College Loan Grant Facts
To finance higher level education, you can pay for your tuition using cash or use some combination of financial aid. Financial aid can include scholarships, grants or loans. Both grants and loans can be provided through the federal government or private sources; however, loans have to be repaid, whereas grants serve as "free" money. When evaluating your financial aid package, understand that you can attempt to negotiate with your school so that your grant money is increased while your loans are decreased. Your main goal should be to minimize the loans that you take out.
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Federal Pell Grant
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The federal Pell Grant program targets low-income students and provides up to $4,000 per year. Factors that impact your award decision include your Free Application for Federal Student Aid (FAFSA), college costs, enrollment status and number of dependents in your family. The FAFSA is a free application that you must complete annually to qualify for federal money. The questions are not difficult (e.g., mailing address, year in school, student adjusted gross income), and you can submit a FAFSA even if you have not filed your federal income tax return.
State Grants
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Most states offer various grants, which usually require students to attend an in-state college. In Oregon, low-income students that enrolled at least part time in college are eligible for the Oregon Opportunity Grant. The Dual Enrollment Incentive Grant Program allows New Jersey high school students to receive money when they enroll in college courses. Check with your state's appropriate agency or department on high agency.
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Loans
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Loans are alternative sources of money that you can use to go to school. Before taking out loans to fund your education, maximize the amount of scholarship and grant money. Loans carry interest rates that increase the amount of money you owe. Thus, if you take out $10,000 during your freshman year, then four years later, you will owe $10,000 (principal) plus interest, which can range from 5 to 10 percent.
You must begin paying back most college loans after you graduate, drop below part-time status or quit college altogether. There are ways to get your loan forgiven, such as by working for the government (e.g., as as a teacher at an inner city public school). Although a few people have attempted to abandon their student loans, the debt differs from credit cards, personal loans and mortgages in that you cannot discharge your obligation by filing bankruptcy.
Stafford Loan
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All loans are not created equal. If you must take out a loan, first apply for a federal Stafford Loan. Stafford Loans are better than private loans for many reasons, especially because they carry low fixed interest rates. Stafford Loans do not evaluate your credit and are not limited to low-income students. Undocumented immigrants currently do not qualify for federal grants and loans to attend college.
Private Loans
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You also can apply for private loans through lending instutions (e.g., AccessGroup, Citibank, Wells Fargo). Private loans will review your credit report and can deny your application or require that you get a co-signer. Be aware of the loan terms, as some private loans might contain variable interest rates that fluctuate (unlike fixed rates).
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