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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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