Understanding Your Financial Aid Options

Written by Michael Bennet

Getting the money you need to attend college isn’t always easy, and with the rising costs of tuition, students from around the country are looking more and more to financial aid to pay for school. Getting financial aid isn’t quite as simple as it used to be though, and there are more options than ever before that can help assist you in your quest to pay for your college education.

While there is a vast array of specialized programs that cater towards a specific audience, or student demographic, the majority of student financial aid falls into a few major categories. Essentially there are three major kinds of financial aid—grants and scholarships, federal student loans, and private student loans.

Grants and Scholarships

First we have grants and scholarships, as these are monies that students hardly ever have to pay back at any point in their lifetime. This kind of financial aid is thus free money from a student’s perspective, and is ultimately the best type of financial aid that is out there. Perhaps the most popular grant that is in existence is the Pell Grant, as this is a grant that is geared towards providing money to lower-income students who demonstrate significant need.

To determine your federal Pell Grant eligibility you should read over one of the included articles that is provided on this site. Other scholarships and grants are most often given when there is an appropriate and qualified reason, determined either by the actual college, the federal government, or some private entity. Some of the more common reasons include academic achievement, athletic achievement, and need.

Federal Student Loans

Next we have federal student loans, as these are loans that are insured by the government and provided by the Department of Education. The most popular federal student loan programs are the Stafford, the Perkins, and the PLUS loan programs. The Stafford and Perkins loans are designed for undergraduate students who are attending a four-year university on a full-time basis, while the PLUS loan program is setup to help parents take out loans to benefit their children.

Federal student loans carry relatively low interest rates comparatively speaking, and most experts agree that they are the best types of loans to have if you are a college student. When you are ready to apply for a federal student loan you simply need to submit the FAFSA application at some point during the beginning of the winter/ spring semester.

Private Student Loans

Lastly we have private student loans, as these are student loans that are not insured by the government, and are rather provided by private third-party lenders. Private student loans typically carry higher interest rates than federal student loans, and they can be made in amounts up to the cost of attendance.

These kinds of college loans should be used to bridge the gap left behind by the two previous types of financial aid, and you need to be careful to not get into too much private student loan debt as this kind of debt cannot be eliminated via bankruptcy.

When you are ready to apply for a private student loan you most often have to apply directly to a private lender instead of simply filling out a FAFSA, and because these loans are based off of your credit, instead of your need for such financing, you should make sure that your credit is in good shape before you apply.