UHEAA is committed to helping students succeed. We understand the pressures of paying for college and your needs while you’re in school. Student loans shouldn’t be your first choice to pay for college and you may be better off if you don’t end up using student loans at all. Here are a few tips about paying for college and the role of student loans.
We recommend that you search and apply for as many scholarships as possible and utilize all the federal student aid options available (federal grants, work-study, and student loans) before considering borrowing private education loans. Apply for federal student aid by submitting the Free Application for Federal Student Aid (FAFSA).
If you do decide to borrow money to pay for your education, we recommend that you look at federal student loans first, then if you still have financial need find out more about private student loans. Make sure you have a plan to repay your student loans, including a plan for dealing with financial difficulties. Always contact your lender or loan servicer if you are having trouble repaying your loans.
Find out more about the starting wages of people in your major. This is important for you to know what you can afford to borrow. Your college or university should have this information. A general rule of thumb is that your student loan payments should be less than 10% of your take home pay.
What are some of the differences between federal student loans and private student loans?
Federal Student Loans:
- Loans funded by the federal government.
- Programs: Direct Subsidized Loans, Direct Unsubsidized Loans, Direct PLUS Loans (for graduate and professional students or parents), andFederal Perkins Loans
Private Student Loans:
- Loans made by a lender such as a bank, credit union, state agency, or a school.
- Programs: There isn’t a standard – private loans differ by type and lender.
You need to understand all of your student loan options. When it comes to paying for college, federal student loans offer several distinct advantages over private loans (benefits, repayment plans, grace period, etc.). Sometimes you may not know about these because they don’t appear on your TV late at night, or pop up as an ad in the middle of a game you are playing on of your phone or tablet. That being said, this page goes over the most basic and important differences between each of these options.
What are some of the benefits of federal student loans?
- You will not have to start repaying your federal student loans until you graduate, leave school, or change your enrollment status to less than half-time.
- Many federal loans provide you a grace period, a period of 6 or 9 months after you leave school, before you must start repaying your loan.
- The interest rate is fixed and is often lower than private loans—and much lower than some credit card interest rates.
- Undergraduate students who demonstrate a financial need will most likely qualify for a subsidized loan.
- For these loans, the government pays the interest while you are enrolled in school at least half-time.
- You don’t need to get a credit check for most federal student loans (except for PLUS loans), and federal student loans can also help you establish a good credit record.
- You won’t need a cosigner to get a federal student loan in most cases.
- The interest you pay may be tax deductible.
- Loans can be consolidated into a Direct Consolidation Loan, which can often make repayment a much simpler process.
- If you are having trouble repaying your loan, you may be able to temporarily postpone (deferment, forbearance) or lower your payments.
- There are several repayment plans, including an option to tie your monthly payment to your income.
- There is no prepayment penalty.
- You may be eligible to have some portion of your loans forgiven if you work in public service.
For more information on the types of aid available check out the FAQ below.
What type of student aid is available?
There are several type of student aid available to you. They can be boiled down into two main categories: student aid you have to repay and student aid you don’t have to repay.
Student aid you don’t have to repay should be your first choice when you pay for college. This type of aid can be scholarships, grants and work study.
Student aid you have to repay is usually student loans. The two categories of student loans are federal student loans and private student loans.
Why should I file the FAFSA?
A question we receive all too often! Here are some reasons to file the Free Application for Federal Student Aid (FAFSA).
It’s the only way to apply for ALL federal and most states’ financial aid, including Pell grants, Work-study, and student loans.
Even if you have a full ride scholarship or savings to pay for college, filing the FAFSA is a good backup plan to cover unexpected expenses.
Many scholarships require you to file the FAFSA as part of their application process.
You never know what financial aid you might end up getting! Many students file the FAFSA and are surprised to find they qualify for a grant or need-based scholarship.
It doesn’t take as long as you think – usually less than an hour from start to finish.
You aren’t obligated to accept loans – the FAFSA is just an application.
Should I apply for scholarships?
Scholarships are the first place you should look for financial aid because scholarships are money you don’t have to repay. There are literally thousands upon thousands of scholarships, from all kinds of organizations, schools, and businesses, and they’re often not even very difficult to find. You might be able to get a scholarship for being a good student, a great basketball player, being a member of a certain church, or because your parent works for a particular company.
How do I find scholarships?
- Talk to your high school counselor
- Check with your college financial aid office
- Visit the local library
- Ask local businesses and organizations
- UtahFutures Scholarship Search
- College Board’s Scholarship Search
- FastWeb Scholarship Search
- Tuition Funding Source
General scholarship tips:
- Know your deadlines! Put all of them on a “scholarship calendar.”
- Send in everything required for the application, but nothing extra.
- Put some effort into your essays. Make them customized for each scholarship application you submit.
- Ask for letters of recommendation at least two to three weeks in advance.
- Use your resources wisely. Local scholarships are often the easiest to get.
- Don’t get discouraged – on average only one in every seven applications you submit will result in you earning a scholarship.
Seven habits of highly successful scholarship recipients
- Persistence: Rejection letters are part of the process for scholarship applicants. It’s discouraging, but if you give up and stop applying for scholarships, you are guaranteed not to get any funds. Persistence can really pay off!
- Start Early: Search for scholarship opportunities throughout middle and high school. Keep a running list of those scholarships for which you’ve applied, those for which you can’t apply until you’re a senior, and for those you’ve received. After you are in college, you can still apply for scholarships! School breaks are a great time to get these out of the way.
- Have a Plan: Want to major in cartography? Or engineering? Or fine arts? The more specific you are in your plan for college, the more specific you can make your scholarship search. Think about where you want to go to college, when you anticipate going, and how much money you will need.
- Know your Weaknesses: Are you a procrastinator? Build in extra time to apply for scholarships. Do you essays sound less than polished? Make sure you ask someone to proofread them for you. Make specific plans to overcome any less-than-stellar habits or qualities.
- Search your Strengths: If you are a good writer but not such a great athlete, you are more likely to win a scholarship essay contest than you are to get an athletics award. Think about your talents and focus your scholarship searches in those areas.
- Use your Resources Wisely: Talk to your financial aid counselors and departmental advisers as well as using internet scholarship searches. Beware of scams: you should never pay for scholarships or scholarship assistance. Look for local resources. Your town might have special scholarship funding just for students in your area! You never know until you look for the opportunities.
- Play the Numbers: Even small scholarships usually receive at least a handful of applicants. If you only apply for one scholarship, your chances are one out of however many applicants there are. However, the more scholarships you apply for, the better your chances are of receiving at least one of them.
Remember, some scholarships require the Free Application for Federal Student Aid (FAFSA) completion as part of the scholarship application process! Don’t miss out on these because you don’t file a FAFSA.
What kind of federal grants are available?
Federal Pell Grant (PELL) — The Federal Pell Grant (PELL) is financial aid that doesn’t have to be repaid (unless, for example, you withdraw from school and owe a refund). Pell grants usually are awarded to undergraduate students who have not earned a bachelor’s or a professional degree. You are not eligible to receive a Federal Pell Grant if you are incarcerated in a federal or state penal institution or are subject to an involuntary civil commitment upon completion of a period of incarceration for a forcible or nonforcible sexual offense.
Federal Supplemental Opportunity Grant — The Federal Supplemental Opportunity Grant (FSEOG) is financial aid that doesn’t have to be repaid (unless, for example, you withdraw from school and owe a refund). The FSEOG program is administered directly by the financial aid office at each participating school and is therefore called “campus-based” aid. Not all schools participate. Check with your school’s financial aid office to find out if the school offers the FSEOG. The FSEOG does not have to be repaid.
Teacher Education Assistance for College and Higher Education Grant — The Teacher Education Assistance for College and Higher Education (TEACH) Grant is financial aid that doesn’t have to be repaid (unless, for example, you withdraw from school and owe a refund). The TEACH Program provides grants of up to $4,000 a year to students who are completing or plan to complete course work needed to begin a career in teaching.
As a condition for receiving a TEACH Grant, you must sign a TEACH Grant Agreement to Serve in which you agree to (among other requirements) teach
- in a high-need field
- at an elementary school, secondary school, or educational service agency that serves students from low-income families
- for at least four complete academic years within eight years after completing (or ceasing enrollment in) the course of study for which you received the grant.
IMPORTANT: If you do not complete your service obligation, all TEACH Grant funds you received will be converted to a student loan. You must then repay this loan to the U.S. Department of Education, with interest charged from the date the TEACH Grant was disbursed (paid to you or on your behalf).
Iraq & Afghanistan Service Grant — The Iraq & Afghanistan Service Grant is financial aid that doesn’t have to be repaid (unless, for example, you withdraw from school and owe a refund).Like other federal grants, Iraq and Afghanistan Service Grants provide money to college or career school students to help pay their education expenses. However, Iraq and Afghanistan Service Grants have special eligibility criteria.
You may be eligible to receive the Iraq and Afghanistan Service Grant if:
- you are not eligible for a Federal Pell Grant on the basis of your Expected Family Contribution but meet the remaining Federal Pell Grant eligibility requirements, and
- your parent or guardian was a member of the U.S. armed forces and died as a result of military service performed in Iraq or Afghanistan after the events of 9/11, and
- you were under 24 years old or enrolled in college at least part-time at the time of your parent’s or guardian’s death.
What is a state grant?
State grants are financial aid, often based on financial need that does not need to be repaid (unless, for example, you withdraw from school and owe a refund). To find out if your state offers state grants, go to Educational Resource Organization Directory.
What is Work Study?
Federal Work-Study provides part-time jobs on or off campus for students who demonstrate a financial need. The program allows you to earn money to help pay educational expenses and also encourages community service work and work related to your course of study.
Apply for the Federal Work-Study Program by checking the “I am interested in federal work-study” box on the Free Application for Federal Student Aid (FAFSA).
Here’s a quick overview of Federal Work-Study:
- It provides part-time employment while you are enrolled in school.
- It’s available to undergraduate, graduate, and professional students with financial need.
- It’s available to full-time or part-time students.
- It’s administered by schools participating in the Federal Work-Study Program. Check with your school’s financial aid office to find out if your school participates
- It’s based on your financial need.
If you are interested in Work-Study, make sure you apply for financial aid early. Schools that participate in the Work-Study Program, award funds on a first come, first served basis. Contact the financial aid office for a list of current Work-Study job openings. Apply quickly, because the Work-Study Program is very competitive and the jobs fill fast.
Remember, Work-Study is like any other job application and interview. Make sure you submit a professional resume and are prepared for the interview.