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Costs & Financial Aid

Financial Aid 101

Financial aid is any type of assistance used 2 pay college costs. There are four main categories:

Grants

Often referred 2 as gift aid, grants don’t have 2 be repaid and you don’t need 2 work 2 earn them.  Grant aid comes from federal and state governments and/or from individual colleges.  Students eligible for grants usually demonstrate financial need.

Most grants require that a student file the Free Application for Federal Student Aid(FAFSA).  Click here for information on the FAFSA.

Scholarships

Also referred 2 as gift aid, scholarships are usually awarded based on merit or talent.  Some scholarships may also require the student 2 demonstrate financial need.  2 search for scholarships, visit www.fastweb.com.

Work

Student employment and work-study aid helps students pay for education costs such as books, supplies, and personal expenses.  Work-study is a federal program which provides students with part-time employment 2 help meet their financial needs and gives them work experience while serving their campuses and surrounding communities.  Students must complete a FAFSA 2 be eligible for Work-Study.

Loans

Most financial aid (54%) comes in the form of loans 2 students or parents and it must be repaid.  Most loans that are awarded are based on financial need and are low-interest loans sponsored by the federal government.  These need-based loans are subsidized by the government so no interest accrues until you begin repayment after you graduate.

Click here for a list of federal programs or click here for a list of state programs.

There are many different types of loans, both for students and for parents 2 take on behalf of their student. Read on for the basics.

Parent Loans

  • Federal PLUS loans: The PLUS Loan program is the largest source of parent loans. Parents can borrow up to the full cost of attendance minus any aid received, and repayment starts 60 days after money is paid 2 college.
  • Private parent loans: A number of lenders and other financial institutions offer private education loans for parents. These loans usually carry a higher interest rate than PLUS Loans.

College-sponsored loans

  • A small number of colleges offer their own parent loans, usually at a better rate than PLUS. Check each college’s aid materials to see if such loans are available.

Federal Student Loans

  • Perkins Loans: need-based loans and are awarded by the financial aid office 2 students with the highest need. The interest rate is very low — 5 percent — and you don’t make any loan payments while in school.
  • Subsidized Stafford or Direct Loans: need-based loans with interest rates in the 6 percent range. The federal government pays the yearly interest while you’re in school. This is why they’re called “subsidized” loans.
  • Unsubsidized Stafford or Direct Loans: not based on financial need and can be used to help pay the family share of costs.  You’re responsible for paying interest on the loan while in school. You may choose to capitalize the interest. The advantage of doing this is that no interest payments are required. The disadvantage is that the interest is added 2 the loan, meaning that you will repay more money 2 the lender.
  • Grad PLUS Loans: a student loan for graduate students sponsored by the federal government that is unrelated 2 need.  Generally, students can borrow Grad PLUS loans up 2 the total cost of education, minus any aid received.  The advantage of this loan is that it allows for greater borrowing capacity.  However, we recommend that students consider lower-interest loans, such as the Subsidized Stafford or Unsubsidized loans prior 2 taking out a Grad PLUS loan.

Other Student Loan Options

  • Private student loans: A number of lenders and other financial institutions offer private education loans 2 students. These loans are not subsidized and usually carry a higher interest rate than the federal need-based loans.
  • College-sponsored loans: Some colleges have their own loan funds. Interest rates may be lower than federal student loans. Read the college’s financial aid information.