Different Types of Student Aid

By on March 4, 2013

If you are a prospective college student with educational ambitions but no financial means, with parents unable to provide the fiscal support you need either, then a loan may well be the answer to your problems.  Student Loan Programs are provided for this very reason, by institutions like banks and credit unions, and student loans are the reason many undergraduates were able to return to school.

In the traditional form of this program, an individual will need a cosigner to receive the loan, this essentially being a person who will claim financial responsibility for the repayment of the loan should you default.  Unfortunately, without a cosigner you will not be eligible for this type of loan, but there is another option, aptly named No Cosigner Student Loans.

In this nontraditional version of the program, there are 3 types, namely

  • Federal Student Aid
  • Private Student Aid
  • Gift Aid.

Federal Student Aid is offered by governmental organizations that provide the students with the loans that enable their pursuit of a tertiary level education.  These are the cheapest of the loans available without a cosigner, and are not dependent on a good credit rating.  The application process consists of filling out a FAFSA form, otherwise known as the Free Application for Federal Student Aid, and your eligibility for it will be based on the information you provide here.  Federal Stafford Subsidized Loans; Federal Perkins Loans; and Pell Grants are examples of loans in this category.

Private Student Aid consists of loans taken by individuals from private lenders, and these loans have higher interest rates attached to them.  Your credit history is also taken into account for this loan, since the provider companies do not receive support from the government, but it is a possibility for those who find themselves unable to receive federal aid.

Gift Aid refers to educational assistance received in the form of rewards like scholarships, bursaries and grants which are bestowed on students according to academic merit, and are undeniably the best option for financial aid, since they do not require repayment.

This is an overview of the various options available to prospective students in need of assistance, and of course the benefits and financial consequences of each vary widely.  Armed with this information, however, and supplementing it with the results of your own personal research, will help you in your quest to accrue data that will enable you to make the best decision for you, best suited to your needs and repayment abilities.

This article was provided by http://www.smarterfinancetoday.com as a guest post to help spread the word about the importance of proper personal financial management!

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