Because financing an education can be expensive, people often need help paying for the tuition costs of colleges and universities. Schools offer financial aid packages to make attending their institution more affordable for qualifying applicants. Typical financial aid packages consist of a combination of options that allow you to take classes and then repay after you graduate. In this article, we will explain the differences to help you decide which ones are best for you. Luckily, there are several options that can help open up a path to pursue your dreams with a good education.
Grants and scholarships
This is money given to you that typically doesn’t need to be paid back. Grants can come directly from the school or from community or state organizations. These help hard-working people or good students get a higher education. Because this money might not need to be repaid, looking for grants and scholarships is a good first step toward paying for your degree. Talk to the school you want to attend, community organizations you’re involved with, or a high school counselor about how to apply for a grant or scholarship.
Federal Student Loans
After you have explored scholarship and grant options, apply for a Federal Student Loan. This government loan is designed to have flexible repayment options with lower interest rates. Typically, you begin to pay for this loan after you graduate. To apply, visit https://studentaid.gov/ and fill out a FAFSA form (Free Application for Federal Student Aid).
Private Student Loans
You can receive these loans from a financial institution such as a credit union, bank, or online lender. These private loans usually have higher interest rates and should be the last type of financing you seek, after looking for grants, scholarships, and federal student loans.
Both federal and private student loans do not have to be repaid until you graduate, but they still accrue interest that starts on the day you receive the loan. If possible, pay some of this interest or part of the balance as early as you can. This will reduce the amount of interest you eventually will owe on the entire loan.
After you graduate, you can simplify the repayment process in several different ways to make it more manageable. If you have multiple student loans to pay back, you can consolidate all the loans together so you only need to make one payment each month. This is called a consolidation loan.
Another option to consider is refinancing your student loan or loans. When you refinance, you might be able to obtain a lower interest rate, which could lower your monthly payment amount and can save you money over the total repayment period.
If you have questions, start with your academic advisor, the financial aid department at your school, or a loan officer at a financial instuition that offers student loans. They will be happy to help you plan this important step of your educational journey.