For many teenagers and young adults it is a dream to attend college. However, school is expensive and most need help paying for it. Below describes the types of financial aid and the pros and cons of each.
Most college students are smart enough to explore all of their options before going out on a limb to finance their college education. Many are lucky enough to have parents who can afford to help; others have grandparents who will kick in a little money. Most, however, have only three major choices when it comes to funding college tuition and related expenses: government or private student loans, grants and scholarships, or borrowing through a home equity line. The following information may help students find the best funding alternative:
Government or Private Student Loans
Government loans work well for some students because even those with poor credit may qualify, and these loans offer flexible payment plans. The federal government also gives students some of the lowest interest rates available. However, government student loans are rarely enough to cover the total cost of tuition, and most are designated for uses that do not include living expenses.
Students can get more money by applying to a private bank or lending institution and can use these funds for any college related expenses, but the interest rates are usually much higher than government supported student loans. These financial institutions also require a credit check to determine the odds of repayment, and most students must still file annually.
The major drawback to accepting any type of loan is that the money is not free and will need to be paid back at some point.
Grants and Scholarships
This option is the perfect solution for students with the drive to go after all of the free money at their disposal. Businesses and corporations do their part by establishing grant and scholarship opportunities; it is up to the student to make applications. Large companies, such as G.E., Boeing, AT&T, Microsoft, have established a history of providing scholarships to help college students. The best place to look for these is at a local college financial aid office.
In addition, local colleges have scholarship funds that are available in some fields of study. Alumni associations may also offer scholarships to students who attend certain schools, and professional organizations offer specialized scholarships and grants as well. For example, the American Association of University Women and the Institute of Electrical and Electronic Engineers offer free scholarships and grants to chosen students. Women and minority students will find some scholarships and grants that are set aside especially for these populations.
Because grants and scholarships do not have to be repaid, these are a perfect way to finance college. However, many are so small in amount that it will take several to cover all of the costs involved in college. Also, the application process can be time consuming.
Home Equity Line
Older college students may already own property or housing. In this case, it may make sense to finance school through an existing home equity line. The drawback to this is that the interest rates are usually variable, and it is possible to lose the house if repayment cannot be made.
Before signing any loan documents, students should check into all options for free money. This will prevent them from incurring long term debt before they even complete their education.
Guest author Jennifer Lewis writes for a site that has more details on education grants for women and offer advice on how to apply for scholarships. She believes that students should seek out sources of free financial aid to help pay for the cost of college, and make sure they are aware of the repayment conditions if they do take out any type of loan.