College is a big investment for any family, regardless of economic standing. Even students with substantial college savings plans find that expenses relating to tuition, housing, and other requirements are quite sizable. In fact, the current cost of higher education is more than two-and-a-half times the figure it was three decades ago. To put it into perspective, a 1988 graduate of Harvard University would have shelled out $17,100 on tuition. And if they want their own scion to attend the same institution, they would have to pay almost $45,000 in tuition. That’s about 163% increase in costs! And prospective college applicants eyeing public schools will be spending a lot as well, as the average cost of attending a public four-year college program is about $20,000 per academic year. Going to college is an expensive prospect, and one that will continue to be so. Hence, most students will benefit from considering various types of financial assistance. Of course, this can include personal savings, family contributions, loans, and grants. Whether from the federal government or from the college itself, grants can provide a valuable source of financial assistance for college students who qualify.
Loans, Grants, and Scholarships: How to Decide Which One’s for You
If you are planning to attend college, understanding how to qualify for financial assistance involves learning the difference between loans, grants, and scholarships. Let’s look at each one to help you make sense of which option fits your context.
Loans
Everyone knows the basic definition of what a loan is, and for prospective college students, banks, education institutions, and even the federal government provide loan options to students. Do take note that among the three financial supplements, this one lets you attend college but with compounding interest. The common types of loans include:
Federal Perkins Loan
This type of loan package is lent by the school, in the student’s name and with a maximum sum of $5,500 per year of undergraduate study. That means the maximum amount you can borrow is $27,500. As it is a federal loan, the interest is relatively lower at 5%, and you can plan the repayment scheme for up to 10 years. And there’s no need for credit history to be approved for the loan. If a student drops below halt time or graduates, there is a six-month grace period. If the student re-enrolls, the loans are deferred, but if he or she drops below half time again, then repayment will begin.
Private Loans
Because the Perkins Loan from the US government allows only a small amount of financial assistance per year, you may not be able to cover costs with it alone. You can then apply for loans from private groups, like the Smart Option Student Loan offered by Sallie Mae. The institution provides several options that help students graduate with a smaller debt. For instance, the Fixed Repayment Option enables payment of $25 every month you are in school. There’s also the Interest Repayment Option, which pays the interest every month while in school. This can save as much as $8,000 compared to the usual deferred payment plans.
There are other loan options out there depending on your need. What you have to remember is that loans have to be paid on time, else you suffer severe charges and penalties if you are not able to pay back. Make sure to examine all the terms and conditions before agreeing to one.
Grants
Grants are different from loans in that these do not require repayment. College grants are just like scholarships. The difference is, most grants are generally need-based. They are essentially free money awarded to those with great financial need. Scholarships meanwhile, can be awarded on the basis of some type of merit, whether academic achievement, athletic talent, or extracurricular performance. Grants for college aspirants are provided by federal and state government, colleges, public and private organizations, and professional associations.
Federal Grants
Federal grants are administered through the US Department of Education, and should be the first option to be considered by any student looking to fund his or her college tuition. Here are several federal grants currently offered:
Federal Pell Grant
Started since 1972, this program is the largest provider of grants in the country. Eligibility is determined annually based on Free Application For Student Aid (FAFSA) disclosures, and if the student meets the prescribed enrollment status, actual costs, and financial need beyond Expected Family Contribution.
Federal Supplemental Educational Opportunity Grant
The FSEOG is designed to provide free grants for college students with the highest amount of unmet need who qualify for the Pell Grant. But unlike the Pell, FSEOG is dependent on the college’s funds. To be a recipient of this grant, students must apply through their college on a first come, first served basis. The amount ranges from $100 to $4,000 depending on the college of choice and EFC.
Iraq and Afghanistan Service Grant
This type of grant offers financial aid to college students whose parent or guardian was a military service personnel who lost his or her life in either the Iraq or Afghanistan war. To qualify, you must meet the criteria, be under 24 years of age, and enrolled in a college at least part-time at the time of your parent or guardian’s death.
National SMART Grant
The National Science and Mathematics Access to Retain Talent (SMART) Grant provides funding for low-income third and fourth year college students. Qualifications include Pell recipient and academic talent pursuing a degree in STEM fields or in foreign languages with a high need. The maximum grant is $4,000 per student.
Federal TEACH Grant
The TEACH Grant provides grants for college students who plan on teaching in a high-need field of study in a low-income area following graduation. Recipients sign a contract specifying the established time of service. This is quite different from other federal grants for college because it requires you to hold a job to keep the grant from becoming a loan you have to pay back. The TEACH Grant offers up to $4,000 a year for students pursuing teaching.
State Grants
State grants are managed by the state’s Department of Higher Education, sourced from state and local taxes. Most states offer resident students some degree of grants via the Department or a Student Assistance Commission. Grant programs are different from state to state, which means you have to inquire what type of options you have specific in your area.
Non-Government Grants
If you have already exhausted federal and state grants, you can also look into corporations and associations that offer grants to students in disciplines closely related to their industry. Some religious organizations and clubs also provide grants with certain eligibility requirements. Privately awarded grants and scholarships tend to have highly specific eligibility conditions, and generally target certain portions of the population. For instance, college grants may be dedicated for women and minorities.
Scholarships
As what we’ve mentioned, scholarships are similar to grants in that the financial aid does not require repayment. The main difference is, scholarships are awarded to students with certain qualities, such as proven academic ability or talent in sports or the arts. And most scholarships have rules that the student has to follow in order to continue receiving aid. This may include maintaining a certain GPA, or holding a position in a campus group. Scholarships, like grants, come from different sources. Federal and state government as well as non-government entities like colleges and private organizations offer such aid.
How to Apply for College Grants and Scholarships the Right Way
With millions of aspiring college students enrolling each year, knowing which grants and scholarships are available for you will ensure that you are able to apply for them early on. Here are some considerations you should remember:
Research online and locally
You wouldn’t be able to apply for a grant without researching thoroughly what’s available for you. There are a lot of options online, and all you have to do is allocate time and effort researching about them. Factor in your grade point average, test scores, and special skills and interests when searching for grants that you may be eligible. You may also want to inquire with groups you have a connection to – including employers, unions, private institutions, and local community groups. That way, you can easily find several sources of aid.
Think small
When applying for a grant, many families tend to go for the gold. That’s well and good, but even small awards can add up. Yes, it will entail more work preparing your application, but it can still provide a bit of help for your tuition needs.
Follow requirements and deadlines
It doesn’t matter if you are the most ideal candidate for a grant. If the application is sent without key requirements, or worse, if it arrives late, then the aid may well go to someone who was more thorough about the whole application process. Always stick to the eligibility requirements and conditions if you want to gain an opportunity for a grant.
Learn to wait
If you think that calling or emailing the committee incessantly will help your chances, think again. An applicant or parent who’s too impatient may just harm the student’s chances! Instead of being restless with one grant, why not use this time to apply for other options?
Conclusion
Grants and scholarships provide essential financial support for college students, especially to those who are in most need and who have exceptional academic talents and skills. It’s the lifeblood of higher education in the country, as it provides many students the difference between pursuing college dreams and shelving those dreams in the backseat. Before resorting to expensive loans, you should make time to investigate the myriad of grant and scholarship opportunities available for you.