Student Loans

Everything you need to know about student loans and scholarships

There is much “out there” to consider when looking for money to pay for your education. Like buying a big-ticket item, doing your due diligence and learning more about your options is a must for serious funding shoppers. Depending upon your school of choice, the cost of furthering your education is equal to or greater than the purchase of a new car. And it will last a lifetime. So lets kick a few tires and let the shopping experience begin.

What’s on the showroom floor?

To get you where you want to go, we have your basic Student Loan. Call it an entry-level vehicle. Next to it is the more sporty Scholarship. Moving up in class and over in the corner is the “Grants” model coupe and then the luxury line called “Fellowships”. Different models that do the same thing. Move you from where you are to where you want to be.

The information pitch

A student loan is an aid available to qualified candidates that helps pay for the cost of your education, usually books, tuition, and living expenses. For loans, money borrowed is financed at a lower interest rate than most other types of loans, usually 2% less. PLus, “payback” does not start until you are no longer in school. Two of the three basic types of student loans are sponsored by the United States Government, while the third is through private student lenders (i.e. Banks, Insurance Companies, Credit Unions and other lending institutions).

Private student loans are sometimes used to supplement Federal Government loans. Interest rates are often higher than government loans and the repayment options are tailor made by the lender. Shopping this lending group is important as the interest rates charged and terms will vary from lender to lender. Because of the risk and your payment record, tougher terms may apply and lenders often charge you a set up fee that is added to the total cost of borrowing.

Shop your best deal and be sure to read the fine print.

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Scholarship! The sporty model

Not a loan but an award, scholarships generally need not be paid back. This form of financial aid has various criteria depending upon the donor. A sample of this and the criteria involved can be found at www.lintcenter.org These awards are generally merit based and consider academic, athletic, artistic abilities and factors such as community service, associations, extra curricular activities and of course a demonstrated need for financial assistance.

High SAT and ACT scores are also taken into account. If you are eligible, a scholarship is basically free money to contribute to your educational expense.

If the scholarship is Federally funded – and even with most privately funded donors, a requirement for consideration is a completed Free Application for Federal Student Aid (FAFSA) form.

This is used to calculate a student’s financial need and through a specific formula, and considers family contributions against the cost of attending your college of choice and more.

Scholarships are also awarded by race, gender, medical history, and religion. These are referred to as Student-Specific and the most common of these are granted to minorities.

Another type of available scholarship is called Career-Specific and is awarded to students planning to study in a field of high need for graduates. Nursing and education are two of those areas. A requirement for funding might necessitate the graduate to have a “bond”. That is to say; an agreement of employment upon graduation that might require the candidate to work in remote or rural areas, the Military, Public Health Service and other disciplines. Once graduated, failure to comply with the “bond” could result in the repayment of the value of support received. Scholarships represent the largest source of financial assistance available to students wishing to continue their education beyond high school.

Grants

Sponsored by the United States Department of Education, a Pell Grant is a post secondary educational Federal Grant and one of 1,000 Grant programs offered by the 26 Federal Grant making Agencies in 21 categories. Education being one of them. Overall, it is reported that these Federal Agencies approve Grants for $40 Billion each year. These include the Pell Grant, Academic Competitiveness Grant, Federal Supplemental Opportunity Grant (FSEOG), National Science and Mathematics Access to Retain Talent Grant and Teacher Education Assistance for College and Higher Education (TEACH) Grant.

Annual award limits range from a high of $5,550 for Pell Grants to a low of $750 for the Academic Competitiveness Grant, the average being a maximum amount of $3,266. But there is more!

The above mentioned opportunities deal with Government Grants. Corporate America also awards money to students who require financial assistance in the form of a Grant. In this case, usually employee dependants are the beneficiaries. www.foundationcenter.org is a good source of information on corporate Grant givers and their Grants.

A recent report suggests that of the billions of dollars allocated for Grants only about a third has been granted. The remainder and considerable amount is available to qualified students. The process to apply for and to receive a grant – from start to finish – can sometimes take up to a year before you receive the funding you desire. So start shopping early and persevere. Apply for a number of grants to improve your odds and also supplement your funding. Your guidance office is a good place to start to mine for information.

Fellowships (a Fellow)

“A financial grant made to a Fellow in a college or university”

Fellowships usually refer to grants in support of post-baccalaureate projects, or to pre-baccalaureate projects pursued outside the normal curriculum. The luxury model in the funding of your education is so penned because it generally applies to those who have completed degrees and wish to continue an academic life. “A fellow is often part of an elite group of learned people who work together as peers in the pursuit of knowledge or practice.” Requirements vary among colleges and universities. As a sample of protocol and what to expect, visit www.gdnet.ucla.edu/asis/entsup/fellgrnt.htm

The fellowship application form asks for personal information and degree objectives along with consideration for departmental awards, which fellowships you want to be considered for and a written document on how you think you meet the requirements. Once submitted, response time can take months. Apply early!

Another source of valuable information for those seeking Fellowships is: The institute of International Education. www.iie.org

Tire kicking completed

Our tour of the financial assistance showroom floor leaves much to choose from. Loans, Scholarships, Grants and Fellowships are all vehicles that can get you to where you want to go. The difference between them is usually technical by nature.

Loans require repayment at a cost to the borrower. The rest don’t. Scholarships are a form of grant used to assist students in undergraduate education.

A Grant can best be described as “money in exchange for a prescribed purpose.” In this case the purpose is your continued education.

Fellowships are usually financial assistance given in support of post-baccalaureate projects. All fellowships and scholarships are grants.

Serious students looking for financial assistance to complete your education should also be students of the various funding sources available.

It is an important component of your education! It will allow you to put more into the world than you take out.