Figuring out how to pay for college ranks up there with choosing a major and selecting a school in terms of difficult issues students must tackle. Luckily, a variety of ways exist to finance on-site or online studies. The following terms are ones you’ll likely encounter as you navigate the financial aid process, so it pays (literally and figuratively!) to become familiar with them:
Free Application for Federal Student Aid
Commonly known by the initials FAFSA, this form serves as the starting point for most financial aid. Filling it out involves providing key information regarding your finances and that of your parents if you are a dependent. Expect to supply numbers from tax returns, bank accounts, investments, and any other assets. These numbers help in determining what you can afford to pay for college and how much need still must be met.
As the name implies, the FAFSA does not cost anything to complete. Do not, however, let the word “federal” throw you. While info obtained from the FAFSA does get used for determining federal grants and federal student loans (more on those in a minute), colleges to which you apply also use the data to make their own financial decisions, such as who gets institutional grant money. Thus, every applicant looking for assistance in meeting higher education costs should consider it mandatory to complete the FAFSA.
A grant is money awarded to a student that does not need to be paid back (except in occasional circumstances such as withdrawing from school early). The government issues federal grants. Colleges themselves give institutional grants.
Three major federal grants are:
- Pell Grants, which are given to undergraduates demonstrating exceptional financial need as determined by the results of the FAFSA.
- TEACH Grants (Teacher Education Assistance for College and Higher Education), which provide funds for aspiring educators who commit to teaching for four years in a high-need field at an elementary or secondary school serving low-income students.
- The Iraq and Afghanistan Service Grant, which provides money for children who had a parent die during U.S. military service in either of those two countries.
Individual colleges set the amounts and conditions of the grants they issue.
A loan is borrowed money that needs to be repaid. Just like a house or car loan, a student loan spells out terms on interest and payback schedule. The loan may come from the federal government or from a private source such as a bank, credit union, or other financial institution.
Many people view taking out a loan as a good investment in their future. They reason that pursuing a higher education will help them secure a better job, and they’ll be in a position down the line to pay back the money.
Lastly, all students seeking assistance in paying for college should be alert to scholarship opportunities. This free money could cover anything from the cost of some books to full tuition.
Scholarships can be based on need, merit, or specific qualifications. Some award committees may want an application outlining your past achievements and future career goals. Others may require an essay on a certain topic, a piece of artwork, or a high score on a standardized test. Competition for many scholarships is limited to select individuals, such as residents of a particular town or people seeking a degree in a designated field.
If still in high school, ask your guidance counselor for assistance in identifying opportunities. Likewise, financial aid personnel at the college you will attend can help. Also, consider putting in some good old-fashioned effort of your own. The U.S. Department of Labor operates a scholarship search tool, and some investigation into local, civic, professional, and cultural groups may reveal even more possibilities!