Colleges today charge phenomenal fees, and hence many students need substantial financial aid to pay these. But to avail finance externally for the first time, their mind buzzes with so many questions regarding the terms and types of financial assistance. There are also questions related to scholarships.
Frequently Asked Questions
What is the difference between grants, scholarships, and loans?
Simply put, college grants and scholarships need not be repaid as they are monetary rewards given mostly, either by the colleges or the government. On the other hand, loans are taken from lenders and need to be repaid along with interest.
What forms of financial aid can I get?
Firstly, try your luck with scholarships. There are many types of scholarships, and if there is anything that you have excelled at during school, there may be a scholarship for you. If not, try to get financial aid by filling out a FAFSA form. This will decide if you are eligible for financial aid. If you cannot avail that, then go for student loans. They are available at slightly lower interest rates.
If I get a scholarship, will it affect my chances of getting financial aid?
Yes, scholarships might affect your chances of getting financial aid. The government takes into consideration many things, and a scholarship will boost the chances of getting aid. At the same time, the college giving the scholarship will adjust the scholarship amount with the aid.
What if I don't need aid?
Some foresighted parents save for their children's education. While saving is a good habit on the part of parents, if the child can avail aid, why not take it? But this shouldn't act as a deterrent for parents from saving. If your child doesn't get enough aid, the saved money is certainly going to come in handy.
When do I submit my application?
The financial aid application can be submitted after January 1. This is because the process of analyzing the amount of aid to be given also factors in the income earned by the family, along with the academic records of the student. Also, you have to reapply for the financial aid each year, as the financial situation of the family may change.
Can I apply before being admitted to a university?
Yes. The entire application procedure has to be completed after January 1. You may apply for aid before securing admission, but you will get the money only when you notify the financial aid office, that you have got the admission.
If I don't get aid or a scholarship, what are my options?
If you do not get either a scholarship or any aid, you can consider taking up a loan for education. You can pay it off by working as you complete your education or after you graduate and get a job.
Who is responsible for educational loans?
This depends on the loan documents. It is usually the responsibility of the student to pay off the loans. This is because the 'defense of infancy' clause in the law of contracts does not apply here. A minor can also take such a loan on his responsibility. Parents become liable only if they consent to become co-signers.
Are work-study earnings taxable?
Unfortunately, work-study earnings do entail a tax liability. Federal and state income taxes have to be paid on this income. But while calculating the taxable income, remember that the tax is calculated according to the earnings in the calendar year and not the school year.
You have to remember the priority list. Firstly, you have to try to get a scholarship. If you don't get a scholarship, or it is unlikely that you will get one, apply for financial aid. If you don't get enough aid to pay your fees, then consider taking a loan.