If you are thinking, “College sounds like a great idea, but how am I going to pay for it?” you aren’t alone. I had the same thoughts. Student debt is now at an all-time high and you may be questioning whether going to college is even worth it. While no one can decide that for you, I can speak from personal experience and say that it is worth it in the end. In my opinion, the classes that you enroll in will help broaden your mind, expose you to different cultures and experiences, and lead you down the path of being a well-rounded member of society. When paying for college, there are a few main types of financial aid: scholarships, grants, and loans.
There are some forms of financial aid you do not have to pay back if you meet certain requirements, such as scholarships and grants. While some scholarships may be awarded automatically based on various factors such as your SAT/ACT score, the strength of your admissions application, your GPA, or your class rank, other scholarships will require an application along with an essay. If you are having trouble getting past this first step, read my previous post on how to write a scholarship essay.
Scholarships are essentially free money that you do not have to pay back. Most colleges have a section of their website that lists the various scholarships that are available. (Learn more about how to start searching for a scholarship.) It’s important to note that some scholarships are setup to have certain eligibility criteria, so you need to be mindful that you qualify before you put any effort into writing the essay.
Grants are essentially free money that is given primarily by the federal government and is usually need-based. Some states (such as Minnesota) also offer grants for college. Grants are calculated using a formula based on a few different factors, including “expected family contribution” or EFC, your status as a full- or part-time student, and the cost of attending the college you’ve chosen. The information is gathered from your FAFSA form (Free Application for Federal Student Aid) and you are automatically considered for federal and state grants when you submit the application.
Although you can take out loans at any time, I would personally suggest that you exhaust grant and scholarship options for the year first. Loans, which can be subsidized or unsubsidized, are available directly from the federal government. The Department of Education will pay the interest on your subsidized loan if you meet certain conditions, whereas you are responsible for any interest with an unsubsidized loan. You can read more about the differences between the two types of federal loans by reading this government brochure.
Federal loans may even have forgiveness programs if you become employed in certain fields such as public service or teaching. (Learn more about loan forgiveness, cancellation, or discharge.) There may even be other fixed- or variable-interest rate loans that you can qualify for through other state offices, like the Minnesota SELF Loan, which is available through the Minnesota Office of Higher Education.
It’s important to educate yourself on the terms and conditions, interest rates, and benefits. For instance, did you know that the Minnesota SELF loan requires you to pay interest while you are in school and may not have other loan deferment options that are offered through the federal government? This is different than a subsidized federal loan which pays the interest for you and allows for a limited period of deferment options. While loans may seem scary, you shouldn’t be afraid to invest in your future. The main thing is to invest in your future responsibly by understanding how much you need to borrow and the terms of repayment. You should only borrow what you absolutely need for your education.
The second type of loan is a private loan. Private loans are generally more expensive than federal loans. Only use these if you have exhausted all other options. They may have varying- vs. fixed-interest rates or have other unusual requirements. Tread carefully if you are considering this type of financial commitment.
Funding your education can be a confusing process, but knowing what the options are can help you make the most informed decision. You can read more about scholarships, grants or loans by visiting the Federal Student Aid Government website.
Here’s to a successful new year!
Stephanie Davison, College in the Schools
