One of the most asked question when going back to school is, “What is financial aid?”. One of the biggest misconceptions about College Financial Aid is that funds borrowed from the Federal Government do not have to be paid back. This is only partially true as Federal Financial Aid is made up of four types of aid. It is crucial that all prospective and current students understand the differences.
- Loans –Do have to be re-paid
- Grants – Do not have to be re-paid
- Scholarships – Do not have to be re-paid
- Work-Study – Federal Work-Study amounts/hours determined by your school
Types of Loans
Loans, both Subsidized and Unsubsidized are borrowed money with the promise to repay. For more information on the difference between Subsidized and Unsubsidized loans please CLICK HERE. Another type of Financial Aid is know as a PLUS loan. In short, PLUS loans are federal loans that are generally taken out by graduate or higher degree seeking students (i.e. Doctoral candidates) as well as parents of dependent undergraduate students (24 years old or younger) that can be used to help pay educational related expenses. PLUS loans have many positives and negatives to the student and parent that everyone should be very aware of.
Grants and Scholarships
Grants and Scholarships do not have to be repaid and are generally awarded based on “merit” (Scholarships) and “need” (Grants). Need-based awards, such as the PELL Grant, are designed to support low-income or no-income students that are in difficult financial circumstance and generally have a higher need for additional funding to pay for school. In some cases, scholarships can be need-based as well. Merit-based programs are grounded on many different factors depending on the scholarship; however, a student’s financial situation (“need”) is not always a factor.
Federal Work-Study program
Federal Work-Study programs are generally part-time jobs for Professional, Undergraduate and Graduate students (Full or Part-time) that have some type of financial need. The jobs under the work-study program are primarily centered around a student’s degree program or community service. It is also important to note that not all Universities participate in this program so it is important to double check with your chosen school if this is an option that appeals to you.