Personal Finance / Unit 6: Paying for College and Big Purchases
6.3 Grants, Scholarships and Loans
Notes
Aid comes in two kinds: money you keep and money you must repay.
- Grants and scholarships are gifts. Grants are usually need-based; scholarships are often merit-based. Neither is repaid.
- Work-study gives a part-time job on or near campus.
- Loans must be repaid with interest. Federal loans usually have more borrower protections than private loans.
- Borrow only what you need. Prefer gift aid first, then work, then loans.
- Example: cost $20,000. Grants and scholarships $8,000. Loans $6,000. Remaining out-of-pocket $= 20000 - 8000 - 6000 = 6000$, so $6,000.
Practice
Which of these must be repaid?
Loans are borrowed money that is repaid with interest.
Total cost is $25,000. Grants and scholarships cover $10,000 and loans cover $7,000. How much must the student cover another way?
$25000 - 10000 - 7000 = 8000$.
Which is the best order for covering college costs?
Money you do not repay is better than money you do.
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