal Direct Loans. These must be repaid when you stop attending school—even if you don't get a degree. They do offer a break on the interest, however. For example, the government pays the interest on the loan while you are in school and for a six-month grace period after graduation.

Two other alternatives are the Unsubsidized Stafford Loan and the Unsubsidized Direct Loan. These loans may accrue interest while you are a student, or you may start making interest payments while you are in school. Because of the cost of paying interest on these loans, you should approach these alternatives reluctantly.

Private loans are another way to fill the gap between what the school or federal government can provide and what you need. Private loans usually have higher interest rates than government loans. In addition, if you borrow from more than one source—for example, a Federal Perkins Loan, a Federal Stafford Loan, and a private loan—you will have three loan payments to make.

Sources of private loans include the following: personal loans from a bank or credit union, loans from a life insurance policy that has a cash value, home equity loans your parent or guardian can obtain, or loans from your or your parent or guardian's retirement plan (use this source only as a last resort).

With all loans, make sure you read and understand every loan provision. In particular, make certain you know how much you will have to repay and when before you sign the loan papers. Most importantly, do not borrow more than you need.

Some loans can be "forgiven" in exchange for spending some of your career helping people in need. A so-called "forgiven" loan is partly or totally cancelled. Other programs reward public service with grants or loan forgiveness. Check out the resources section for links to more information on this option.

Grants—These are financial aid awards that don't have to be paid back. These are typically need-based, meaning they are given based on financial need.

Scholarships—These are awards that don't have to be paid back, either. They can be based on financial need and/or merit-based, meaning they are awarded for high academic achievement, athletic ability, or another talent. (There are even scholarships for left-handed students and skateboarders!)

Work-Study—The Federal Work-Study program offers you the chance to earn while you learn. Often awarded as part of a complete financial aid package, work-study funds give you the chance to acquire valuable work experience—usually on campus—as well as make money for college.

If you have a choice about your Work-Study assignment, look for a job that relates to the career you hope to enter. For example, if you want to become a veterinarian, try to find a Work-Study job in the Department of Veterinary Medicine or a related department. This will give you relevant work experience and may give you a head start on the competition when you start looking for a job.

Here are Other Areas to Link to:

FINANCIAL AID 101: FOR HIGH SCHOOLERS
FINANCIAL AID 201: FOR COLLEGE STUDENTS
WORKING YOUR WAY THROUGH
COLLEGE FINANCING ALTERNATIVES

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