College is expensive and there is no secret about that. In fact, some students put off college simply because they are not ready to jump into a pool of debt. If you do not know what degree you are going after, you can end up spending a lot of money on college and if you take out student loans, you could end up taking out more than you intended to.
It is important for all students to understand the difference between student loans and scholarships as one option requires you to pay back the money and the other does not. Below, we will explore both of these options in depth to help provide you with the information you need to make a decision about funding your education.
Student Loans and What to Know
The FAFSA allows you to apply for financial aid and once the application is complete, you may find that you are offered federal student loans to help you pay for your education. If a loan is provided to you, should you accept it, you are responsible for paying it back along with any interest that accrues on it.
Before you take out any type of student loan, you need to know the terms and conditions of said loan, otherwise, you may find yourself clawing your way out of more debt than you intended.
When it comes to your student loans, you will not be offered them unless you fill out the FAFSA. This is a free application that is completed each year. The FAFSA can be completed both online or through a traditional paper application.
Disbursements from your student loans are done according to the school, but you can expect the money to pay for your college education expenses. The remainder of the money, if any, is often disbursed to you four weeks after classes are in session. Of course, this can vary based on your school, so you should speak with the financial aid office to learn more about specific dates.
Lastly, student loans do require you to pay interest on the money. The interest rates change every year according to the federal government. While student loan interest rates aren’t all that bad to begin with, they are still daunting to a young college student.
At the end of it all, some students end up paying close to double the amount of money that they initially borrowed. On top of this, any loan repayment malpractice directly affects your credit score negatively which can definitely have a big impact on your financial well-being. This is why student loans are not as beneficial as scholarships.
Scholarships and What to Know
Scholarships are much different than student loans, and they are a better option overall. One of the good things about scholarships is that they do not have to be paid back, so you are not locked into any type of repayment period the moment you graduate from college.
Another reason students love scholarships is because you do not have to limit yourself to just one or two. Student loans are capped at a certain amount for the year, but scholarships are not. In fact, your earning potential is unlimited, and some students have received enough scholarship money to support them through their education at a top university. There are no limits on how many scholarships you can apply to and if you win 13 scholarships for $2,000 each, then you will have $26,000 toward your education. The earlier you start to apply for scholarships, the better. In fact, you can start submitting scholarships as early as freshman year in high school.
Scholarships come in all sizes and the lesser-known ones are the best because there is less competition, which means that you have a better chance of winning. For example, are you an Eagle Scout? Do you have Asthma? There are scholarships for each and every one of your characteristics. One of the best pieces of advice you can receive about scholarship applications is you should take your time and make sure that your application and essay stand out above the rest. Always avoid cliché essays and try not to submit a generic application.
Final Thoughts on Scholarships
You can save a lot of money if you put some time and patience into scholarships. Scholarships are a good way to fund your education because it is gift money, so you do not have to pay it back. Many students have been able to pay all of their tuition with scholarships and you can too.