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This will all be spelled out in your award letter but the kind of financial aid usually offered is scholarships, grants, work-study programs, loans and grants in aid. Of these five options, the best are grants and scholarships because they are basically free money. Your child would not have to do anything to earn the money nor would he or she have to pay it back.
Read the award letter carefully
It's important that you read very carefully the award letters you receive. It might seem at first blush that it’s time co celebrate because of all of the financial aid your child will be receiving. However, a careful reading might reveal that a majority of that aid is in the form of a loan. We understand that your child may have to take out loans in order to finance his or her education but, of course, it's much better if you can avoid this. Students today are graduating with an average of nearly $30,000 in student loan debts, which can haunt them for years.
Avoiding student loan debt
Of course, the best thing for your child would be to avoid student loan debt. Unfortunately, given the cost of some colleges, this is much easier said than done. One way to do this is to have a heart-to-heart talk with your child regarding schools that he or she would like to attend versus those that you could finance without having to go into debt. It used to be that attending an elite Ivy League school was worth the investment because it all but assured a very lucrative career. However, this is no longer as true as it was just a few years ago. For that matter, many parents today are sending their children first to two-year community colleges where they can get the basic courses out of the way before going on to more prestigious schools for their junior and senior years.
The two types of federal student loans
If there is just no way your child can get a college education without borrowing the money, you should know about the types of loans available. The ones your child could get would be a Federal Direct Loan or a Perkins loan. The major difference between the two is that the Federal Direct Loan comes from the US government, while a Perkins loan comes from your child's college or university. Federal Direct Loans can be either subsidized or unsubsidized. The difference between the two is that subsidized loans are based on need – meaning that you and your child must be able to demonstrate a financial need. On the other hand, unsubsidized loans don't require that you prove a need. But all Perkins loans do require this. It's also important to understand the difference between subsidized and unsubsidized loans. Subsidized loans are those that don't require your child to pay any interest while in school at least halftime. But unsubsidized loans do require that your child pay interest while in school.
The final choice
As you can see, there are many factors that go into making that final choice or the school that your child will attend. However, if you take your time, do your homework and sort through the various alternatives available, you should be able to make a final choice that will fit with both your child's career plans and your ability to help finance his or her education.