Wednesday, April 8, 2009

The Basics

by D. Babbs

Financial aid is a general term that includes all types of money, loans, and work-study programs offered to a student to help pay tuition, fees, and living expenses. Financial aid usually comes in three forms: scholarships and grants, loans, and work-study.

Grants, also called scholarships or gift aid, are the best kind of financial aid. They are free money that you don't have to pay back. Generally, grants are awarded for one of three reasons:

· Need: The student has qualified as financially needy

· Merit: The student is being rewarded for good grades, athletic skill, musical talent, etc.

· Employment benefit: The student or the parent qualifies for tuition assistance through an employer. Many universities, for example, give employees' children a break on tuition.

Loans are debts that you have to pay back. Some loans, such as federal Stafford and Perkins loans for students, are considered financial aid because taxpayers subsidize the rates so that students can borrow at a lower cost than they would get from a bank.

The federal government subsidizes some campus and nonprofit jobs for students. Generally, work-study jobs are awarded only to students who the college says are financially needy. The jobs typically don't pay especially well. But work-study jobs have advantages.

The best way to receive financial aid is to fill out the free application for federal student aid (FAFSA). The form is a long, complex document but the government shares the information with your schools of choice.

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