Funding Sources for College Students

By Chase Pattison on October 1, 2011

Harrison Kratz is the community manager for the University of North Carolina’s online MBA degree program, MBA@UNC. Learn more about how MBA@UNC is one of the top online MBA programs available. Harrison is also the founder of the global social good campaign, Tweet Drive.

Grants
Let’s start with grants because they do not have to be repaid. Each type of grant requires a financial aid form to be completed, along with some supporting documentation. There is a deadline for the submission of the application, and financial information from parents is necessary to complete this form.

Photo by dbking on flickr.com

A federal Pell Grant is available to undergraduate students up to a maximum of $5,550. The amount awarded depends upon your financial need, the cost to attend your school, whether you are full-time or part-time and whether you will attend school for a full academic year or less. Colleges administer the funds awarded through a Pell Grant, either through cash disbursement to you or application of some or all of the funds towards your costs to attend school.

Some grants are also contingent on your studies. For example, if you are in college to become a teacher in a public or private elementary or secondary school with a low-income student population, you should inquire about eligibility for a Teacher Education Assistance for College and Higher Education Grant of up to $4,000/year. Be sure to enquire with your financial aid office of similar grant prospects.

For those whose parent or guardian was a member of the U.S. Armed Forces and died as a result of service performed in Iraq or Afghanistan after September 11, 2011, you are eligible for the maximum amount of the Pell Grant and you may also be eligible for an Iraq and Afghanistan Service Grant. Additional eligibility qualifications may apply – as with any federal government grant – but you should make an inquiry. The Department of Defense maintains information for financial aid resources to military dependents on its website.

Keep in mind that in addition to federal grants, your college itself may also offer grants. Get in touch in person with the financial aid office to discuss your options as early as possible.

Student Loans
Next on your checklist of compiling financial resources for college would be student loans. The amounts students can borrow are typically determined by the school, and these loans traditionally have 10-year terms.

Low-interest loans called Stafford Loans are available for eligible students enrolled at a four-year college, university, community college or trade / career / technical school.  A “Direct Subsidized Stafford Loan” is for students who demonstrate financial need.  This type of loan does not require you to start payments as long as you are in school at least half-time and deferments may be available. A “Direct Unsubsidized Stafford Loan” is available to all other students. This type of loan requires interest payments during college or the interest will be capitalized, meaning it will increase the base amount owed.

Additional types of federal student loans are the Direct PLUS Loans, available to parents, and the Direct Consolidation Loan. PLUS loans are determined by a parent’s income, resources and credit history, like any other loan. The Direct Consolidation Loan allows a borrower to combine multiple federal student loans into one loan for lower monthly payments.

Loan Forgiveness
As soon as you think about applying for federal student loans, consider federal student loan forgiveness.  “Loan forgiveness” simply means that the loan you enter into is pardoned – in exchange for your time and use of the expertise you acquire in college. The earlier you consider loan forgiveness, the earlier you can select a course of study that will prepare you for the field of work hat will increase the probability of qualifying for loan forgiveness upon graduation.

Peace Corps and AmeriCorps are two federal programs that take eager, recent college graduates and place them in low income situations where they can make a difference, earn an income, build a resume and potentially have their loans forgiven. Peace Corps offers international placements, while AmeriCorps offers domestic placements.

Additionally, professions such as law, medicine and teaching have loan forgiveness programs upon completion of graduate school and licensing. This is one more thing to consider early to figure out your post-graduation financial strategy.

State-Specific Financial Aid
Still need more money to pay for school? Each one of the 50 states offers some form of state financial aid. That, unfortunately, also means that each state can set its own eligibility requirements and award amounts. In the current economy, state governments are persistently debating cuts in student funding, so it is important not to place too much reliance upon a state student loan. Remember also that you may qualify for a state loan from the state in which your parents reside and / or you may qualify for a state loan in the state where you will be attending college.

Private Loans
Generally, the loans of last resort are the loans from private banks because they are permitted to charge a higher interest rate, may require a parent or legal guardian to guarantee or co-sign the loan, and may impose a higher monthly loan payment.

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