By: Emily Ferreira, Managing Editor
When entering college, students can be ill-prepared for the costs that present themselves, such as: tuition, room and board, books, even just buying pens and notebooks can really add up! Student financial aid is something that most look to for help and it comes in many forms. Student financial aid is designed to help students pay these costs while attending classes. Scholarships can be one type of a student financial aid award. Generally, there are two types of student financial aid: merit-based and need-based.
Merit-Based Financial Aid
Merit based student financial aid can include merit-based college financial aid scholarships awarded by the individual learning institution being attended as well as scholarships awarded by outside organizations. Merit-scholarships are usually awarded for outstanding academic achievements, though some merit student financial aid scholarships can also be awarded for leadership potential, special talents and other personal characteristics. Merit scholarships can sometimes be awarded without regard for the actual financial need of the student financial aid applicant. At many institutions, every student accepted is automatically considered for merit student financial aid scholarships. At other schools, however, there is a separate application process required for consideration for student financial aid. Athletic scholarships are a form of merit college financial aid that takes athletic talent into account.
Need-Based Financial Aid
Need-based student financial aid is awarded on the basis of the individual financial need of the student. Within the realm of need-based federal student financial aid, there are several different programs such as grants, scholarships and Federal Pell grants, Federal Perkins Loans, Federal Stafford loans (both subsidized and unsubsidized) and Federal PLUS loans. Federal Perkins loans are made by participating schools, in accord with annual appropriations from the U.S. Department of Education. Federal student financial aid in the form of Federal Stafford loans and Federal PLUS loans is offered by participating lenders under the Federal Family Education Loan Program. To qualify for federal student financial aid, a student must file the Free Application for Federal Student Aid (FAFSA). This application uses a calculation that takes into account income and assets to determine a student’s “Expected Family Contribution” toward their college education for that year. Colleges then use this Expected Family Contribution to decide what types of student financial aid each student is eligible to receive. Students must complete the FAFSA each year they wish to be considered for college financial aid. State governments also typically provide some types of need and non-need-based student financial aid. These usually consist of grants, loans, work-study programs, tuition waivers and scholarships. Individual colleges and universities may provide federal student financial aid grants along with need and merit- based scholarships. Students requiring college financial aid beyond what is offered by their college or university may consider private education student loan financial aid. These are available from most large lending institutions. Usually, student loan financial aid obtained through the federal government has lower interest rates than private education loans. Institutions may also offer their own student financial aid, in the form of need or merit-based aid, as well as endowed scholarships. Some schools may only require the FAFSA in these cases; some may also require an additional need-based analysis document, such as the CSS/Profile, to apply for these funds.
Repayment is usually pretty straightforward when it comes to student financial aid. Once you have graduated, left school or dropped below half-time enrollment, your grace period begins. This is a period of six to nine months before which student loan financial aid must begin being repaid. The only exception to this is student loan financial aid that parents have applied for and been granted. These loans must be repaid as soon as the full amount of the loan is disbursed. If you received a grant or scholarship as student financial aid to attend your classes, you’re in luck! You’re not required to make any repayment on this college financial aid or federal student financial aid. Student loans are, for the most part, the only type of student financial aid that requires repayment. Keep in mind that all interest paid on student loans or student loan financial aid is usually tax deductible that could be a big help come tax time!