Scholarships and grants provide coveted financial assistance for college students, because these forms of aid do not require repayment. Grants generally focus on the neediest applicants, while scholarships tend to reward outstanding achievement in athletics and academics. Need-based grants and merit-based scholarships provide valuable financial aid entries, but most higher education is not fully funded by these options. Once these gift-aid alternatives are exhausted, students turn to loans that bridge the college affordability gap.
Public and private borrowing options exist for college students, but there are significant differences in how the two forms of assistance are administered. Far and away; the preferred path for students seeking loans is to utilize low-interest fixed-rate programs initiated by federal and state agencies.
Government-backed loans make the most sense for college students because terms and conditions are more manageable than loans issued by banks, credit unions and other private lenders.
- Low interest
- Fixed rates
- Flexible repayment options
- No credit check required
Important federal programs like William D. Ford Direct Loans provide subsidized and unsubsidized funding for students at all levels of higher education. Federal financial aid resources are deepest, so file your FAFSA on-time, to be considered for Pell Grants and Direct Loans.
The Texas Higher Education Coordinating Board (THECB) extends alternative loans once known as Hinson-Hazelwood Student Loan, or HH loans
Private lending is governed by credit-based principles that make it harder for students to secure aid. The limited number of credit interactions characteristic of college-aged borrowing histories is often insufficient for banks to approve loans for students. As a result, private loans for higher education are generally secured with the help of credit-worthy cosigners. There is nothing intrinsically wrong with that, but even with an additional credit reference attached to your private student loan, interest and other terms are not as attractive as government options. Read more