College  Financial Aid	
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Grants and scholarships	 provide "gift" money that you do not paid back.  	Merit-based	 assistance (also 	
called scholarships) is given to students who meet grade and requirements not related to financial needs.  
For example, a merit scholarship may be given to a student who has done 
well in high school, or student 
who displays artistic or sports talent.  	Need-based	 assistance is financial aid a student receives depending 	
on cost of college and on the student family's ability to pay.  Most financial aid is need-based.  The most 
common federal grant is the Federal Pell Grant which is based on financial 
need and cost of college.  The maximum Federal Pell Grant is $6,495 for 
the 2021-22 school year.  
Students who received Federal Pell Grants and still need more money for 
college,  may apply for the Federal Supplemental Educational Opportunity
 
Grant (FSEOG) to receive $100 to $4,000.  To find grants in your state, 
Googel: College Grants Your State's Name.  Read websites ending in "gov"
Loans	.  Like car loan, an education loan must be paid back, but payments 	
do not begin until the student finishes college.  Direct Subsidized Loans are 
loans made to students based on financial need (2.75% interest until July 
2021).  Direct Unsubsidized Loans are loans not based on financial need 
(2.75% interest until July 2021).  Interest rates are going up, so loans funded after July 2021 will have 
higher interest rates.
  
Direct PLUS Loans are loans made to parents of students to cover college costs not covered by any other 
financial aid (5.53% interest until July 2021).  Before taking out a loan be sure to ask:
• 	What are the rules of the loan?  What is the interest rate?  What are the monthly payments?	
• 	When will the monthly payments begin?  How long will the monthly payment
s last?  	
• 	What happens if I miss one of the monthly payments?  Who repays the loan if I cannot?	
A loan taken to pay for a college education must be paid back, whether a student finishes college or not; or 
gets a job or not.  Failure to repay a student loan can ruin a person’s credit rating and make finances more 
difficult in the future. Suzy Orman, well-known financial planner, said that students should not borrow 
more for college than they expect to make the first year on a job after college.   Therefore, if you expect 
to make $35,000 yearly on a job after college, you should not borrow more than $35,000 for your college 
expenses — or you will put your financial future in danger.  	
How much will a college graduate will owe for a $35,000 college loan?	  At average 	
interest rates, the monthly repayment amounts is $399 per month for 10 years:
a) repayment of $35,000;  b) $12,904 for interest; c) with total of $47,904 total due to 
payback the loan. 
Therefore, if you borrow $35,000 today — you will pay back $47,904 in the future.  
If you graduate from college at age 23,	 you will pay your college loan payments for 	
ten years   — until age 33 (unless you have extra money to pay off the loan early).  
College Financial Aid  (page 1 of 2)

College Financial Aid (page 2 of 2)	
QUICK CHECK:
It will take you more time to pay off your student loan than time you attended college!  	Will you be able 	
to pay the government about $399 per month for ten years PLUS support yourself after college?  Financial 
aid in loans looks like a good thing, but loans can be a very bad drag on your financial future after college.  
Search for ways you can pay for college cost as you attend each year, rather than accepting loans.  To 
research college financial aid:  Visit: www.finaid.org —  Visit: www.studentaid.gov
Here are ways you can keep college costs as low as possible:
Get good grades in high school. 	 During your junior and senior years, apply for scholarships.  	
Scholarships are "gifts" of money for college that you do not pay back.   To search scholarships, go to: 
https://bigfuture.collegboard.org.  	Take high school AP (Advance Placement) and/or IB (International 	
Bacculaureate classes 	and score high on the final test to qualify for possible college credit.	
  
Work Part Time or apply for Work Study Programs	.  Many students work during the summer and part 	
time during the school year to help pay for college.  In addition, many colleges of fer work-study programs 
to students.  The jobs are on campus, and the money earned is used to pay for tuition.
Enroll in public community college for the first two years.  
Transfer to a four-year college after earning an Associate degree 
at a community college.  	Select a public four-year college	 that 	
is less expensive than a private four-year college.
Live at home and ask your parents to help with college costs.  
If you move to another city, can you find a relative to live with 
while in college?
Be a "thrifty" (spend every dollar carefully) student. 	 You do not need fancy clothes or shoes.  Forget 	
spring break vacations until you can afford.  Look for ways you and your friends can enjoy free activities in 
life: meet in college cafeteria, exercise in college gym, take a hike, a
nd go to movies in college lounge.  
1. Are grants and scholarships paid back?  
2. To whom is merit-based assistance given?  
3. What does need-based assistance mean? 
4. a) What is the most common federal grant?  
 b) On what is it based?  c) What is maximum 	
yearly amount?  d) Up to what amount may the 
FSEOG grant provide?	
5. What do you do to find grants in your state?
6. a) Must loans be paid back?  b) What is the 
 difference between Direct Subsidized and 	
Direct Unsubsidized Loans?  c) To whom are 
Direct PLUS Loans made?  	
7. Must a loan be repaid if the student:  a) drops 	
out of college?  b) can't find a job?	
8. Failure to repay a loan can do what 2 things?	
9. a) What is the maximum amount of money that 	
Suze Orman recommend a student to borrow for 
college?  b) Or what?	
10. a) What is the monthly amount a graduate will 	
pay for 10 years for a $35,000 loan?   b) If the 
graduate makes $15 per hour, how many hours 
per month would the graduate have to work to 
repay the loan?  (Divide by 15).  	
 c) You may borrow $35,000 today if you pay 	
how much back in the future?	
11. List 2 websites useful to research financial aid.
12. a) List 7 ways you can keep college costs as low.  	
b) How should you spend every dollar?	
13. Do you think loans are worth the time and cost it 	
will take to pay back the loan?  Why or why not?