An Investment in Your Future: Funding Your Undergraduate Education Through Loans, Grants and Scholarships

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Grants And Scholarships

Private grants and scholarships, whether need based or merit based, are also offered by a host of institutions, organizations, corporations, and private foundations. Spend some time in your high school guidance or college counseling office and be sure to apply for as many scholarships as you can. When you have exhausted the local offerings, surf the Web or research in your school or local library to identify additional sources.

"My strategy was to apply for everything possible," Zoe recalls. "I received a National Merit Scholarship and a few thousand dollars in local scholarships. Although many of these were only for a few hundred dollars each, most were also renewable year-to-year. I also received a grant to cover a summertime volunteer internship through the Sevringhaus Foundation and a Barnett-Miller research grant that paid for my three-week thesis research trip to Cuba."

"During my freshman year, I saw a flier advertising a 'balanced man' scholarship paid for by a campus fraternity," Chase added. "The application consisted of a set of essays and a couple of interviews, all of which were very low stress. I received $1,500 in financial aid from this after spending only a handful of hours filling in the application. Obviously, that was time well spent, as every dollar counts when it comes to reducing debt. There are lots of opportunities around—the key is being active in seeking them!"

Treat this search like a part-time job, because you'll be literally amazed at how many scholarships there are available to you and how many of them don't get awarded because there were no applicants! One free source of such information, which claims to have a database of more than ten thousand grants and scholarships in all areas of academia, is on the Web at www.absolutelyscholarships.com.

Private Loans

Private loans are personal loans from a bank or private lending institution. Of all the ways to finance your college education, private loans are the most expensive, as they generally carry much higher interest rates and will come with a number of extra charges and insurance fees. Just as with unsubsidized federal loans, interest on private loans accrues during school.

If you must take out a private loan to bridge a financial gap between your expenses and your aid package, do everything you can to reduce the overall cost of these loans by shopping around extensively to find and secure the lowest possible interest rate. Having a cosigner on the loan or securing the loan with personal assets will reduce the bank's risk and may persuade a bank to lower its interest rate for you. If your family maintains a special relationship with a particular bank, that bank may be willing to give you a special rate. You will have to, and should, negotiate these points with a bank to determine the degree of flexibility they have with their rates. The overall cost to you of even a quarter of a point on an interest rate can be extremely significant over time, so make the effort to shop around and bargain hard for the best deal you can find.