Iowa College Aid Insider: Applying for College & Financial Aid (Jan. 2018)
SPECIAL EDITION: 3 basic types of financial aid
While you have to meet certain requirements to receive grants and scholarships, you do not have to pay them back. Literally thousands of grants and scholarships are available to college students.
What’s the difference? Grants are usually need-based aid, while scholarships are usually merit-based. Eligibility for need-based grants is determined by your family’s ability to pay for college, with income being one important factor. Other factors might include number of people in your family and number of family members in college. Merit-based scholarships are awarded based on particular talents or achievements. Merit-based aid might be given for academics, sports, arts or leadership, for instance.
Where do they come from? Grants and scholarships can come from government sources (such as the federal Pell Grant and the Iowa Tuition Grant) or from private sources (such as colleges and universities, nonprofit foundations and religious or service organizations).
How do I get them? By filing the FAFSA and following up with the Iowa Financial Aid Application, you apply for the federal Pell Grant and for eight grants and scholarships administered by the state of Iowa. To find private scholarships, start with your school counselor and your college financial aid office. More tips for finding private scholarships.
Federal Work-Study allows you to earn money in a job that relates to your course of study or that fills a community need. Work-Study is administered by your college, and jobs are usually available both on- and off-campus.
How am I paid? Work-study wages are covered by a combination of federal funds and money paid by the school or employer. Work-study jobs pay at least the federal minimum wage, and you must be paid at least once a month. Your school’s financial aid office will set a cap on the number of hours you may work.
How do I get it? The FAFSA serves as the application for Federal Work-Study. If you qualify for Work-Study, you will be responsible for landing a job, based on referrals from your financial aid office.
Once possibilities for grants, scholarships and Federal Work-Study are exhausted, many students still find they need to take out loans to cover the cost of college. The important thing is to be smart about how and what you borrow.
First choice: Federal (Stafford) subsidized loans These U.S. Department of Education loans will not come due until six months after you graduate or leave school. They won’t accrue any interest while you are in school (at least half-time) or during a six-month grace period after you leave school. You must demonstrate financial need to qualify. These loans might be eligible for repayment assistance for borrowers who work in certain careers. You must file the FAFSA to qualify, then your financial aid office can help you with the loan application.
Second choice: Federal (Stafford) unsubsidized loans These U.S. Department of Education loans will not come due until six months after you graduate or leave school, but they will accrue interest. You do not have to demonstrate financial need. These loans might be eligible for repayment assistance for borrowers who work in certain careers. You must file the FAFSA, then your financial aid office can help you with the loan application.
Your parents’ option: PLUS loans These federally insured loans are available to parents of dependent undergraduate students. They require credit checks. Repayment begins immediately, although you can request postponement as long as a student is enrolled at least half-time. You must file the FAFSA, then your parents must apply for a PLUS loan. If your parents’ application is denied, you might qualify for increased federal loan amounts.
Last resort: Private loans Private loans are not federally insured and are not eligible for repayment assistance. These loans are often more selective and more expensive than federal loans. They require credit checks and sometimes co-signers.
No matter what ... For any type of loan you choose, borrow as little as possible. Your award letter might include a loan amount in your financial aid package, but you do not have borrow the full amount you qualified for. Think of this amount as a credit limit, and try to stay under it if you can.