College Financing 101
As a high school student looking to attend college in the near future, one of the issues you will inevitable face is costs; how is tuition going to be paid for? The following information shall breakdown the basics of financial aid so you will know what to expect in the near future.
- You must file a FAFSA to determine what need based funding you are eligible for. The FAFSA is available through the federal department of education at the following site http://www.fafsa.ed.gov/
- Filing your FAFSA is a process undertaken by you and your parents. You may run across FAFSA filing services that charge a fee to file for you. It is highly recommended you complete the process yourself and avoid paying for what already is a free application from the government.
- There are four primary funding sources used to pay tuition. Need Based Grants, Merit Based Scholarships, cash payments, and Student Loans.
- Need Based Grants originate from Federal and/or state government agencies. They can also be awarded by the school you attend. They use the FAFSA to determine your eligibility. The lower your household income the more likely you can qualify for a need based grant. Examples for these grants include Pell, SEOG and TEACH.
- Merit based scholarships are awarded by admissions offices by considering your GPA, class rank, standardized test scores, extracurricular activities and other factors. You can also apply for scholarships from outside scholarship groups. Your FAFSA information will not have a bearing on these qualifications. Please see the Quick Scholarship Q&A for more details.
- Cash payments are straightforward. Paying an outstanding bill with cash is the simplest way to handle it. Colleges typically offer an interest free payment plan where the total balance due is split up into monthly payments.
- Student loans are used when there is no other option left to cover the remainder of tuition. There are two main varieties of loans. First there are federal loans. They are made available by filing the FAFSA form and include the Stafford loan, Parent Plus loan and Perkins loan. Federal loans are the best student loans you can get because they may qualify for subsidies, have guaranteed interest rates and do not require a credit approval. You should maximize your use of federal loans before you use any other loan to cover your bill. The second category is private loans. They are credit based loans, that typically come with a variable interest rate and may require a cosigner to get approved. You should only apply for private loans after you have exhausted all other forms of financial aid. Please see the applying for a private loan section for more details.
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