Last Updated: February 11, 2014
Financial aid is a wonderful resource that you can use to get yourself through school. Whether you absolutely need large loans or choose to apply for small scholarships here and there, it is important to know the major differences between your financial aid options. Here are some key points to keep in mind when comparing financial aid options:
- Scholarships are usually awarded to students based on merit or an application process.
- It is typically a fixed amount of money granted for the student to use towards his or her studies. The student does not need to repay this money.
- Sometimes the funds are given directly to the student to use as he or she deems necessary. Other times – usually when a university provides the scholarship – students can only access funds through their student account. This varies depending on the organization donating the scholarship money.
- Applications vary greatly for each scholarship. Most require written essays and academic transcripts.
- An important element to remember about scholarships is that they are not necessarily based on financial need. Many scholarships are available to students based on their academic performance and application, as opposed to income.
- Some scholarships include perks like membership to the donating organization or post-graduate career assistance.
- Loans come with more responsibility post-graduation than scholarships because students are borrowing money, not being given a fixed amount.
- The amount a student can borrow depends on his or her education level (undergraduate vs. graduate) and dependency status (independent vs. dependent).
- The borrowed money must be repaid after graduation. Interest rates are applied during the repayment period, which often begins six to twelve months after graduation.
- While loans are most frequently subsidized (funded) by the Federal Government, private loans do exist.
- Any student wishing to receive loans from the government must fill out a Master Promissory Note, essentially a legal contract that binds students to repaying their loans.
- Students wishing to obtain loans must fill out the government FAFSA (Free Application for Federal Student Aid) form.
- You can borrow money regardless of your income or your parent’s income; you are only excluded from these government loans if you’ve been unable to pay them back in the past or have been convicted of drug offenses.
Original Post Date: February 11th, 2014