Types of Financial Aid
Grants and Scholarships
Grants and scholarships are sometimes called gift aid because it's money you do not have to pay back. They can come from the federal or state government, your college/career school, or other organizations like a church, community, or private organization.
Wondering what the difference is between a grant and scholarship? Grants are usually need based while scholarships are usually merit based. |
Loans
Loans are money that you borrow and have an obligation to pay back with interest.
It is likely that you will be offered a loan when you apply for financial aid. It is essential that you understand the different kinds of loans and how it will affect your financial situation upon graduation. Loans can come from the federal government or from private sources like a bank or financial institutions. Federal student loans usually allow for lower interest rates with more flexible repayment plans. In order to receive federal loans, you must be enrolled in at least half time status (usually 6 credits). |
Work Study
Federal Work-Study is a program designed to let you work a part-time job in order to earn money to help offset education expenses. The amount of hours you work varies, but it cannot exceed your total Work-Study award (this number is set and identified in the financial aid award from your school). This is a NEED BASED program, and so it is important that you apply for federal student aid as soon as possible. Doing so will increase your opportunity for more aid.
Work-Study encourages community service and work related to your course of study. Part time or full time students are eligible for the Work-Study program but know that not all schools participate. |
For you visual learners, maybe this will help...
http://studentaid.ed.gov/sites/default/files/types-of-aid.png
Types of Monies
Federal
Federal monies can come in the form of grants of loans.
Some of the federal grants were mentioned in the infographic above: Pell grant, TEACH grant, FSEOG, and the Iraq and Afghanistan Service grant. Remember these are funds that you do not have to pay back (make sure to read the fine print because many have stipulations). Below you will be introduced to several ways to receive federal loans. A federal student loan allows students and their parents to borrow money to help pay for college. They have low interest rates and offer flexible repayment terms, benefits, and options. Remember, federal loans are borrowed funds that you must repay with interest |
Private
Private monies come in the form of loan or scholarships.
A private student loan is a non-federal loan issued by a lender such as a bank or credit union. You may have heard or seen advertisements that suggest you can borrow thousands of dollars to pay college expenses. These advertisements generally are promoting private student loans, also known as alternative loans. The loans usually require a credit check, have higher interest rates, and not as many options for repayment. If possible, I highly recommend not taking out private loans. You should exhaust all other options and methods of financial aid before turning to private loans. Private scholarships may be awarded to a student for academic achievement, religious affiliation, ethnic or racial heritage, community activities, athletic ability, or hobbies and special interests. |
State
Each state administers its own student aid programs, which might include scholarships, loans, fellowships for graduate school, or other types of aid.
To find out what your state offers in terms of financial aid, click here. |
Federal Loans
The U.S. Department of Education has two federal student loan programs:
Parents: Here is a brochure answering many of the questions you may have about the PLUS loan.
- Direct Loan Program: Under this program, the U.S. Department of Education is your lender. This is the largest federal loan program, and there are four types of direct loans.
- Direct Subsidized Loans are loans made to eligible undergraduate students who demonstrate financial need to help cover the costs of higher education at a college or career school. You do NOT accrue interest while in school with this loan.
- Direct Unsubsidized Loans are loans made to eligible students, but in this case, the student does not have to demonstrate financial need to be eligible for the loan. Interest accrues on the loan while the student is in school.
- Direct PLUS Loans are taken out by parents of dependent undergraduate students to help pay for education expenses not covered by other financial aid. The borrower (parent) is responsible for all interest on the loan.
- Direct Consolidation Loans allow you to combine all of your eligible federal student loans into a single loan with a single loan servicer. This usually happens upon graduation from college.
Parents: Here is a brochure answering many of the questions you may have about the PLUS loan.
Subsidized Loans
These are federal government loans offered to students on the basis of financial need. No interest is charged on subsidized loans while a student is in school at least half-time.
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Unsubsidized Loans
These are federal government loans offered to students whether they have financial need or not. Interest is charged on unsubsidized loans, even while in school.
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Subsidized and unsubsidized loan repayments begin 6 months after graduating from college (or when a student stops attending at least half time status).
Look over the chart below. It gives you some additional information about federal loan options.
Here's a summary chart of all the FEDERAL financial aid options available to you.
Federal Student Aid
As you've probably figured out, federal student aid comes from the federal government in the form of grants, loans, and work study. It's money that helps you pay for college expenses including tuition, room and board, supplies, etc.
How do I get federal student aid?
IMPORTANT:
Avoid "FAFSA" scams- these are websites claiming to help you find financial aid for school. Remember the FAFSA is FREE! If you are asked to pay for a FAFSA application, you are on the wrong website.
Want an estimate of the type of aid you might receive before you fill out the FAFSA?
Go to www.fafsa4caster.ed.gov to get a free estimate.
Need help filling out the FAFSA?
College Goal Sunday can help!
This is an event designed to give you FREE, on-site professional assistance in completing the FAFSA. Financial aid professionals are available to talk and answer your questions about financial aid resources and how to apply.
Click here to find out when and where you can attend a MI College Goal event.
How do I get federal student aid?
- You can apply for federal student aid by filling out the Free Application for Federal Student Aid (FAFSA).
- Visit www.fafsa.gov to apply online
- When you submit the FAFSA, you are automatically applying for federal aid, state aid, and many times college aid.
- Apply between January 1 and February 1 to meet most school deadlines and to be considered for the most aid possible (it is a first come first serve basis).
IMPORTANT:
Avoid "FAFSA" scams- these are websites claiming to help you find financial aid for school. Remember the FAFSA is FREE! If you are asked to pay for a FAFSA application, you are on the wrong website.
Want an estimate of the type of aid you might receive before you fill out the FAFSA?
Go to www.fafsa4caster.ed.gov to get a free estimate.
Need help filling out the FAFSA?
College Goal Sunday can help!
This is an event designed to give you FREE, on-site professional assistance in completing the FAFSA. Financial aid professionals are available to talk and answer your questions about financial aid resources and how to apply.
Click here to find out when and where you can attend a MI College Goal event.
Michigan Financial Aid
Each state administers its own student aid programs, which might include
scholarships, loans, or other types of
aid. Michigan no longer provides loans to students, but they do participate in several grant programs.
The following programs are awarded by the State of Michigan:
Michigan Competitive Scholarship (MCS)
MCS is based on both financial need and merit. MCS funds may be used at Michigan public and independent, nonprofit, degree-granting postsecondary institutions. To be considered, a student must take the ACT prior to entering college and achieve a qualifying score (23 composite or 90 scaled).
Michigan tuition Grant (MTG)
MTG is based on financial need for use at private, nonprofit, degree- granting colleges and universities in Michigan.
Police Officer’s and Fire Fighter’s Survivor Tuition Act (STG)
STG provides for the waiver of tuition at public community colleges and state universities for the surviving spouse and children of Michigan police officers and fire fighters killed in the line of duty.
Tuition Incentive Program (TIP)
TIP encourages eligible students to complete high school by providing tuition assistance for the first two years of college and beyond. To be eligible, a student must have received Medicaid coverage for 24 months within a 36-month period between the ages of 9 and high school graduation.
Children of veterans tuition Grant (CVTG)
CVTG is designed to provide undergraduate tuition assistance to certain children older than 16 and less than 26 years of age who are the natural or adopted child of a Michigan veteran. The veteran must have died or become totally and permanently disabled as a result of military service. You must take your letter of eligibility to the college financial aid office.
GEAR UP Michigan Scholarship/GEAR UP College Day Scholarship
GEAR UP recipients must have successfully completed the GEAR UP Scholarship six-year program and be nominated. They must also possess a high school diploma, be less than 22 years old, be a resident of Michigan, and must use the scholarship within five years of high school graduation.
Dual enrollment
The Dual Enrollment option allows students to begin taking dual enrollment classes in the 9th grade and continue to take up to ten dual enrollment courses in grades 9-12. Students earn college credit while in high school, at no cost to the student.
NOTE: Many of these programs use the FAFSA for determination of eligibility. However, other programs require additional forms to be filled out. If you are eligible for any of these programs, click here to find out what additional forms you may need to fill out.
Just for parents: Section 529 Plans
Hey, Parents! Do you have younger children and want to learn how to start saving now for their college tuition? Michigan offers a prepaid tuition and a college savings plan known as Section 529 plans.. Check out www.collegesavings.org for more information.
The typical prepaid tuition program allows families to purchase future tuition by paying a predetermined monthly amount into the program. The savings cover full tuition at a public state school or a specified amount toward tuition at a private or out-of-state school. Check out the Michigan Education Trust website for more information.
The Michigan Education Savings Plan is essentially an investment account created to save for a specific child’s college expenses. Click here for more information.
The following programs are awarded by the State of Michigan:
Michigan Competitive Scholarship (MCS)
MCS is based on both financial need and merit. MCS funds may be used at Michigan public and independent, nonprofit, degree-granting postsecondary institutions. To be considered, a student must take the ACT prior to entering college and achieve a qualifying score (23 composite or 90 scaled).
Michigan tuition Grant (MTG)
MTG is based on financial need for use at private, nonprofit, degree- granting colleges and universities in Michigan.
Police Officer’s and Fire Fighter’s Survivor Tuition Act (STG)
STG provides for the waiver of tuition at public community colleges and state universities for the surviving spouse and children of Michigan police officers and fire fighters killed in the line of duty.
Tuition Incentive Program (TIP)
TIP encourages eligible students to complete high school by providing tuition assistance for the first two years of college and beyond. To be eligible, a student must have received Medicaid coverage for 24 months within a 36-month period between the ages of 9 and high school graduation.
Children of veterans tuition Grant (CVTG)
CVTG is designed to provide undergraduate tuition assistance to certain children older than 16 and less than 26 years of age who are the natural or adopted child of a Michigan veteran. The veteran must have died or become totally and permanently disabled as a result of military service. You must take your letter of eligibility to the college financial aid office.
GEAR UP Michigan Scholarship/GEAR UP College Day Scholarship
GEAR UP recipients must have successfully completed the GEAR UP Scholarship six-year program and be nominated. They must also possess a high school diploma, be less than 22 years old, be a resident of Michigan, and must use the scholarship within five years of high school graduation.
Dual enrollment
The Dual Enrollment option allows students to begin taking dual enrollment classes in the 9th grade and continue to take up to ten dual enrollment courses in grades 9-12. Students earn college credit while in high school, at no cost to the student.
NOTE: Many of these programs use the FAFSA for determination of eligibility. However, other programs require additional forms to be filled out. If you are eligible for any of these programs, click here to find out what additional forms you may need to fill out.
Just for parents: Section 529 Plans
Hey, Parents! Do you have younger children and want to learn how to start saving now for their college tuition? Michigan offers a prepaid tuition and a college savings plan known as Section 529 plans.. Check out www.collegesavings.org for more information.
The typical prepaid tuition program allows families to purchase future tuition by paying a predetermined monthly amount into the program. The savings cover full tuition at a public state school or a specified amount toward tuition at a private or out-of-state school. Check out the Michigan Education Trust website for more information.
The Michigan Education Savings Plan is essentially an investment account created to save for a specific child’s college expenses. Click here for more information.
Use this Financial Aid Checklist to stay organized and ensure you've completed all necessary to steps.
Use this worksheet to compare financial award letters. It will help you see how much money you're really getting and what money you'll have to come up with.
Use this worksheet to compare financial award letters. It will help you see how much money you're really getting and what money you'll have to come up with.
Scholarship Sources
Try These Free Sources of Information
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Additional Resources
StudentAid.gov
Planning for college, paying for college, and repaying student loans College Preparation Checklist A student’s or parent’s first stop for information on academic and financial preparation FAFSA Fill out a FAFSA, make corrections, and find school codes FAFSA4caster Early estimate of aid eligibility College Affordability and Transparency Center Resources to help you compare college costs and find the college that best meets your financial needs. Federal Student Aid’s Twitter feed Federal Student Aid’s YouTube site Federal Student Aid’s Facebook page National Student Loan Data System Access your federal loan records using your pin Youth In Transition Foster Care Youth Education and Training Voucher Foster Care Youth Michigan Indian Tuition Waiver Bureau of Indian Education Education Tax Credits |
Sources: www.studentaid.ed.gov; "Do You Need Money For College?" Article: www.studentaid.gov; Affording College in Michigan Guidebook