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A Breakdown of the College Financial Aid Package

Student college financial aid comes in various forms. Learn the difference between college grant money, subsidized student loans, and student bank loans.A family receives a financial aid package, usually in the form of an award letter. They've been excited and anticipating this day, yet once the letter arrives, they're left . . . confused? What are these terms such as "subsidized student loans" and why is it different than an unsubsidized student loan? Are student bank loans better? College paper writers from https://writemypaperbro.com/ offer to learn how to decipher what is good financial aid and what isn't.

College Scholarship Money

For both undergraduates and graduates, financial aid packages will look basically the same. Firstly, the most desirable type of aid comes in the form of scholarships and grants. Look for anything in the letter that says either scholarship or grant. Scholarships are free money (given by the school) that does not need to be paid back; however, some scholarships have stipulations. For example, merit scholarships require the student must maintain a certain Grade Point Average (GPA), otherwise, the money is taken away. The grant money comes from different sources, so look for the originator. The federal government, state government and the colleges themselves will give out grants. The added bonus of receiving a grant is it is usually tax-free.

Student Loan Consolidation Interest Rates

Student loans are taken out by the student. Every loan must be paid back in some way, either to the government or to a bank. Anything that says "loan" in the award letter is not desirable per se, but within the student loan category, there are desirable loans. Here is a breakdown of student loans:

Subsidized loans are the best. Rates are much lower – at around 6.8 percent as of 2020 - than bank loans. No interest accrues while the borrower is a student. No repayment is required until the student graduates or drops out of college.

Unsubsidized loans are the second best. Rates are lower than bank rates, but interest accrues the day the student takes out the loan. No repayment is required until the student graduates or drops out of college.

Bank loans or unsecured loans are not desirable – unless a family can find a good deal. These rates are much higher, interest accrues immediately and the student may have to repay as soon as possible.

Though it doesn't fit into the scholarship or loan category, another option is federal work study (FWS). Students work on campus part-time and the federal government gives her/him money toward school. Remember to break down the financial aid package like so. Assess from best aid to worst, which will help a family decide where to send a student. Knowing the difference between a loan and grant can save a family a ton of money for college. This article, Expected Family Contribute Matters, Not College Price, discusses how a family should assess their ability to pay for school.

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