Each graduate typically has bold dreams about their future. Do you see yourself as a college student? Want to join the university of your dreams? Maybe you’ve been working hard during high school but now face some difficulties with paying for your education. Well, it’s time to consider student aid.
Student aid is an amount you can get to cover the cost of your tuition or any other related costs. You can get a student cash advance either from private lenders or from the government. Student aid can be either repayable or non-repayable. So let’s take a closer look at both these financing options and find out whether you meet the basic requirements.
Repayable student aid
Repayable aid is typically about loans. A loan is a cash advance you can get from a lender or government to cover your specific needs, in this case – your education costs. Most loans usually require you to repay them in fixed monthly payments within the agreed repayment period. In addition to your loan principal, you will be asked to pay back interest rates and processing fees a lender may charge. Therefore, your total loan cost will be pretty higher than the loan amount you’ve got.
There are two types of student loans – private and federal loans.
Federal student loans
Federal student loans are cash advances the federal government can give you to cover your educational needs. There are several types of federal aid offered by the US Department of Education. The whole program is called The William D. Ford Federal Direct Loan Program. It provides the following types of student loans with restricted uses:
- Subsidized loans – Governmental aid designed for students with “exceptional” financial needs. Your family will be asked to prove it doesn’t have enough revenue to cover your educational costs without additional help to get this loan. The government will pay your subsidized loan interest for you while you’re in school and six months after you graduate;
- Unsubsidized loans – Cash advances you can count on without any special financial conditions. But get ready to start repaying it from the moment you get it;
- PLUS loans – These loans are available for graduate and professional students and their parents. They allow you to access the amount you need to cover your educational or related costs that other financial aid programs don’t cover;
- Consolidation loans – These programs allow you to combine all your existing student debts into one but on better terms.
Private student loans
Private student loans are financial products that students or their families can obtain from banks or private lenders. These loan options work almost like personal loans and have similar eligibility requirements. You can get whatever amount you need if you have a good credit score, low debt-to-income ratio, and debt utilization rate, as well as a high enough income. Therefore, it is usually tougher to get a private student loan compared to a federal one. However, these cash advances may be used to cover both tuition costs or any related expenses, for example, book costs, accommodation, and more.
Which one to choose – Federal loans vs. Private loans
Federal aid typically offers better conditions and lower interest rates. On top of that, you won’t be asked to repay the money until you leave college. Most federal student loans come with fixed interest rates, so your monthly payment amount will always be predictable and never changes. Moreover, students or families with exceptional financial needs may count on governmental financial support. Thus, the government assumes your interest payment obligations while you’re in school and six months after you graduate. Federal student aid also offers various flexible options for students who face difficulties with making their payments.
Non-repayable student aid
Non-repayable financial aid is typically represented with grants. A grant is free funds that come from the federal government or state government. Students attending college or career school can access grants to cover the costs of higher education. Unlike federal and private student loans, most types of grants don’t have to be repaid if all your eligibility and needs remain the same.
However, grants are not offered by the government only. You can find various not-for-profit organizations that also provide non-repayable financial aid for students. Grants may also be obtained from your college or career school, so do a small research to find out whether your college offers any assistance for students. You’re welcome to apply for any grants you might be eligible for. They can help you both cover your educational costs and avoid getting into a debt trap.
Types of student grants
Most federal or college student grants are based on your financial situation. However, there are also options you can access by demonstrating a high level of academic achievement. Such grants are also known as merit-based grants. The US Department of Education provides a variety of options you can access. Here are some examples to consider:
- Federal Supplemental Educational Opportunity Grants (FSEOG);
- Federal Pell Grants;
- Iraq and Afghanistan Service Grants;
- Teacher Education Assistance for College and Higher Education (TEACH) Grants.
As each program has its own eligibility requirements, you need to spend some time comparing various options to choose the one or few you may be eligible for.
Students now have various options to consider when it comes to financial aid for education. If you can demonstrate financial needs, you’re welcome to consider federal loans or non-repayable grants. If you don’t meet these need-based requirements, consider merit-based grants or unsubsidized loans. You can also find multiple lenders that provide private student loans. However, you should have a good credit score and high income to qualify for one. Also, get ready to pay it from the moment you’ve obtained it.