Counseling » Financial Aid

Financial Aid

Loans, Grants, and Scholarships  ​
​What's the difference?

Remember when you were a kid and asked your brother for some cash to buy a few new baseball cards? Sure, he gave it to you but he did so expecting you would pay him back. That’s a loan in its simplest form and when it comes time to start writing those checks to your child’s college or university, you’ll need more than those few bucks to cover the cost. The school, banks and even the government can step into that role formerly held by your sibling – its pockets are much deeper – to provide the funds you need but just like your baseball card loan, you will have to pay it back eventually…this time with interest.

The most common type of loan is the Federal Perkins Loan, which is sent to your child’s school on behalf of your student in the amount of $5,500 for each year of undergraduate study. (Important: You cannot borrow more than $27,500 as an undergrad.) At 5 percent, this federally-funded loan is relatively low interest and you have up to 10 years to repay it. Payment begins nine months after your child 1. graduates, 2. leaves school, or 3. drops below half time enrollment (this grace period may be extended if your child is on active military duty).

If the Perkins Loan does not cover everything your child will need, you can apply for loans from private institutions, such as banks. Chase’s Select Private Student Loan is one option, which features in-school deferment repayment like the Perkins Loan. The amount can range from $500 and up to the cost of attendance. Sallie Mae offers the Smart Option Student Loan, which is designed to save money and help your child graduate with less loan debt, thanks to two repayment options; Fixed Repayment Option with in-school fixed payments of just $25 or the Interest Repayment Option that could save the lendee more than $8,000 compared to a traditional 15-year payment-deferred private student loan.

These are of course just a few of the myriad loan programs out there. Think back to your brother and the cash loan for baseball cards. There would have been consequences if you didn’t pay him back; if you don’t pay back federal and private loans, those consequences are amplified by about 23786587236 so be sure you’re comfortable with all terms and conditions of a loan before signing on the dotted line.

Like loans, grants can come from both federal funds and private institutions. Unlike loans, you do not have to repay grants. The most common Grants are Pell Grants. The amount your child receives is based on the level of unmet need and can only be determined after you have completed the FAFSA. The Pell Grant is offered exclusively to undergraduate students who have not earned a bachelor’s or professional degree. The maximum award can vary from year to year depending on program funding. (The maximum Pell Grant for the 2019-2020 award year is $6,095). Another option is the Federal Supplemental Educational Opportunity Grant (FSEOG), which is awarded to undergraduates with the greatest amount of unmet financial need who also qualify for the Pell. The amount awarded ranges from $100 and $4,000 depending on the college and the Expected Family Contribution (EFC).

On the private side, grants are available for just about any student in any situation. There are merit-based grants, need-based grants and student-specific grants, the latter of which includes grants specifically for women, minorities and students with disabilities. Since they do not require repayment, grants are attractive to a wide variety of students and the competition will be fierce. Your child should contact large corporations as well as smaller organizations at the national, state and city levels and tell them exactly why they and they alone deserve the award. Check with your employer as well because many companies offer financial assistance to their employees’ children. Our advice: Apply early, apply often and apply to as many as possible to increase your odds of winning at least one.

Scholarships do not require repayment and are awarded on a wide variety of criteria. Clicking this link, scholarship search, enter the required information, grade point average, test scores, special skills and interests. The search tool will generate a list of scholarships your child can realistically be awarded. Some are easy while others require more time and effort but all should be considered.

Observe requirements and deadlines. Your child may be an ideal candidate but if their application arrives missing key elements or arrives late, it may not be considered. Someone who turned in their package complete and on-time may receive the award instead. Don’t discount the importance of neatness. If the scholarship committee can’t read the student's writing or doesn’t appreciate the stains on the paperwork, their odds of success are significantly lowered.

When a student is awarded a scholarship, encourage them to send the committee a handwritten note expressing their gratitude. If the award is renewable, have the student write a letter detailing how the scholarship has impacted their educational experience. The letter should be sent when re-applying for the award.