Financial Aid Basics
What is financial aid?
Financial aid is money that helps students pay for college.
It can include scholarships, grants, loans, and work-study programs.
Do you have to pay back scholarship money?
No. Scholarships are generally free money that does not have to be repaid, as long as the student follows the scholarship requirements.
Do you have to pay back grant money?
Usually, no. Grants are generally free money that does not have to be repaid as long as the student meets the grant requirements.
What is a student loan?
A student loan is money borrowed to pay for education that must be repaid, usually with interest.
What is interest?
Interest is the extra money charged for borrowing money.
What does FAFSA stand for?
Free Application for Federal Student Aid
What is a merit-based scholarship?
A merit-based scholarship is awarded because of achievement, such as strong grades, test scores, leadership, etc.
What is the difference between a grant and a loan?
A grant is money that generally does not need to be repaid. A loan is borrowed money that must be repaid, usually with interest.
When do you typically start paying back federal student loans?
Many federal student loans have a grace period of about six months. The exact rules depend on the loan type.
If you borrow $10,000 at an interest rate of 5%, will you pay back more or less than $10,000?
More than $10,000
When should you submit the FAFSA when it opens?
Submit it as soon as possible when it becomes available for your college-planning year. Some financial aid is limited and may be awarded on a first-come, first-served basis.
Name two places where you can search for scholarships
A school counselor or college financial aid office
College and university websites
Scholarship search websites
Local businesses and community organizations
What is the Pell Grant?
The Pell Grant is a federal grant for eligible undergraduate students with financial need. Eligibility is determined through the federal student aid process.
What is loan default?
Loan default occurs when a borrower fails to make loan payments as required. Default can damage credit and may lead to serious consequences.
What is a repayment plan?
A repayment plan is a schedule that explains how much a borrower will pay, how often payments are due, and how long it will take to repay the loan.
Who can receive financial aid?
Almost anyone attending college can apply, including U.S. citizens, eligible noncitizens, and students from a wide range of income levels.
What are some red flags that a scholarship might be a scam?
Asking students to pay money to apply
Guaranteeing that the student will win
Using high-pressure tactics
Asking for unnecessary bank account or credit card information
Claiming that an award is available without an application
Can you lose grant money?
Yes. A student could lose grant eligibility by failing to maintain required academic progress, dropping below a required enrollment level, withdrawing from school, or failing to meet other requirements.
What does it mean to borrow responsibly?
Responsible borrowing means borrowing only what you need, understanding the interest rate and repayment terms before signing, planning how to repay the loan, and considering your expected future income.
What should you do if you cannot afford your monthly student loan payment?
Contact your loan servicer immediately. You may qualify for options such as a different repayment plan, deferment, or forbearance. Do not simply stop making payments.
Name three types of information you may need to complete the FAFSA
Social Security number or other required identification information
Tax and income information
Information about savings and other assets
A list of schools the student is considering
True or False: You can apply for scholarships only during your senior year of high school.
False. Students can apply for scholarships throughout high school and while they are in college
Besides federal grants, where else might grant money come from?
Grant money may come from state governments, colleges and universities, or private organizations.
Name three things you should do before taking out student loans.
Complete the FAFSA
Apply for scholarships and grants
Calculate how much you actually need
Compare federal and private loan terms
Understand the interest rate and repayment rules
Consider expected future income and career plans
Talk with a financial aid office or trusted adult
Look for lower-cost schools or other ways to reduce expenses
What is income-driven repayment?
Income-driven repayment is a repayment approach in which a borrower’s monthly payment is based partly on income and family size.