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Got three minutes? Then you’ve got time for college.
Presented by the University of Arizona’s Office of Early Academic Outreach
This is Paying for College. If you’re like most students, your biggest
concern about going to college is having the money to pay for it. But what if you knew
there were people who want to help you pay for college?
This is the idea behind financial aid. You go to college, and someone else invests in
your potential by providing you scholarships, grants, or loans. These investors include
both individuals and organizations, like foundations, companies and the government.
So what are the differences between scholarships, grants and loans?
Scholarships are merit-based, meaning you earn it through hard work, like good grades,
involvement in clubs and sports, community service or personal experiences. Usually,
scholarships are free money, meaning you don’t have to pay it back.
Grants are also free money. Grants come from either the federal or state government, and
are awarded based solely on financial need. The government can only determine your need
after you have filled out the Free Application for Federal Student Aid, which is commonly
known as the FAFSA. The FAFSA can also give you access to federal
student loans. These loans are different from car or home loans because they often carry
much lower interest rates, and can delay repayment until after graduation. There are four types
of loans: subsidized, unsubsidized, parent and private.
Subsidized loans are the best loan option, because the federal government “pays”
the interest while you’re in school. This means you don’t accrue any additional debt
from the loan until you graduate. For example, if you take a $2000 loan your
first year, you will owe just $2000 when you graduate.
Unsubsidized loans are the same, except you pay the interest, and it starts accruing when
you initiate the loan. So, if you take a $2000 loan your first year, you will owe more than
$2000 when you graduate because of interest. Parent loans are another type of loan to help
pay for college expenses. These loans are in the parent’s name, not the student’s.
For parent loans, repayment begins immediately, with interest accruing the moment you take
out the loan. The final type of loan is a private loan.
This loan can only be taken out from a private bank, and does not require you to complete
a FAFSA. Private loans often have higher interest rates, and should only be used if you have
no other options. The final form of aid is Federal Work-Study.
Work-study is also awarded through the FAFSA. However, unlike grants and loans, you do not
receive a lump sum of money. Instead, work-study aid comes in the form of a paycheck for working
a part-time job on-campus. Work-study experience is very desirable to employers because the
federal government pays 75% of the student’s wages, while the employer, which is usually
the university, pays only 25%. In addition to these opportunities, both the
University of Arizona and Arizona State University have programs that can assist students from
low-income families. The Arizona Assurance program ensures that students admitted to
the UA will be able to attend the University for four years, with little or no debt upon
graduation. The university meets their financial need with scholarships, grants, and federal
work-study opportunities. The Obama Scholars Program serves the same
need for students at ASU, and also awards a combination of scholarships, grants and
federal work-study. In this way, Arizona universities are committed
to making sure financial need is not your main obstacle when it comes to going to college.
This has been a presentation on paying for college. For more three-minute videos, please
visit startnow.arizona.edu