What is a Financial Aid Package?

After your application to a college has been accepted, you will be sent something called a financial aid package, or, sometimes, an award letter. This contains all of the different ways that the college and other parties are willing to help you pay the expenses involved in going to school. It is very important that you review this letter carefully because not all of this money is “free;” much of it may come in the form of loans that you are required to pay back. If you have been accepted to more than one college, you should compare the different financial aid packages that they are willing to offer you, because one school may be offering you a far better deal than another. What kinds of aid are in the package? They tend to be as follows:

Grants

Grants are usually issued by the federal government in the form of Federal Pell Grants. This is the best kind of financial aid because it is literally “free money” for going to college. You never have to pay it back and there are no strings attached.

Scholarships

Most scholarships are offered by third party institutions, like private organizations and such; however, sometimes colleges also offer scholarships on the basis of academic merit. Scholarships are also “free money” that does not have to be paid back, however there are often strings attached. You may be required to maintain a minimum grade point average to remain eligible for this kind of award.

Loans

Much of your financial aid package may come in the form of loans, which means that this is money that you must pay back. It is not free. It is very important to look at what kinds of loans are included in your financial aid package. The package may ask that you, the student, take out loans. It may also ask that your family take out loans. Find out who is responsible for what. The most common type of student loan is the Federal Stafford Student Loan. With this kind of loan, the US Federal Government is giving the money. If you are being asked to take out a Stafford loan, make sure to check whether the loan is subsidized or unsubsidized. A subsidized loan is much better than an unsubsidized loan, because all interest on the loan is paid by the government while you are studying and during grace and deferral periods. With an unsubsidized loan, you are responsible for paying interest on the loan as soon as you take it out.

Work Study

Your financial aid package may also offer you work-study as a way of paying your tuition. Work-study involves taking on a part-time job while you are a student. Most of these jobs are either on or near campus, so they should be pretty convenient for you to hold as a student. You will be paid an hourly wage and then you can use your wages to pay part of your tuition.