Understanding Financial Aid

There are three types of financial aid available

1. Grants And Scholarships

Grants and Scholarships are often called “gift aid” because they do not need to be paid back. The Federal government issues need-based gift aid in the form of Pell Grants, while the Pennsylvania state government offers grants and scholarships through the Pennsylvania Higher Education Assistance Agency (PHEAA). Colleges may also offer need-based and/or merit-based grants and scholarships to students that meet specific criteria. Private organizations, like companies, religious organizations, and non-profits also offer scholarships and grants to college students.

2. Work Study

Work study is a form of financial aid that allows you to earn money by working part-time for your college or a participating non-profit. The money you earn is paid directly to you, but you can request that it be sent to your school to pay for tuition.

3. Loans

When you apply for financial aid you may be offered loans as part of your financial aid offer.
If you have to borrow money, federal loans should be your first choice. Federal loans are offered at a low interest rate, and there is a grace period, meaning you have time after graduating before you have to start repaying. There are two basic types of Federal loans:

  • Subsidized
    The US Department of Education will pay interest on your loan while you are enrolled in school at least half time, for the first six months after you leave school and during a period of deferment.
  • Unsubsidized
    You will be responsible for paying the interest that is charged to your loan while you are enrolled in school, as well as the original amount you borrowed.

Parents may also borrow money to help pay for their student’s education through the federal Parent PLUS loan program. Like federal student loans, Parent PLUS loans offer lower interest rates than loans from a bank.

If you do not receive enough federal or institutional aid to cover the cost of your degree, you may have to take out a private loan. Private loans should be a last resort because they tend to have high interest rates and might require payment while you are still in school. Make sure you have exhausted all other avenues of aid. You must apply for private loans separately – they are not included in the FAFSA. Use this comparison chart of the major private loans available to compare interest rates, term limits, and award limits. You can also visit ClarifiCollege.org and check out their loan calculator. This calculator will help you borrow responsibly.

More Financial Aid Resources:

  • To learn more about grants, scholarships, work-study and loans visit the U.S. Department of Education’s Office of Federal Student Aid.
  • Visit this website to help find affordable colleges and universities.
  • To learn more about the student loan process use this helpful guide.