Types of Financial Aid
There are three types of financial aid.
Free money, such as scholarships and grants, that don’t have to be repaid; work-study, which is part-time work to help pay for school, and student loans.
Free Money
Scholarships and grants are a parent’s dream because they’re literally gifts of cash for college.
What’s important for parents to know is that scholarships are not always awarded based on financial need, and not all scholarships are based on academic performance. Scholarships are awarded by corporations, foundations and organizations based on factors such as grades, community involvement, extracurricular activities, athletics, arts and other distinctions.
See Help Your Child Succeed for advice on helping your child apply for free money. And be sure to visit the NextStudent Scholarship Search Engine for immediate access to more than 800,000 awards worth over $2.8 billion in no-cost aid. It’s fast, completely private, and totally free of charge.
Grants, on the other hand, are awarded based on financial need, and are available from the federal government, state governments, schools and private organizations. To qualify for a grant, students must submit the Free Application for Federal Student Aid (FAFSA). Funding for grants is limited and is awarded on a first-come, first-served basis, so it’s best to file the FAFSA as soon after January 1 as possible for the best shot at getting grant money.
Work Study
The Federal Work-Study Program offers part-time employment for eligible students demonstrating financial need. Federal Work-Study jobs may be on campus or off campus, and are guaranteed to pay at least the current federal minimum wage. To be considered for work-study, students must complete the Free Application for Federal Student Aid (FAFSA).
Student Loans
If free money and work-study are not enough to pay for college, student loans can help fill the gap.
Perkins Loan Students may qualify for Federal Perkins loans, which schools disburse to their neediest students. Perkins loans have no fees, a low fixed interest rate, and liberal forgiveness policies.
Federal Stafford Loans are among the most affordable ways to pay for school. Stafford Loan rates are lower than other forms of consumer financing, and repayment is postponed until you are out of school. Stafford Loans do not require a credit check, and students do not need a co-signer.
Federal PLUS Loans (parent loans) are low-interest loans that allow parents of undergraduate students to borrow up to 100% of college costs, including tuition and living expenses, less any financial aid received. One of the smartest college funding options, Federal PLUS Loans are not based on financial need, and require no collateral. What’s more, rates are at all-time lows, there are no out-of-pocket costs, and PLUS Loans offer benefits other types of credit can’t match.
Private education loans are unsecured, credit-based loans available to students, parents or other adult sponsors who may act as co-applicants on the application if the student does not meet credit requirements.
Check out our Undergraduate Loan Comparison for a side-by-side look at student loan options.
Quick Links
» Free Application for Federal Student Aid
» Help your child succeed
» Search for free money for college
» NextStudent Financial Aid Advisor
Before you get a PLUS Loan
» Before you get a PLUS Loan
» Understanding Financial Aid Basics
» Filing the FAFSA
» Financial Aid Cycle
For more information about NextStudent, visit www.NextStudent.com.
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