Understanding What's Available

If you are in need of financial aid to help pay for college, you are not alone. It has been estimated that two-thirds of college students graduate with some kind of financial aid debt. Ideally, students will want to get a scholarship--money for college that does not need to be paid back--but these are not as readily available as other loan programs. As such, you will likely have to pay off an interest-bearing loan.

That being said, you should still look into available scholarship programs. Scholarships are "free money". Don't think that because you're not a top-flight athlete or in the top of your class that you're not eligible for scholarships and fellowships. There are a wide variety of scholarships available: for minority students, types of study, gender, even for left-handed students. A scholarship search engine will help you narrow down your choices.

Scholarships are highly competitive so you should apply early. If you aren't able to secure a scholarship, you will have to look into other financial aid opportunities. Even if you are able to get a scholarship, it might not pay off the entire tuition. You may need to apply for a supplemental financial aid package.

Financial Aid Loans

Loans are by far the most common financial aid opportunity. Like credit card offers, there are student loan offers with a varying list of interest rates. Some student loan programs set a low interest rate in order to attract student borrowers. Being that students are a higher-risk group, interest rates can be quite high. However, the federal government has set a maximum interest rate and fee that can be charged to students, so any student loan will have a reasonable rate.

Student loans come in the form of Stafford and Perkins loans. Unfortunately, these loans only cover a limited amount of a college education. Tuitions are on the rise and these types of federal loans will only cover a few thousand dollars of tuition. As a result, students and parents apply for private student loans. These loans are much larger than government loans in addition to having more flexible payments schedules.

For example, it is possible to defer payment of the loan until after the student graduates. This can be helpful for students who don't want to be saddled with debt payments during their time in school. However, they will have significantly higher payments once they graduate. Generally, private student loans have lower payments than credit cards, so they are a popular way to pay for college.

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