By Laura Hailey
With the cost of education growing, student loans are often unavoidable on the road to higher education. A recent study by Mintel found that 47% of people over the age of 18 have student loans, so if you’re a parent or student considering this option, rest assured that you are not alone.
Debt can later challenge your financial situation when it comes time to repay, which is why it’s important to understand the student loan landscape before you get started.
In this article we will cover the types of financial aid provided by the federal government (which can be very complex and confusing to navigate). Other non-federal options include loans through private institutions (like a bank), your state, or from your college.
Types of Federal Aid
Grants: Grants are basically free money awarded to students with financial need. They typically don’t have to be repaid unless you withdraw early or don’t graduate. Like any type of financial aid, grant money can be used on school-related expenses such as tuition, room and board, books, and supplies.
Loans: Loans are money you borrow that you have to repay later with interest. That means the amount you eventually pay back will be greater than what you initially borrowed. Federal loans have lower interest rates than almost all private loans and much more flexible pre-payment plans. A portion of your student loans can even be forgiven if you work certain jobs while in school or after graduation (read about those options here.) There are a lot of types of federal loans, which you can read about here.
Work-Study: Federal work-study programs provide part-time employment to students, offsetting the cost of education. The jobs can be on-campus provided by your school or off-campus with non-profit organizations or public agencies.
Applying for Federal Aid
To apply for any of the three options above, you can fill out a Free Application for Federal Student Aid (FAFSA) here. After filling out the application, your school will determine the aid they will offer you by taking into account factors such as your family’s financial situation and the school’s tuition.
If you would like to continue reading about federal aid, we highly recommend this government website.
Laura Hailey is Ford Financial Solution’s Digital Marketing and Strategy Coordinator. She specializes in digital marketing for small businesses and startups and is a driven advocate for financial literacy.