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How Can I Afford To Send My Child to College? (page 2)

— U.S. Department of Education
Updated on Apr 12, 2011

Financial Aid

Financial aid can help many families meet college costs. Every year millions of students apply for and receive financial aid. In fact, almost one-half of all students who go on for more education after high school receive financial aid of some kind.

There are three main types of financial assistance available to qualified students at the college level:

  • Grants and Scholarships;
  • Loans; and
  • Work-Study.

Grants and Scholarships

Grants and scholarships provide aid that does not have to be repaid. However, some require that recipients maintain certain grade levels or take certain courses.

Loans

Loans are another type of financial aid and are available to both students and parents. Like a car loan or a mortgage for a house, an education loan must eventually be repaid. Often, payments do not begin until the student finishes school, and the interest rate on education loans is commonly lower than for other types of loans. For students with no established credit record, it is usually easier to get student loans than other kinds of loans.

There are many different kinds of education loans. Before taking out any loan, be sure to ask the following kinds of questions:

  • What are the exact provisions of the loan?
  • What is the interest rate?
  • Exactly how much has to be paid in interest?
  • What will the monthly payments be?
  • When will the monthly payments begin?
  • How long will the monthly payments last?
  • What happens if you miss one of the monthly payments?
  • Is there a grace period for paying back the loan?

In all cases, a loan taken to pay for a college education must be repaid, whether or not a student finishes school or gets a job after graduation. Failure to repay a student loan can ruin a student or parent's credit rating. This is an important reason to consider a college's graduation and job placement rates when you help your child choose a school.

Work-Study Programs

Many students work during the summer or part time during the school year to help pay for college. Although many obtain jobs on their own, many colleges also offer work-study programs to their students. A work-study job is often part of a student's financial aid package. The jobs are usually on campus and the money earned is used to pay for tuition or other college charges.

The types of financial aid discussed above can be merit-based, need-based, or a combination of merit-based and need-based.

Merit-based Financial Aid

Merit-based assistance, usually in the form of scholarships or grants, is given to students who meet requirements not related to financial needs. For example, a merit scholarship may be given to a student who has done well in high school or one who displays artistic or athletic talent. Most merit-based aid is awarded on the basis of academic performance or potential.

Need-based Financial Aid

Need-based means that the amount of aid a student can receive depends on the cost of the college and on his or her family's ability to pay these costs. Most financial aid is need-based and is available to qualified students.

 

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