Types of Financial Aid
Types of Financial Aid
Simply put, college financial aid encompasses four forms of assistance: scholarships, grants, work-study and loans. Students become eligible for aid from federal and state agencies and from colleges by filing the U.S. Department of Education’s Free Application for Federal Student Aid (FAFSA). The form is available at no cost at www.fafsa.ed.gov or by calling (800) 433-3243. Students may file the form without professional assistance.
Scholarships and Grants
Scholarships and grants are awarded by different sources for a variety of reasons. “Anyone planning to attend college should try to get as many scholarships and grants as they can,” said Rob Miller, director of the Iowa College Access Network® (ICAN). “This is money that doesn’t need to be paid back, so it’s essentially free money for students.”
Besides filling out the FAFSA, students can find scholarships and grants offered by local, regional and national organizations and businesses by using free searches online. “Many searches match students’ qualifications to scholarship criteria. Students shouldn’t pay for such a service – the free searches are just as effective,” Miller said.
Federal and state work-study programs pay students for part-time jobs on campus. Since money is paid out over time rather than awarded in a lump sum, students generally use work-study to cover personal expenses.
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“Work-study is excellent because students earn much-needed money, and they can gain valuable job experience,” Miller said. Work-study positions often offer flexible schedules, and they go quickly. “Students should apply for positions as soon as possible,” Miller advised.
Loans should be a last resort for students needing college financing because they need to be repaid with interest, Miller said. “Students should exhaust all their other options before taking out loans. Then they need to borrow carefully to make sure they don’t get so deeply in debt that they can’t repay the loans.”
Federally guaranteed loans for students and parents are awarded based on information provided in the FAFSA. Generally, federal loans offer better interest rates and better terms than private loans. “Federal student loans don’t require repayment until after the student leaves school. With the Federal Subsidized Stafford Loan, the government even makes interest payments while the student’s in school,” Miller said.
Private loans are also available to students and their parents, but again, Miller advised caution. “Exhaust all federal loan options before considering private loans. Then calculate how many years it will take to graduate and how much in total loans is needed. Then decide if the student will be able to make the monthly payments after graduation.”
For Additional Information
ICAN is the official Statewide College Access Network for Iowa, as designated by the National College Access Network (NCAN). The ICAN College Planning Centers provide free information and assistance to students and their families as they plan their postsecondary education and apply for financial aid. For more information, call (877) 272-4692 or visit www.ICANsucceed.org.
ICAN is provided by Iowa Student Loan; no ICAN services, however, are dependent on a student borrowing through an Iowa Student Loan preferred lender.