According to The College Board, In 2015-2016 the average 4 year public university sticker price for tuition and fees was 9,410$. The average gift aid and tax benefits was 5,430$, leaving a difference of 3980$ net price. Now, this is an average and every family’s financial situation is different. This also does not reflect the average costs of private universities. Also, keep in mind that the College Board populated these numbers from a sample of in-state full-time students and real amounts may vary. That being said, it is apparent that there is money out there to be had, especially if people continue to see it as pointless to apply for financial aid. So, where do you fit in on the spectrum of financial need? In an effort to help you understand the landscape better, I have provided you with the various types of financial aid and where it all comes from.
There are 4 main sources for financial aid. The federal government, the state government, postsecondary institutions, and private organizations.
Federal Aid and State Aid
The federal government and state aid are the largest providers of financial assistance in the nation. They both offer assistance in the forms of grants, loans, and work-study programs.
Student Grant – This is the type of financial aid that does not have to be paid back, so long as you meet all of the obligations, i.e. GPA and course requirements. Grants are offered by the state and federal government and by some institutions. Grants can be merit based, need based or student specific such as; minorities, women and students with disabilities. Chances are that you will not receive enough grant funds to cover 100% of your costs, which is where loans and work-study programs come in (see below).
Work Study
The federal work study program encourages community service and work in the student’s related field or major. Students are not required to work in a related field and often times take up jobs on campus to make money to cover additional college expenditures. Typically, students are only allowed to work a total of 20 hours and the amount you earn on the job cannot exceed your federal work study award amount. Something to note; being in the federal work study program does not preclude you from obtaining grants or loans. You will know if you qualify for federal work study when you receive your financial aid package in the mail or online. If you qualify, the dollar amount will be listed in your awards page.
Loans
A student loan is a financial assistance that must be paid back. There are private student loans and there are federal student loans.
Private Student Loans – These loans are generally obtained by applying with a bank, credit union or online lender. Private student loans must be paid back and include an interest rate that is dependent on your credit score. Without a credit score of at 690, you’ll likely pay a higher interest rate than for a federal loan. Private student loans are typically unsubsidized, which means that interest begins accruing as soon as the loan is taken out.
Federal Student Loans – Taking on a federal student loan means you are borrowing a loan funded by the government. Typically, federal loans offer protections to borrowers and alternative payment options that private loans may not, such as income based repayment and even forgiveness programs. Another benefit to federal student loans is that interest rates are flat and set by congress, while private loan interest rates are set according to your credit and/or that of your co-signer. Federal loans are direct subsidized loans that the government pays the interest on while you are in college or the loan is in deferment.
Private Aid/Scholarships
Private aid comes from organizations not affiliated with the university or the government. Generally, this type of aid is limited to a specific amount of money and comes from corporations, religious organizations, cultural organizations, professional and service organizations, and more. Keep in mind that this type of aid can present itself in the form of a loan or scholarship.
Post Secondary Institutions
Universities and college are also able to provide students with institutional money for aid. While institutions can offer grants and work study, they can also offer scholarships. Academic ability, merit based, athletic, religious affiliation, race and other scholarships are all available to students at post-secondary institutions.
As you can see, financial aid can come in many forms. Be sure to consult your accountant or CPA for more clarification on how your financial situation falls in line with the options aforementioned. Stay informed, stay positive and be well.
