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College Financial Aid FAQ

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College financial aid can make it possible for you to go to the school of your dreams, or even for you to attend college at all. Most young students who go to college right out of high school don't have the funds to pay for their education themselves. While some parents try to help as much as they can, sending a child to school is simply too costly for many parents to fit into their budget. College financial aid steps in to pay the bills, and students can borrow money or get other types of financial aid to help them pay their way through college. However, before taking college financial aid, it is essential to understand what exactly is involved. Read on for answers to some college financial aid FAQ to find out many of the details you need to know.

College Financial Aid FAQ

  • What are the different types of financial aid available?

There are four major types of financial aid: student loans, scholarships, grants and work study. Student loans are often the least attractive form of financial aid because they have to be paid back, but they are also the most readily available. Some loans, especially those offered at a low interest or with favorable terms, can be considered good debt because they help you pay for college. Scholarships and grants are money you do not have to pay back. They can be need based, merit based, or based on other things such as your geographic location or demographics. Work study involves doing work in specified on campus jobs in order to put that money towards your education. The salary you make at a work study job is normally subsidized.

  • Will my parents income affect my financial aid?

When you are going to get an undergraduate degree, your parents income is taken into account for most government loans and other types of student loans. There are some exceptions, such as if you can prove that you are emancipated and living independently from your parents, but for the most part, their income can affect your financial aid even if they aren't helping you to pay the bills.

  • What is the difference between government loans and private loans?

Government loans are either issued by government lenders, such as the Department of Education, or are issued by approved lenders with a quasi-governmental role. The loans typically have a lower interest rate because they are guaranteed by the government, which means the government will pay them if you default or pass away before paying the bills. Private loans have no government affiliation and different qualification requirements. The interest rates may be higher.

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