Education is a big investment, and many students like you may need help paying for it. The price of tuition alone may seem like a barrier between where you’re at now and where you want to be. Even then, tuition isn’t the only expense you might face—the cost of textbooks, housing, transportation, food and supplies all add up. This is why most students utilize some form of financial aid, including private student loans, to help them fund their future goals. Let’s take a look at the main sources of financial aid to gain a better understanding of your options as a student.
The Four Main Types of Financial Aid
Financial aid usually comes in the form of grants, scholarships, federal loans or private loans. You may choose to use a combination of these to get the financial help you need.
The Free Application for Federal Student Aid (FASFA) will be your starting point when it comes to receiving financial aid. You may be awarded grants or subsidized federal loans based upon your financial need. In order to determine how much financial assistance you need, you may be asked to provide information about your parent’s income and education levels. Remember that you will have to re-submit the FAFSA every year to claim your benefits, just like you do for grants and subsidized loans. Check out the FAFSA deadlines to make sure you turn yours in on time!
Grants are awards that do not have to be repaid. As you can imagine, these are welcome bonuses for students! Grants can be awarded based on merit or on need, usually by the state or federal government. Some grants are competitive in nature while others are student-specific. The most common type of grant for undergraduates is the Pell Grant, which is awarded based on financial need. Other grants are more specialized, such as the various grants available for minority students. To check out some of the types of grants out there, have a look at The College Grants Database.
Scholarships are similar to grants in that they don’t have to be repaid. Unlike grants, scholarships are usually offered by private institutions rather than the government. They are awarded based on factors such as scholastic performance in school and athletic skills. The financial aid office at your school can help you out with finding scholarships. For more info, check out BigFuture’s article on where to find college scholarships.
Federal loans are granted by the government and come in two forms:
Private loans help to bridge the gap between these last three forms of financial aid and your education. We’ll dedicate the rest of this article to understanding how a private student loan works, and how it can be an important factor in making college work for you.
What to Look for in a Loan
A private student loan can be an important component in any college plan. However, not all loans are created equally. It’s important to choose the right loan provider and plan. Here are some important questions to ask when it comes to choosing what loan to go with:
Applying for a Loan
Once you decide on a loan provider, start the application process. You can speed along the process by swiftly providing any and all information requested by the provider.
For many loans, you’ll be required to have a cosigner. A cosigner is someone who is backing up your side of the loan. They assume liability for the loan in the event that you do not make good on payment or contractual obligations. Usually a parent or relative, they lend their credit score and income as insurance for the lender. This means that if you were to default on your loan, your cosigner would be responsible as well. Having a cosigner can help you get lower interest rates as well as other potential benefits. In some cases, you may want to release your cosigner after a period of time, since it offers you an opportunity to gain independence down the road.
It’s important that you consider all of your options when it comes to choosing a student loan. Loan amounts, interest rates and eligibility requirements all have to be taken into account to make the best choice possible. Some loans, such as the Ascent Cosigned Loan, may offer benefits to those who have a cosigner. Once you have secured the college funding you need, you’ll be one step closer to graduation.
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