Think about your last big purchase. Was it a new videogame? Maybe an iPod? Fresh pair of kicks? What factored into your purchasing decision? "Do I really need this item? Does it cost too much money? Could I get a better deal elsewhere?" You eventually pulled the trigger, stepped up to the register and forked over your hard-earned cash after you did the work.
Take that process, reverse it and multiply the degree of difficulty a few times. That will give you a general idea of what it's like to secure financial aid. In a sense, financial aid falls into the category of price discrimination, in that consumers pay different prices for the same service. The seller [or provider of the grant or loan] asks you [the consumer] questions regarding your financial status and ability to pay. If you qualify, the provider determines the amount of your award or loan.
Take the following numbers, provided by the College Board, into account as you plan your life after high school:
$7,020 Average yearly tuition at a four-year public university in 2009-2010
$800,000 Amount of additional income that college graduates can expect to earn over their lifetime, compared to those who graduate only from high school
$168 billion [yep, billion] Student financial aid available annually through scholarships, grants and loans
The following information can guide you through the process and help you get a small share of those billions, enabling you to earn thousands more than if you went straight into the workforce after high school.
Types of Financial Aid
The primary types are scholarships and grants, both of which are essentially free money (i.e., they do not need to be repaid). For that reason, you should go after them first, before you consider loans. Most scholarships and grants must be renewed each year.
Scholarships are distributed on the basis of eligibility criteria established by the scholarships' administrators. Common criteria include financial need, academic excellence, civic service and athletic ability.
Most Division I and II schools [the Ivy League is a notable exception], and some NAIA and NJCAA institutions, offer athletic scholarships in the following sports: baseball, basketball, cross country, crew, golf, hockey [ice and field], lacrosse, soccer, softball, swimming, track, volleyball and wrestling. Some colleges offer athletic scholarships in other sports, as well. Your scholarship can be cancelled if you:
Voluntarily withdraw from your team
Falsify information on a financial aid form
Engage in misconduct that results in disciplinary action by the school
Also, most sports, with the exception of football and basketball, are equivalency sports, meaning programs have a set number of scholarships that can be divided among multiple players, any which way. Most athletes in equivalency sports receive partial scholarships.
Grants are disbursed on the basis of a student's financial need, or to support a specific project, which is usually researchedbased. The process of applying for grants begins with completing the Free Application for Federal Student Aid [FAFSA].
Pell Grants are awarded by the U.S. Department of Education on the basis of financial need. The maximum amount available to a student during the 2009-2010 school year is $5,350. The actual amount a student receives will depend on his or her financial situation and the amount of support the Department of Education estimates can be provided by the student's parents.
Loans are monies borrowed from a college or university, a bank or other institution, which must be repaid with interest. Again: "with interest." Usually, though, interest does not begin to accrue until after you graduate.
Perkins Loans are federally backed, low-interest loans available to undergrads with demonstrated financial need. Many schools distribute Perkins funds on a first come, first served basis and may not have enough funding to cover all eligible students; so it's wise to apply early in the year.
Work study programs, administered by colleges and universities, offer studentathletes employment, usually on a part-time basis during the academic year, with compensation at rates no lower than the federal minimum wage. In addition to providing much needed funds, work study programs provide valuable work experience.
Depending on your financial situation, you can look into military enlistment, employer support and various tax credits.
Photo Credit: Getty Images // Thinkstock