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What Are the Types of Student Loan Programs & Their Differences?

What Are the Types of Student Loan Programs & Their Differences?

Three Primary Sources of Financial Aid for Students

  • Loans: Must be repaid (usually in monthly installments over the course of 10-20 years) beginning when the student graduates or when the grace period ends (typically 6 months after graduation).
  • Grants: Gift money that does not need to be repaid. Grants are often provided by non-profit organizations and are usually tax-exempt. Students usually must give or submit a report regarding the project for which the grant money was issued.
  • Scholarships: Awarded based on financial need or on merit, scholarships are also monetary awards that do not need to be repaid. Non-profit and for-profit institutions can provide them. Usually the student must maintain a certain level of academic performance to receive or continue receiving the scholarship money. Scholarships are not usually tax-exempt.

A fourth type of aid comes in the form of work-study, part of campus-based financial aid. If a student has work-study, the student works part-time on campus to help fund college expenses.

Primary Avenues Students Should Explore When Applying for Financial Aid

  • Federal aid: The FAFSA form must be filled out annually for the student to be eligible for subsidized and unsubsidized Stafford Loans; PLUS loans; as well as need-based federal grants: Pell, Academic Competitiveness, TEACH, and SMART.
  • State government grants and loans.
  • Campus-based financial aid: Scholarships, Federal Work-Study, and grants including the Federal Perkins Loan and the Federal Supplemental Educational Opportunity Grant (FSEOG). Most states and schools use the FAFSA to determine eligibility for other non-federal aid.
  • Scholarships: Campus-based scholarships (often found on the college/university’s website), local scholarships, national scholarships.
  • Private agencies: This can include a number of companies, foundations, and employers (either the parents’ or the student’s employer)


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