6 Types of Financial Aid to Help You Pay for College
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As a student, navigating the process of applying for financial aid and funding your college education can be challenging. Fortunately, there are six types of financial aid available, each designed to make college more affordable amidst the rising cost of tuition. According to the National Center for Education Statistics, the average cost of tuition, fees, room, and board at a public college is approximately $17,797 per year. Private institutions tend to be even more expensive, causing the stress of student loan debt to weigh heavily on the minds of students nationwide, regardless of their chosen major.
To help alleviate some of this stress, we will guide you through the most common financial aid options and explain what each entails. Armed with this knowledge, you may find that your options for college expand or that you are better equipped to create a budget that works for you.
5 SOURCES OF FUNDS TO PAY FOR COLLEGE
There are five common sources of college financial aid. Many students use a combination of two or more of these sources to pay for college.
Check out the different types of financial aid below to find the fit that’s right for you and learn how to apply to each.
TYPES OF FINANCIAL AID
|SOURCE OF AID||TYPES OF AID||DEGREE LEVEL||BENEFITS|
|Federal Aid||Grants, Loans, Work-study||Undergraduate, graduate, professional||Lower interest rates, flexible repayment terms|
|State Aid||Grants, Scholarships, Work-study funds, State loans, Tuition assistance||Undergraduate, Graduate||May ease the cost of attending a state school|
|Institutional Aid||Usually grants||Undergraduate, graduate||Grants awarded based on merit or financial need don’t have to be repaid|
|Private||Private student loans or private scholarships||Undergraduate, graduate, professional||Scholarships don’t have to be repaid and private loans have variable APR, cosigner options, and allow you to build credit|
|Personal or Family Savings||Personal savings, or help from family or friends||Undergraduate, graduate, professional||Often, these are gifts that you don’t have to pay back, or at least without interest|
1. FEDERAL AID
The federal government provides three types of financial aid for students, namely federal grants, federal work-study programs, and federal student loans. Each type has distinct requirements and repayment options. If you meet the eligibility criteria for federal grants, you are not required to repay them. However, if you do not meet the criteria, the grants may be converted into loans.
FEDERAL STUDENT AID TYPES
|FEDERAL STUDENT AID PROGRAM||TYPE OF AID||PROGRAM DETAILS||MAXIMUM AWARD AMOUNTS|
|Federal Pell Grant||Grant (not repaid)||Available almost exclusively to undergraduate students.||The maximum Federal Pell Grant award is $6,345 for the 2020–21 award year (July 1, 2020, to June 30, 2021).|
|Federal Supplemental Educational Opportunity Grant (FSEOG)||Grant (not repaid)||For undergraduate students with exceptional financial need. Priority is given to Federal Pell Grant recipients.||Awards can range from $100–$4,000 and do not need to be repaid.|
|Federal Work-Study||Earned (not repaid)||For undergraduate and graduate students (not available to international students). Student coordinates with school to find eligible employers. Jobs can be on campus or off campus. Students are paid at least minimum wage.||To receive funds, you will need to be awarded work study and secure a job. The funds you earn are not applied directly to your tuition.|
|Direct Subsidized Loans||Loan||For undergraduate students who have financial need. Your school determines the amount you can borrow and that amount cannot exceed your financial need.||Loan limit for first year dependent children (except students whose parents are unable to obtain PLUS Loans is $3,500)|
|Direct Unsubsidized Loans||Loan||For undergraduate, graduate and professional degree students. Your school determines the amount you can borrow based on your cost of attendance and other financial aid you receive.||Graduate/professional students may borrow up to $20,500 per year.|
Learn more about the specific types of grants and other federal financial aid below.
Check out more about Grants and Scholarships to see if you meet the requirements and learn how to apply!
2. STATE AID
Numerous states offer various forms of financial assistance to in-state students or those attending schools in the state from out-of-state. These options may include scholarships, grants, work-study funds, state loans, and tuition assistance. To explore the financial aid opportunities available in your state, the first step is to get in touch with your guidance counselor or the financial aid counselor at your preferred school. You may also reach out to your state’s financial aid agency for further information.
3. INSTITUTIONAL AID
Unlike federal and state financial aid, which is provided by the government, institutional financial aid is directly provided by colleges or universities. In some cases, this aid is funded by individual donors, such as alumni, and is administered by the school.
Institutional aid is usually given in the form of grants or scholarships, which do not have to be repaid. Eligibility for this type of aid is often based on financial need, academic merit, or both. To apply for institutional aid, you will typically need to complete a FAFSA to help your school determine your need-based aid options.
However, some schools may require additional forms or information, so it’s important to check with your financial aid office or counselor. Keep in mind that institutional aid is highly competitive due to limited funding, so it’s important to carefully review all requirements before submitting your application.
4. PRIVATE AID
Private financial aid typically takes the form of either private student loans or private scholarships. Private scholarships, which are often available through websites like Unigo.com, can range in value from a few hundred dollars to tens of thousands of dollars. To determine which scholarships you might be eligible for, it’s important to do your research.
Private student loans, on the other hand, are provided by independent lenders like banks or credit unions. Although each lender may have its own specific requirements, many offer benefits such as variable APR, reduced interest rates for automatic payments, and loans with or without a cosigner.
5. PERSONAL SAVINGS
Although college tuition can be expensive and may exceed most families’ savings, personal savings play a crucial role in paying for higher education. Personal savings can typically be used to cover various college expenses, including a portion of tuition, travel, food, books, and study materials.
It’s worth noting that personal savings don’t necessarily have to come from your own bank account or your parents’ savings. In some cases, friends or extended family members may also be able to contribute to your college fund.
6 TYPES OF COLLEGE FINANCIAL AID
There are many types of financial aid that come from the sources listed above. Some of these options are listed below so that you can learn how to apply and find out which is the perfect source of financial aid for you.
1. FEDERAL GRANTS
As previously mentioned, colleges and universities often provide grants based on financial need or academic merit, and there are numerous options available. To learn about specific opportunities offered by your school, it’s important to reach out to your counselor or financial aid office.
In addition to institutional grants, there are also various grant programs offered by the federal government. The following is a list of some of these options.
Typically, these grants are intended for undergraduate students who have not yet completed a bachelor’s degree. The maximum amount awarded for the 2018-2019 academic year was $5,920, although the specific amount given is determined by a number of factors, including the student’s financial need, the cost of attendance at the college, the student’s enrollment status, and the length of the academic year during which the student is enrolled.
FEDERAL SUPPLEMENTAL EDUCATIONAL OPPORTUNITY GRANTS (FSEOG)
Grants awarded to undergraduate students with exceptional financial needs are typically determined by the financial aid office of the college. The specific amount of the grant is dependent on the student’s financial need and the availability of funds at the college.
TEACHER EDUCATION ASSISTANCE FOR COLLEGE AND HIGHER EDUCATION (TEACH) GRANTS
Grants are available to students who plan to become teachers in public or private elementary or secondary schools serving low-income families. If the service requirement is not fulfilled, these grants may be converted into loans.
Scholarships are a great way to get free money for college. You have to apply and find ones that fit you, but it’s worth it because you could get thousands of dollars. Even smaller amounts like $500 or $1,000 can help a lot. Applying for scholarships with fewer applicants can increase your chances of winning. Look for scholarships with deadlines that are coming up soon and don’t forget to apply. There’s even a scholarship available for military active duty and veterans sponsored by EducationConnection.
3. FEDERAL LOANS
These loans are provided by the federal government and typically have lower interest rates than private loans. There are two types of federal loans available to students: subsidized and unsubsidized. Subsidized loans are based on financial need, and the government pays the interest on the loan while the student is in school. Unsubsidized loans, on the other hand, are not based on financial need, and interest starts accruing as soon as the loan is disbursed. Federal loans offer a range of repayment options, such as income-driven repayment plans and loan forgiveness programs, making them a flexible option for students who need to borrow to pay for their education.
4. PRIVATE STUDENT LOANS
Federal student loans and private student loans have several differences. For example, the government sets the interest rates for federal student loans, whereas private lenders set the interest rates for private student loans based on your credit score and other factors such as having a cosigner. However, private loans also have some advantages such as variable interest rates and the ability to release a cosigner after a certain number of on-time payments. To learn more about private student loans, you can check out different lenders to see their specific benefits and how to apply. Also, it’s worth noting that checking your rates doesn’t typically affect your credit score.
5. CORPORATE OR EMPLOYER FUNDING
In today’s competitive job market, companies are looking for ways to attract and keep the best employees. Education reimbursement or other types of funding to earn a degree are among the benefits offered to workers. However, it is essential to check with your HR department to find out if there are any annual caps or percentage limits for these programs.
6. WORK STUDY
Federal Work Study programs are available to college students to earn money through part-time employment, both on-campus and off-campus at approved locations. Work Study jobs can be found in various campus facilities, such as the student center, career center, athletic department, and residence halls. These programs are funded by the federal government and provide students with financial assistance while also gaining valuable work experience.
HOW TO APPLY FOR FINANCIAL AID
In order to apply for college financial aid, through any of the sources above, you should:
- Complete the FAFSA
- Find out your awarded amount
- Contact school
- Complete necessary loan forms
- Find scholarships you qualify for
- Apply for scholarships and grants at your school
TYPES OF ACCREDITATION
There are two types of accreditation: institutional and specialized. Institutional accreditation is awarded to an entire college or university and ensures that the institution as a whole meets certain academic standards. Specialized accreditation, on the other hand, is awarded to specific programs within an institution, such as a nursing program or a business program, and ensures that the program meets industry-specific standards.
Accreditation is further categorized into national and regional types. National accreditation is often used by vocational, technical, correspondence, and religious schools, and is generally less widely accepted than regional accreditation. National accreditation may not be recognized by regionally accredited institutions, and credits earned at nationally accredited schools may not transfer easily to other institutions.
Regional accreditation is the most widely recognized type of accreditation, and is recognized by most traditional colleges and universities. This type of accreditation is awarded by one of seven regional accrediting bodies in the United States, and ensures that the institution meets high academic standards. Credits earned at regionally accredited institutions are generally more easily transferable to other regionally accredited institutions.
WHY IS ACCREDITATION IMPORTANT?
- Middle States Commission of Higher Education
- Northwest Commission of Schools & Colleges
- North Central Association of Colleges & Schools
- New England Association of Schools & Colleges
- Southern Association of Colleges & Schools
- Western Association of Schools & Colleges
To check distance learning accreditation, visit: