Things might rapidly become difficult if you’re just beginning to research your alternatives for paying for college. There are several related terms, and it’s not always clear how they differ from one another. In this post, we’ll examine scholarships and financial aid, two subjects that are frequently misunderstood. We’ll describe the variations, discuss their significance, and assist you in understanding how everything fits into the overall scheme of paying for college.
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What Is Financial Aid?
Financial aid is the collective term for the funding you may be eligible to get to assist with expenses such as living costs, college tuition, and fees. Financial aid can refer to either loans or grants that you don’t have to repay once you graduate.
Start by completing the Free Application for Federal Student Aid (FAFSA) to submit a financial aid application. The FAFSA is the official federal government form used to assess applicants’ qualifications for work-study, grants, and other types of financial aid. The FAFSA is also used by many universities to determine your eligibility for internal grants and scholarships.
Furthermore, your expected family contribution (EFC), or how much your parents can reasonably afford to pay for college, will be displayed on the FAFSA. You may be eligible for need-based financial aid if your family cannot afford the whole amount; this aid may or may not require repayment when you graduate.
Types of Financial Aid
There are numerous sorts of financial assistance. To see how they differ and which you might be qualified for, read on.
#1. Federal Student Loans:
One of the simplest forms of financial aid is a federal student loan. Federal student loans must be repaid after you no longer qualify as a full-time student or when you graduate. For community college, undergraduate study, or graduate study, federal loans are available.
The annual cap on federal student loans is $20,500 for graduate students and ranges from $5,500 to $12,500 for undergraduate students. Undergraduate student loans have an interest rate of 4.99% for the 2022–2023 academic year. Depending on the type of loan, interest rates for graduate student loans range from 6.54% to 7.54%.
#2. Federal Grants:
Federal grants are a popular option for students since they are free from repayment obligations, unlike student loans. Only those with a financial need that has been proven must submit a FAFSA by the deadline in order to qualify.
- The most popular choice, the Pell Grant, has a maximum annual value of $6,895. The Pell Grant is available to students for up to six semesters in total.
- Another government award available to students with proven financial need is the government Supplemental Educational Opportunity Grant (FSEOG). Depending on the student’s EFC, the annual sum can range from $100 to $4,000 per year.
Part-time employment is offered to students who take part in the federal work-study program, either on campus or with a business associated with the college. Most students earn the minimum wage or more, though the hourly wage varies by college. The typical student works between 10 and 15 hours per week; however, the precise amount varies by position. Each college only has a certain number of work-study slots available, so those interested should file their FAFSA as soon as feasible.
#4. State Grants
For nearby college students, the majority of state governments give grants. Depending on the award, some students may only be eligible if they have financial needs, while others may be eligible based on their GPA or test results.
To see if you qualify for any state grants and how to apply, visit the website of your state’s department of education. To ensure that you don’t miss out on the opportunity, remember the deadline.
#5. Private student loans:
Private student loans are an alternative for students who don’t qualify for federal student loans or who have exhausted all other forms of financial aid.
Furthermore, private lenders, including banks, credit unions, and online businesses, provide private student loans. Private lenders, unlike the federal government, will check a borrower’s credit and confirm their income before authorizing a loan.
To be eligible for private student loans, the majority of students must have a cosigner. A co-signer is an adult who is a US citizen or lawful permanent resident, has a stable job, and has a solid credit rating. If you co-sign a loan, it implies that the person will be held accountable in court if you stop paying payments.
What are Scholarships?
Scholarships are often used as a method of funding higher education, yet they are harder to secure. The type of scholarship offered and the scholarship giver determine who is eligible. The prize can be anything from $50 to the full cost of tuition.
Furthermore, a scholarship is a form of gift aid, so if you graduate from college, you are not required to pay it back. Prior to using student loans, students should take advantage of all available scholarships.
Additionally, scholarships are frequently awarded on the basis of academic or athletic ability, but some merit-based awards also take financial needs into account. Scholarships for students with creative or musical abilities are also possible.
Most institutions provide their own scholarships, and applicants might need to submit separate applications for each one. Additionally, there are lots of independent businesses and charitable groups that offer scholarships. The following websites offer options for students to find scholarships:
- College Board
- Going Merry
Note that depending on the scholarship, the application procedure may vary, but you’ll often need to submit an essay and a letter of recommendation. You should start applying for college scholarships when you’re still in high school and keep doing so until you earn your degree.
Do you want to study abroad? Note that obtaining a bachelor’s degree or a master’s degree in this field helps to improve your chances in the labor market. Studying abroad is no joke for international students due to the cost. However, you can achieve your dreams without breaking the bank by applying for student loans, which you can pay for as long as 10 years.
MPower Finance and Prodigy Finance are some of the best student loan providers for international students. They also do not require a cosigner or collateral before an application. Reach out to us today, and let’s help you get started.