All About the Money: Your Guide to Grants, Loans, and More

Introduction

Planning for the cost of higher education is a critical milestone for every prospective student. According to the College Board's Annual Survey of Colleges, the average cost of tuition and fees for the 2019-2020 academic year was $36,880 at private colleges, $10,440 for state residents at public universities, and $26,820 for out-of-state students at state schools. With expenses this high, it becomes essential to understand the options available for financial aid—grants, loans, scholarships, work-study opportunities, and more.

Understanding Financial Aid

Financial aid is money provided by various agencies (federal, state, school, private nonprofits) to help fund a student's college education. Aid can come in the form of grants, which need not be repaid, and loans, which must be repaid with interest. Scholarships are merit-based, while work-study positions allow students to work part-time to help pay for college. The Free Application for Federal Student Aid (FAFSA) plays a crucial part in this process, as it is used to determine eligibility for most types of aid.

Breakdown of Different Financial Aid Options

The Specifics of Grants

Grants are often referred to as "gift aid" because they do not have to be paid back. They come from federal and state governments, colleges, and private organizations. Popular federal grants include Pell Grants and Federal Supplemental Educational Opportunity Grants (FSEOG). Eligibility is mainly based on a student's financial need, as determined by the information supplied on the FAFSA.

Understanding Loans

A loan is borrowed money that must be repaid with interest. There are federal loans, offered by the government, and private loans, offered by banks or financial institutions. Federal loans have lower interest rates and more flexible repayment plans than private loans. On a further note, subsidized loans are a type of federal loan where the government pays the interest while the student is in school, while with unsubsidized loans, the student pays all the interest.

Explaining Scholarships

Scholarships are another variety of "gift aid" and are typically based on merit. They may reward academic achievements, athletic ability, artistic talent, or even participation in community service. Finding scholarships requires some research: numerous websites offer scholarship search tools, and students can also check with the financial aid offices at the schools they’re applying to.

Introduction to Work-Study

Work-study programs offer part-time jobs to students, allowing them to earn money to help pay for college. Not only can these programs help with tuition, but they can also provide valuable work experience and opportunities for networking.

Strategies for Reducing College Expenses

Save wherever possible. Create a budget that covers all your monthly expenses and stick with it. Textbooks can be a significant expense, so consider buying used, renting, or opting for digital versions. Live frugally when it comes to housing and food—consider sharing an apartment or cooking at home rather than eating out.

Private Aid and How to Navigate It

In addition to grants, loans, and scholarships offered by the government and schools, there are a variety of private scholarships available. Some individuals or organizations offer these scholarships to students meeting specific criteria. Navigating private aid can be complex, but remember to apply early, apply often, and never pay for scholarship information.