Financial aid is funding that is allocated or lent to students pursuing post-secondary education to help them pay for tuition and meet other college expenses. In this article, we shall discuss the three main types of student financial aid available.
Grants are gift aid awarded to college students in the form of scholarships. Unlike student loans, this funding doesn’t need to be paid back. There are some common reasons why a student may be awarded this gift aid and these include;
Need: Grants can be awarded to students whom their parents are unable to pay for their college education or who cannot pay for their college education themselves. To apply for federal grants, students are required to fill and submit a FAFSA (Free Application for Federal Student Aid)
Merit: Grants may also be awarded to students with an excellent academic performance or those who have excelled in extra-curricular activities.
Employment benefit: If a student has an immediate family member who’s working for the institution they attend, he or she is eligible for grants. Also, a student is eligible for this type of financial aid if they have an employer who helps them in paying college tuition.
A student loan is another type of student financial aid that is available for needy students. Students can apply for this funding to pay for tuition and meet other education-related expenses. Unlike grants, this financial aid must be repaid together with the interest by the borrower.
There are three main types of student loans; direct subsidized, direct unsubsidized loans, and parent loans. Direct subsidized loans such as Perkins and Stafford student loans are subsidized and backed by the US government so that if the borrower defaults, the government guarantees repayment to the lender. This is why these loans are offered at lower interest rates than private loans. Direct subsidized loans offer a six month grace period after finishing school giving a student some time to find a job and be able to repay the loan. Some private organizations and schools offer these loans to the qualified students without any interest rates.
Direct unsubsidized loans, on the other hand, are available to any undergraduate or graduate student regardless of their financial status. The amount awarded is determined by your school and is repaid with interest either during school or after school. When a student is entirely depended on their parents, they can benefit from parents loans which are offered by the federal government to the parents. Parents can borrow parents loans in the form of Plus Loans from the federal government at lower rates compared to loans given by the banks.
Student loans don’t require a collateral or credit check to be approved and this makes it easy for the financially needy students to apply for the loans and get approved. Student loans also have extended repayment terms to help students choose their most preferred payment method that fits their financial situation.
There are many government-subsidized jobs available to students studying in campuses and colleges. The jobs are offered only to students who are eligible for federal financial aid. However, unlike off-campus jobs, these jobs don’t pay well. They only help the students have a stable bank account and be able to pay for the tuition and other expenses incurred in college. Work-study jobs are offered by the institution facilities such as athletic department, residence halls, career center, and student centers.
There are many benefits of work-study jobs. First, they allow a student to work in their career field or any field of their interest and are more flexible compared to off-campus or part-time jobs because they can accommodate the student schedule. Second, earning from a work-study job doesn’t mean that you can’t qualify for other types of financial aid. This means that you can also apply for an additional financial aid if you need to.
Another benefit of work-study jobs is that a student doesn’t need to leave their college or campus. This will significantly cut their transportation costs thus saving more money for paying for tuition and meeting other college expenses. Lastly, work-study jobs do not interfere with the student’s education as most of them do not require the student to work for more than 15 hours a week. This will enable the student to concentrate more on their studies.