What Are The Four Main Types Of Financial Aid

What Are The Four Main Types Of Financial Aid

In terms of education, there are four basic types of financial aid. Here is a brief overview.

1. Loans: A loan is borrowed money that will need to be paid back. The Federal Loan Program, offering Stafford Loans and PLUS Loans, among others, is a secure and affordable way to fund your education. While some federal loans are need-based, others are available to all federally eligible students. Interest rates on these loans are generally lower and more affordable than private loans which are usually based solely on your financial credit. Private loans should be your last resort. Keep in mind, regardless of when the repayment schedule begins, loans start to accrue interest the day you receive the money.

2. Grants: Grant money is a gift and doesn't need to be repaid. Grants are generally awarded to the students with the greatest financial need and the highest academic potential. You can find government and private grants. Government grants are awarded to students based on the information you provide on your FAFSA - Free Application for Federal Student Aid - form. Every student heading to college needs to fill out and submit the FAFSA. You never know what you may qualify for. Private grants, on the other hand, are funded by various civil and community organizations, colleges and universities. You will need to apply for private grants individually.

3. Work Study Programs: With work study programs you basically work for the privilege to study. You don't earn a pay check, but you can gain valuable work experience while reducing your tuition costs. This option depends a great deal on your field of study and the school you choose to attend. Not every college or university offers work study programs and those that do can't possibly offer it to everyone.

4. Scholarships: Scholarships, like grants, are a gift and don't need repaid. Unlike grants, which are normally a single payment, most scholarships are paid out over the course of two to four years to cover your long term costs, and to assure the money is spent on your education. In other words, you need to stay in school to get the money. The individuals who administer the traditional scholarships put a great deal of emphasis on your academic achievements to determine your qualifications. The required essay carries a lot of weight in the process and should not be taken lightly. There are also non-traditional scholarships, commonly referred to as - no essay scholarships, because, you guessed it, there is no essay required. These scholarships generally have an easy, one page application and there are few if any restrictions on how you spend the money.

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