Loans and Grants and Scholarships - Oh My!

Resource Photo - Loans and Grants and Scholarships - Oh My!

There is no need to be frightened of loans, grants and scholarships like Dorothy was when she learned about the lions, tigers and bears that were spooking her during "The Wizard of Oz." Unlike those sometimes-frightening creatures, loans, grants and scholarships are very beneficial things that will help you attend college and better your life.


Student loans are like every other type of loan; they consist of borrowed money that needs to be repaid to the loan servicer with interest. However, some significant positives and noteworthy negatives exist with these loans as compared to other ones. On the one hand, the interest rates are generally lower than other types of loans. Conversely, if you do not pay student loans back, it is nearly impossible to include these types of debts in any sort of bankruptcy declaration, and your paychecks could be garnished or tax returns seized if you fall in default.

Maybe some of those things would scare both you and Dorothy; however, the positives are substantial, especially if not taking them out would preclude you from going to college and likely earning a much higher salary than would be possible without a college education.

Two major types of loans exist: federal loans and private loans. The major federal loans are the Stafford, Perkins and PLUS loans. Stafford and Perkins loans are awarded based on the student's or the student's family's financial situation (not their credit score) while PLUS loans are based on credit scores. Private loans generally have a credit score requirement as well and often require a credit-worthy cosigner if the student's credit score is not sufficient. The government plays no role in awarding private loans.


Grants consist of money that is applied to your education expenses that does not need to be paid back. This form of financial aid is generally need based. The amount awarded is based on your financial situation (if you are an independent student) or your parents' financial situation. You are normally considered an independent student if you are least 24 years old or have your own family, although other exceptions exist.

The most common grants awarded are the Pell Grant and the Federal Supplemental Education Opportunity Grant, which are provided by the government to low-income individuals and families. Another one is the Iraq and Afghanistan Service Grant, which is awarded to someone who had a parent or guardian die in Afghanistan or Iraq as a result of military service. This grant is generally not seen at 2-year institutions.


Scholarships come in various forms and can be awarded by a variety of organizations and individuals, oftentimes including the college that you will be attending. This is one area of financial aid where the amount of time that you put into researching which ones are out there is especially worth it. You'd be surprised how much of this free money receives relatively few applications. Conversely, some do attract a high number of applicants and require things like thoughtful essays and recommendations.

Regardless of who awards them, scholarships usually have some connection to merit. If you are awarded one, you may need to earn a minimum grade point average for the life of the scholarship, continue to be part of an extracurricular activity or remain on an athletics team. Other eligibility requirements may exist based on the individual scholarship.

Of course, the most significant benefit of scholarships is the same as for grants: They do not need to be repaid.

Importance of the FAFSA

Regardless of what forms of financial aid you are considering, you should fill out a FAFSA, which is required for all who would like to be awarded any type of federally provided grants, scholarships or loans. It is important to submit this even if you do not believe that you will qualify for any aid, as many students are surprised at what they qualify for. Make sure to complete the FAFSA as early in the process as possible, as some awards are given on a first-come, first-served basis.

Note that you will need to fill out other forms in order to be eligible for any non-federal forms of financial aid.

Get more detailed information about financial aid.

  Ready to Get Started at CVTC? Apply online or call 715-833-6300 with questions.