With all of the different types of financial aid, figuring out how to pay for college can be overwhelming. What’s the difference between a subsidized and an unsubsidized loan? Does it really matter if a loan is private or federal? What is a FAFSA and how do I get one? UW Colleges is here to help you keep all the different forms of financial aid straight.
1. U.S. Department of Education
The U.S. Department of Education is the largest provider of student financial aid in the United States granting nearly $150 billion in federal grants, loans and work-study aid to help ease the financial burden of going to school. 13 million eligible students attending college or career school benefit from federal financial aid each year.
2. Free Application for Federal Student Aid (FAFSA)
The Free Application for Federal Student Aid (commonly referred to as FAFSA) is a quick and simple way to apply for federal aid and most state aid programs while attending school. Nearly 22 million FAFSAs are submitted each year by college students across the country. Applying online only takes about 30 minutes and it is 100% free. After applying, you will receive an award letter from the school that you are attending that contains both the federal and non-federal aid that you are eligible to receive. Be sure to reapply for financial aid each academic year by completing that year's FAFSA. This is important because as your financial situation changes, your eligibility for financial aid can differ from year to year.
Grants are need-based aid that do not have to be repaid after the completion of your degree. You may have to repay the grant if you withdraw early from your program, if your enrollment status changes to affect your eligibility or if you received outside scholarships or grants that reduced your financial need.
4. Federal Student Loan
Federal student loans are aid that must be repaid with interest after the completion of your degree. In comparison to private student loans, federal loans tend to have lower fixed interest rates. There other benefits as well including flexible times to repay the loan, adjustable payments, deferment of payments, and payment forgiveness based on certain types of employment. You may also be able to combine various student loans into one monthly payment. There are four types of federal student loans including direct subsidized, direct unsubsidized, Direct PLUS and direct consolidation loans.
5. Direct Subsidized Loans
Direct subsidized loans are available for eligible undergraduate students and the amount borrowed is determined by the school that you attend. The U.S. Department of Education pays the interest on the loan while you attend school and during a grace period of six months after graduation. Direct subsidized loans can significantly reduce the cost of attending school as well as ease the burden of repayment after school by eliminating the amount of interest while you attend school.
6. Direct Unsubsidized Loans
Direct unsubsidized loans are available to eligible undergraduate and graduate students and, like subsidized loans, the amount you can borrow is determined by the school that you attend. For direct unsubsidized loans, you pay the interest on the loan during all periods of attendance. If you choose to not pay back the loan while in school, the interest will grow and be added the original amount of the loan.
7. Direct Consolidation Loans
Direct consolidation loans allow you to combine multiple federal education loans into one single loan. This will allow you to make one single monthly payment instead of multiple/ Combining your loans also provides access to additional loan repayment plans and forgiveness programs.
Work-study is a type of federal financial aid that provides part-time jobs for undergraduate and graduate students while they attend school. Work-study is based on financial need and often encourages community service work and work that is related to your course of study. Jobs may be available on-campus and off-campus and offer the opportunity to earn at least minimum wage to pay for educational expenses.
9. Private Student Loans
Private student loans are any student loans that are not granted by the federal government. A private loan is funded by a bank, credit union, state agency or school and they set the interest rate, loan limits, and terms and conditions. Often the amount given is based on credit history, the co-signer and co-signer's credit history, your choice of school, and your intended course of study. Generally, private student loans are less flexible than federal student loans and may variable interest rates that can rise or fall during the life of the loan. Students are strongly encouraged to consider all federal and state financial aid before pursuing a private educational loan. First, complete the FAFSA and have aid eligibility determined, including for federal student loans, before applying for a private loan.
Scholarships are money awarded to students and are often based on academic merit or achievement. Scholarships generally do not need to be repaid and are available through various companies and community foundations. New scholarship opportunities become available throughout the year so be sure the periodically check out the UW Colleges Scholarship page. Most scholarship applications can be completed within a few minutes.