International Education Consultants Guide to Financial Aid

Financial aid comes in various forms and from multiple sources, all aimed at covering your college expenses, including tuition, fees, room and board, transportation, and personal costs.

The total cost of attendance depends on the institution you're planning to attend. For a detailed breakdown, refer to resources like our International Education Consultants in India Guide to college expenses.

Types of Financial Aid

1. Grants
   Grants are funds you don’t need to repay, typically awarded based on financial need. They can be provided by the federal government or your school.

2. Loans
   Loans are borrowed money used to pay for education, which must be repaid with interest after graduation. This means you’ll pay back more than you borrow. Loans can be issued by the federal government (e.g., Direct Loans) or private lenders, such as banks.

3. Scholarships
   Like grants, scholarships are funds that don’t require repayment. They may come from private organizations (like corporations) or schools and can be awarded based on merit, financial need, or a combination of both. Some scholarships, such as athletic or academic merit awards, are given to attract competitive applicants and don’t necessarily consider financial need.

What Is "Bad" Financial Aid?

Bad financial aid refers to short-term solutions that create long-term financial burdens. Financial aid packages heavily reliant on loans—particularly high-interest ones—are less appealing. In such cases, the responsibility for covering college expenses falls back on the student after graduation.

Private Loans

Private loans, often provided by banks, are not included in financial aid packages from schools. They might be an option if grants and scholarships don’t cover your expenses, but they should be your last resort. These loans often have higher interest rates and less favorable terms compared to federal loans.

Less Desirable Aid Packages

Aid packages dominated by high-interest loans are less favorable because they leave students with significant debt. The average student debt for U.S. graduates of four-year programs is around $28,950, which can be unmanageable for some.

What Is "Good" Financial Aid?

Good financial aid provides a sustainable financial solution that helps cover education costs without causing long-term challenges after graduation.

Grants

Grants are an ideal form of aid since they don’t need repayment. They can come from both public and private sources, like the federal Pell Grant program.

Scholarships

Scholarships are also considered free money, and like grants, they don’t require repayment. Unlike grants, scholarships often evaluate applicants based on merit, even when financial need is considered.

Low-Interest Loans

While loans aren’t as appealing as grants or scholarships, low-interest loans are a manageable option. Federal loans, like Direct Loans, typically offer lower interest rates than private loans.

Subsidized Loans

Subsidized loans are advantageous because they don’t accrue interest while you’re in school or for six to ten months after graduation. These loans can save you a significant amount of money compared to unsubsidized options.

Characteristics of "Good" Financial Aid Packages

A strong financial aid package includes a high proportion of grants and scholarships. If loans are part of the package, they should have low interest rates (5% or less) and ideally be subsidized. The best packages cover all financial needs without requiring students to take out loans.