Financial Aid Explained

 As the college admission cycle comes to an end, many high school seniors are eagerly waiting for their decision letters. Some are lucky and have already received acceptance letters from their dream schools as decision letters are slowly rolling out this month, but there are still questions when it comes to the financial aid offers. To help you understand your financial aid offers from colleges, we’re going to review the types of offers you will receive: loans, grants, and scholarships.

Loans
 College debt is known worldwide since students in many countries take out loans to go to college in America. There are many types of loans, but the ones most people consider are private loans and federal loans.

 Private loans are mostly avoided since they have the highest interest rates if they are from banks. Currently, the average interest rate for personal loans is 9.41%, but depending on the bank and your credit score, you can get better interest rates. If you decide to take out a personal loan, then you should ask a few different banks what they can offer in terms of interest rates and payment plans.

 Federal loans are commonly taken out since they have lower interest rates. Keep in mind that not all of the money borrowed has the same interest rate and loans are only given to you based on financial need you demonstrate on your Free Application for Federal Student Aid (FAFSA). The federal loans come in three forms: unsubsidized student, subsidized student, and parent plus. As a student you are legally only allowed to borrow a certain amount of money every year from the government, and as you get older you can borrow more. Subsidized student loans do not accrue interest while you are in school while unsubsidized loans start to accrue interest once you get it at the beginning of the school year. Both of these loans have an interest rate of 3.25% per year. Parent plus loans are meant for your parents to take out, with an interest rate of 6.25% per year. All of these loans may be offered to you in your financial aid offer, but you do not have to take them. Since all of these loans are already approved for you, you can always take them later on in the school year. Please ask your school’s financial aid office for the process on how to take out federal loans later on in the year.

Grants
 Grants are money given to you by the school, government, or a corporation based on financial need. Grant Money does not need to be returned like a loan. Many schools and almost all government grants are based on what you report for FAFSA and/or CSS Profile. Some of the most common grants are the Pell Grant, and Cal grant, both from the government and based on FAFSA. There are also private grants you can apply for, but they are not as common as scholarships. Many schools have a career center that also recommends scholarships, grants, and internship opportunities, which is a great resource to use later on in the year to help find grant opportunities.

Scholarships
 Currently, it is scholarship season, when many smaller local scholarships open their applications. Scholarships are given to you by merit based, and many applications require an essay, letter of recommendation, report your transcript, or all of the above. Scholarships are very common and they can have very specific requirements from your race to what company your parents work for. There is almost a scholarship for everything so always keep looking! Most recommend shooting for local scholarships since you have a greater chance of being selected.

 If you win a scholarship, some are sent directly to you, and some are sent directly to you through checks. You may get taxed for scholarships that are sent directly to you, depending on the total amount you won. If your school receives scholarships that cover more than your cost of attendance, the school will write a check for you to give you the difference for you to spend or keep.

 Regardless of how much money you get for college, you should be very proud of yourself for applying and getting into college! To help you on your journey through college, OperationSTART has found many local scholarships in San Francisco and is continuously adding more for you!