Grants and scholarships are the most desirable forms of financial aid because they come in the form of free money, often with no strings attached. Some grants and scholarships are applied right to your bill - you often see this with federal and school-based aid.
Explanation: The correct order to accept different types of financial aid is: 3) scholarships, work-study, federal loans, private loans. Scholarships should be accepted first, as they do not need to be repaid and can significantly reduce the overall cost of education.
Grants and scholarships are the most desirable forms of financial aid because they come in the form of free money, often with no strings attached. Some grants and scholarships are applied right to your bill - you often see this with federal and school-based aid.
Given the option, you should accept a Direct Subsidized Loan first. Then, if you still need additional financial aid to pay for college or career school, accept the Direct Unsubsidized Loan.
Drawbacks of Unsubsidized Student Loans
You're responsible for paying the interest on that loan from day one. Unsubsidized loans are not the worst loans you can borrow in terms of pure cost and the interest rate that you'll receive. However, the interest accumulates even before you enter repayment.
Interest accrual, interest capitalization, fees, deferment, forbearance, and grace periods can all increase your student loan balance. Paying more than the minimum each month, making extra payments, and paying interest while in school can help reduce your loan costs.
The maximum Federal Pell Grant award is $7,395 for the 2024–25 award year (July 1, 2024, to June 30, 2025).
You'll want to consider student aid based on the order you should accept it: grants and scholarships first, then work-study funds, and then student loans. See an example of how your comparison may look in the image below. Understand the pros and cons of taking out private student loans to help fill the gap.
"The rule is: free money first (scholarships and grants), then earned money (work-study), then borrowed money (federal student loans)," the US Department of Education writes on its website, adding that private loans should be the last resort.
Federal financial aid regulation states that if you withdraw from all of your classes or cease enrollment prior to the 60 percent point of instruction in any term, you will be required to repay all unearned financial aid funds received. A calculation will be performed to determine the repayment amount.
You can make prepayments on your loan while you are in school or during your grace period. Be aware, however, that any prepayment you make will not count as a qualifying payment in any loan forgiveness programs.
Subsidized loans don't generally start accruing (accumulating) interest until you leave school (or drop below half-time enrollment), so accept a subsidized loan before an unsubsidized loan. Next, accept an unsubsidized loan before a PLUS loan.
As previously mentioned, the FAFSA is an application that students must fill out if they are interested in applying for any federal student aid including scholarships, work-study, grants, and federal student loans. A Pell grant is a type of aid, awarded to students who demonstrate exceptional financial need.
Federal student aid from the Department of Education covers such expenses as tuition and fees, housing and food, books and supplies, and transportation. Aid can also help pay for other related expenses, such as a computer and dependent care.
Colleges today are looking for students whose strengths and experiences will be an asset to their school. Good grades, a challenging high school curriculum, standardized test scores, extracurriculars, and a strong essay are a few key factors admissions officers assess.
With loans, you will have to pay the money back, plus interest. Depending on the type of student loans, you may receive a subsidized loan meaning interest won't start accumulating until you leave school. So, if you have the option, choose a subsidized loan before an unsubsidized loan.
What income is too high for FAFSA? There is no income that is too high to file a FAFSA. No matter how much you make, you can always submit a FAFSA. Eligibility for need-based financial aid increases as the cost of attendance increases, so even a wealthy student might qualify for financial aid at a higher-cost college.
Depending on your year in school, your status and your financial need, it's possible that you can get enough financial aid to cover the entire cost of your attendance. However, in many cases, there are limits.
The Pell Grant is indeed a valuable financial aid resource for many college students. While there isn't a strict maximum family income limit for Pell Grant eligibility, the grant is typically awarded to students with financial need, particularly those with an annual family income of $60,000 or below.
To request an aid adjustment, contact your school's financial aid office. Your school may ask you to provide documentation about your circumstances so that they can consider making an adjustment to your FAFSA information and aid offer.
An overpayment refund happens when the total amount of financial aid you receive (scholarships, grants, loans, etc.) exceeds your college's billed expenses for the semester. When this occurs, the school sends the excess money back to you. It's like getting a bonus, but with a few important strings attached.
If you're an undergraduate, the maximum combined amount of Direct Subsidized and Direct Unsubsidized Loans you can borrow each academic year is between $5,500 and $12,500, depending on your year in school and your dependency status.