Wonder what the difference is between a loan and a grant? Here’s a quick look at the various terms you’ll come across to fund your college education or career training.
FAFSA – Most college financial aid offices will suggest that you file a FAFSA – the Free Application for Federal Student Aid – even if you don’t think you’ll qualify for aid. Sometimes being rejected for federal aid is a prerequisite to getting other grants and scholarship from an institution. You’ll more than likely need to complete this form for trade and technical school and community college applications, too.
Family contribution – the amount of money your parents can expect to contribute to your education. Two accounts that can help save toward that college education are a Coverdell Education Savings Account, available through financial institutions and investment advisors and offers tax benefits for education expenses, or a 529 savings plan, which are savings plans set up by every U.S. state treasurer’s office and the District of Columbia.
Grants – Financial aid that you don’t need to pay back
Loans – Money borrowed either from federally subsidized sources, such as the Stafford Loan program, or from financial institutions.
Scholarships – Another source of aid that doesn’t need to be paid back. These are often offered by various civic, community or nonprofit groups, as well as colleges and universities. Eligibility criteria can vary from financial need to studying a specific major to meeting a certain demographic.
Work-study jobs – These are jobs on campus or nonprofits for which the government provides subsidies to pay your salary. This is considered a form of financial aid.