Understanding Scholarships, Loans and Grants

College Students. Attending college can be an expensive pursuit. Students need money to pay for tuition, fees, books, and supplies. Additional costs include housing, food, and transportation. Some students may have savings or income from a job to offset these expenses. A dependent student's parents might also contribute to their child's educational bills. Financial aid is offered through federal, state, and private sources to help students pay for college. This aid can consist of scholarships, loans, grants, or a combination of these. Inquire with a college's financial aid office to obtain the necessary application forms. To apply for federal programs, complete the Free Application for Federal Student Aid (FAFSA) online. After the college reviews your application and the results of your FAFSA, the school will inform you of the financial aid package they are offering. You will have an opportunity to accept or decline the funding. Study all of your financial aid options and use a loan calculator to get an education with the least amount of debt.

Scholarships

Scholarships are a great way to fund some or all of your college expenses. A scholarship might be awarded by an individual, an organization, or the college itself. While scholarships do not need to be repaid, there may be stipulations you must meet in order to receive or continue receiving the money. For example, an athletic scholarship is usually based on the applicant's past athletic achievements and continued participation in a particular college sport. An academic scholarship will likely depend upon maintaining a minimum grade point average and enrolling for a minimum number of credits each semester. There are scholarships to recognize a student's volunteer activities, musical abilities, or other unique factors. Some scholarship programs require that the applicant demonstrate financial need. Others have no prerequisites and are given simply to encourage recipients to attend college. High school students can check with their school's career counselor about scholarship opportunities. Prospective college students of all ages can also find information about scholarships online, including application requirements and deadlines.

Loans

Many people borrow money in order to pay for college. After completing the FAFSA, you can find out whether you are eligible for a federal loan, which generally has a lower interest rate and better repayment options than if you borrow from a private lender. Some federal student funding programs are based on financial need, while others are not. Parents of dependent college students might also qualify under the federal program to receive money. Before you receive a federal loan for college, you may be required to complete entrance counseling, which is a questionnaire to make sure you understand your obligations to repay the money. Your state or college might also administer a lending program. Use an online loan calculator to compare your options and determine how much interest you will pay before the debt is fully repaid. A loan calculator can also help you assess whether your potential future earnings will be sufficient to justify borrowing money for college.

Grants

After completing the FAFSA, you might also be informed that you are eligible for a federal grant to help pay for your college expenses. Like a scholarship, a grant does not need to be repaid. Federal grants are generally based on financial need. Two common types of grants are the Federal Pell Grant and the Federal Supplemental Educational Opportunity Grant. Factors that are used to determine whether you qualify for grants include your financial status, the cost of attending your college, the availability of grant money at the college, the timeliness of your application, and whether you have other sources of financial aid. You might also qualify for grants in the form of tuition reimbursements through an employer or the Veterans Administration. Like other forms of financial aid, grants can only be used for the specific purposes allowed by the granting agency.