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Loans Fill Gaps left by Grants and Scholarships

dollars-and-educationHigher education is an expensive proposition, even for students receiving grants and scholarships to help pay for school. The costs aren’t limited to tuition either. Books, housing, meals and other college costs add-up too, leaving some students with financial gaps to fill.

Grants and scholarships are great resources, because the money you receive from these programs does not require repayment. While grants often target low income students, or those at a disadvantage for other reasons, scholarships reward high achievement in a variety of areas. Scholastic excellence, for example, qualifies for special college financial aid, as well as outstanding athletic performance.

Planning for school includes a healthy look at your financing options, because financial aid influences where you’ll go to school and even the major course of study you select. Parents and students setting the stage for higher education rely on three main sources of financial aid for school: Grants, Loans and Scholarships.

Scholarships and Grants for College

Scholarships are rewarded by diverse philanthropic organizations and others dedicated to promoting higher education. Opportunities are widespread for students exhibiting high standards during high school and scoring well on placement tests.

Conditions for qualifying are different for each scholarship, since the agencies issuing them have their own organizational goals. Minority advocacy organizations, for example, offer college assistance to particular ethnic groups, to increase their representation in college. The key to landing as many scholarships as possible is to put your best foot forward using good grades, strong extracurricular participation, high levels community involvement and other skills making you stand out. Combination scholarships are common, rewarding successful applicants for multiple traits at once, like scholar-athletes who do well on and off the field.

Like Scholarships, grants do not require repayment, furnishing valuable financial aid options for the neediest of applicants. Grants are often tied to personal and parental income, as well as location and even academic majors. The most prolific examples are those sponsored by the Federal Government, subsidizing countless educational efforts since Pell Grants and others were established.

Grants are issued on a sliding scale of need, with the highest rewards reserved for the students showing the greatest financial hardship. Even students who don’t receive the maximum annual grants, still benefit from whatever amounts are extended. When scholarships and grants, combined with personal savings, don’t quite cover college costs, students turn to loans to bridge the affordability gap.

Loans for Higher Education

The college lending landscape is dominated by two primary resources: Government backed student loans, and private loans issued by banks, credit unions and other lenders. Government loans are the most competitive in terms of interest rates, and carry the most liberal repayment policies. In addition to flexible terms, loans issued through the William D. Ford Federal Direct Loan Program do not require the same extensive credit checks as those furnished by private lenders.

The first step toward landing college loans is to apply to the Department of Education, using the standardized Free Application for Federal Student Aid (FAFSA). The information you submit on your FAFSA, including income, family size, and other data, is used to compile a financial aid profile, establishing how much you can afford to pay for college.

Using your Expected Family Contribution (EFC), financial aid administrators determine how much to offer in the form of Direct Student Loans. Repayment requirements depend on when you borrow, and how much, as well as your graduation date and work situation following school. While payments are expected soon after you leave college, some hardship cases qualify for deferments and extensions.

In the end, most students use blended resources to pay for higher education; tapping free-money grants and scholarships when possible, and filling gaps with low-interest student loans.


Author Bio:

This is a guest post by Sarah Brooks from She is a Houston based freelance writer and blogger. Questions and comments can be sent to brooks.sarah23 @

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