If you’re applying for college for the first time, you probably have tons of questions. And that’s even before you start thinking about financial aid …
But you have to figure out financial aid eventually, right? If you’ve reached that point on your college to-do list, we’re here for you.
By the time you’re done reading this article, you’ll be so well-informed that you’ll be answering your friends’ questions about their financial aid plans.
Or, at the very least, you should feel a whole lot better about yours …
Let’s dig in.
What is a grant?
The definition of grant, according to our friends over at Merriam Webster, is to “bestow or transfer formally.”
So what does that mean in terms of your college plans?
It means that if you get a grant, someone is bestowing money upon you. It’s like a gift of money that you don’t have to pay back.
Grants may be given out by the federal government, state governments, colleges and universities, or any private organization that has money to give away to college students.
Most grants are need-based, meaning that you will usually have to provide financial information about yourself and your parents or guardians in order to qualify.
There’s good news and bad news about that.
The good news is that you have (nearly) one-stop shopping in applying for grants. When you apply for FAFSA, or the Free Application for Federal Student Aid, you’re automatically considered for federal grants, such as the Pell Grant, as well as some state and school grants.
The bad news is that FAFSA can be a bear to fill out. (Luckily, we created a cheat sheet for you in the form a handy, free online guide.)
However, FAFSA is worth your time, no matter how long it takes to fill out. In addition to grants, FAFSA also qualifies you for certain scholarships and federal subsidized and unsubsidized loans.
So if you skip the FAFSA, you may be leaving money on the table. Why would you want to do that?
What is a scholarship?
Like grants, scholarships are another form of free money. In fact, sometimes it can be hard to discern the difference between a grant and a scholarship other than the name.
However, in a general sense, scholarships are more likely to be based on factors other than financial need.
The biggest difference between grants and scholarships is where they come from. While grants may come from government entities, scholarships rarely do. Rather, scholarships may be offered by schools, individuals, businesses, families, community organizations, or any number of other parties.
Scholarships usually reflect the core values or interests of the donor. That’s why some scholarships are extremely specialized.
For example, scholarships may be based on academic merit, participation or excellence in certain sports, geographic location, ethnicity, field of study, extra-curricular activities, interests, lifestyle choices … you name it.
Where can you find scholarships? Filling out the FAFSA may automatically qualify you for some scholarships that are offered by the school you plan to attend.
It’s also a good idea to pop into your high school guidance office a few times a month to check on local scholarships.
You can also search online through any number of online portals. We like Big Future by College Board, where you can search from over 2,300 sources of college funding, as well as Peterson’s Scholarship Search, where you can search for potential scholarships based on your answers to a few basic questions.
What are loans?
Student loans are just what they sound like. Someone lends you money to pay for college and then you agree to pay it back over a period of several years.
However, it’s important to know that not all loans are created equal. Not by a long shot.
Here again, FAFSA plays an important role. When you apply for FAFSA, you’ll learn if you qualify for federal student loans. These are the rock stars of the student loan world for one simple reason: lower interest rates.
So after you’ve collected all the free money you can get in the form of grants and scholarships, federal loans are the next piece of your student loan puzzle.
But, much like our favorite rock stars at the end of a concert, federal loans often leave you wanting more. That is, they may not be enough to cover your entire college education.
If that’s the case, you might want to look into private student loans. How do you pick one of those? In a nutshell, you want to find a reputable lender that can offer you a great interest rate, with easy repayment terms. That should be easy enough to sort out, right?
We’re kidding. Finding the right lender for your student loan can be a challenge, especially if you’re new to the process.
Again, we’re here to help. We’ve done exhaustive research on student loan providers to come up with the best deals we can find from lenders that we trust.
Check out our picks for the best lenders for private student loans.
Now that you know a little more about how college funding works, don’t you feel better about your future? You should. And remember, we’re always here to answer all of your college funding questions.