Paying for College
FAFSA, the difference between grants, scholarships, and loans, and why the sticker price is rarely what you pay.
Start with the FAFSA
FAFSA stands for the Free Application for Federal Student Aid. It is a form you fill out to apply for help paying for college, and it is free. Filling it out is the doorway to most aid, including grants, work-study, and federal loans.
Many states and colleges also use the FAFSA to decide their own aid, so submitting it can unlock money from several sources at once. It is generally worth completing even if you are unsure whether you qualify.
Grants, scholarships, and loans
Aid comes in two broad kinds: money you keep and money you repay. Knowing which is which matters more than the total offered.
- Grants: money you usually do not repay, often based on financial need.
- Scholarships: money you usually do not repay, often based on merit, a talent, or other criteria.
- Loans: money you do repay, with interest, after you leave school.
Sticker price versus net price
The sticker price is the full published cost of a college before any aid. The net price is what you actually pay after grants and scholarships are subtracted. They can be very far apart.
A college with a 50,000 dollar sticker price might have a net price of 20,000 dollars for a given student after aid, while a cheaper-looking school offers less help. Comparing net prices, not sticker prices, shows the real cost.
A note on student loans
Federal student loans come in two common types. A subsidized loan does not build interest while you are in school, because the government covers it for that time. An unsubsidized loan builds interest the whole time, including while you study.
Reading which loans are in an offer, and how much each will cost over time, helps you understand the full price of a college, not just the first-year number.
Check your understanding
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