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Economics and Personal Finance/Higher Education

< Economics and Personal Finance

Financial Aid

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Federal Student Aid: A government granted financial aid that covers expenses in colleges such as tuition, room and boarding, books and transportation. The three main categories are grants and scholarships (gifts from the gov't), work-study (financial income acquired by the student at a job related to his/her schoolwork), and loans. Loans have to be re-payed with interest. How much federal student aid you get is based on your parents/student's income and assets, how many people are in your family, and how many people are enrolled in the college.

Advantages

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  • You pay after graduation
  • Interest rate is fixed
  • Interest rate is most of the time lower than private loans
  • You can apply for subsidized loans that can pay for your interest
  • A credit check is not needed
  • On-time payments accommodate your credit history.
  • If you're behind, deferment options exist.

The reverse of these advantages apply to the disadvantages of private loans.

Student Loans

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Subsidized Loans

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  • The government pays the interest while you are in school.
  • A credit score is not needed
  • Financial need must be evident

Unsubsidized Loans

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  • You're responsible for the interest payments
  • Is not based on financial need

Repayment Process

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  • Loans cannot be canceled, but they can be consolidated into one loan with a single interest rate.
  • Most loans have a grace period before you must begin the payment.
  • If you cannot make your payment, you have options:
    • Deferment/Forbearance - you temporarily stop making payments or you reduce your payments.

Grants

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  • They don't need to be re-payed
  • Pell grants are up to $5500 annual limit. TEACH: You must commit to teaching in a high-wanted field.
  • Military service - awarded to students who have a parent that died during their service in the military.

How do I make college more affordable?

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  • Create a budget
  • Attend a 2-year institution, then transfer to a 4-year institution.
  • Take high school courses that can exempt you from taking college-level courses, such as AP, dual enrollment.
  • Don't take room and boarding, and simply live at home.
  • Buy books that have already been used
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