Different Types of Financial Aid

It’s important to understand the different types of financial aid that are available and also what they mean. Let’s say you complete the financial aid application in the spring of your senior year and then you get the financial aid package or the financial aid offer from all these different schools to which you’ve applied. And you look how they are made up, you see some use terms of scholarship, somebody grant, you see work study, you see loans.

It is important for you to understand what each of those funds are because that will impact what you feel is the best financial fit for you. Scholarships and grants are what we call free money. It is money awarded to you upon the basis of academic achievement, potential for success and higher education or it’s based on needs. Scholarships tend to be merit-oriented or academic oriented. Grants tend to be need-based, based on your financial situation at the time that you apply. And again that’s free money.

Everybody loves the scholarship and the grants. If you see an award that has work-study, what that essentially means is that you are working part-time to earn the funding of the college education. You are working in an office on campus, maybe somewhere off-campus that the school has arranged for you. But the paycheck goes to you and you’re only paid for the hours that you work. That’s important to know. It’s not money that can be, that reduces your bill immediately.

It’s going to be money that you earn by some number of hours you work and you’re going to get the paycheck and you’re going to need to decide what is you need to do about money. So that’s what work-study is. And finally the loans, loans, particularly student loans and parent educational loans are, is money that you have to pay back, it’s the term loan. You are borrowing to pay for your college education and you have to repay that money after you graduate or after you drop less than half time. You have to pay that back with interest.

Sometimes you pay the interest as you go along, sometimes you don’t pay any interest until you graduate. So that is the four types of loans, the scholarships and grants again are the free money. Work-study, you have to work, you have to earn those wages and loans are these monies that you borrow that you have to pay back with interest after you graduate.