On average, students spend about $51,000 for a private college or university, slightly under $41,000 for a public out-of-state college, and more than $25,000 for a public in-state college over four years.
These figures cover tuition, fees, accommodation and board, and other costs, but they are still astronomically pricey for someone fresh out of high school. Regardless, most students seek financial aid in the form of student loans, grants, or scholarships.
Students are relying on financial help more than ever before to bridge the gap between tuition and their wallets. Despite the fact that it is a must, the world of financial help may be somewhat perplexing. Financial aid is divided into various categories, and it's easy to get them mixed up.
Financial help is divided into two categories: need-based and non-need-based.
- What is Financial Aid Based on Need?
- What is the contrast between need-based and non-need-based monetary help?
- The Differences Between the Two
What is Need-Based Financial Aid?
Financial aid that is only accessible to students who earn less than a particular amount is known as need-based financial aid. This means that they or their family do not have enough money to cover a large percentage of their education expenses. Simply put, they require additional assistance.
How the FAFSA Comes Into Play
After completing the Free Application for Federal Student Aid, a student's need-based status is established (FASFA). The FAFSA examines how much money the student and family bring to the table (the expected family contribution, EFC).
Your financial need is the difference between your EFC and your tuition. You're more likely to qualify for need-based financial help if you have a high financial need.
The financial aid office at a school will put together a financial aid package for you based on your financial need as well as available funds. The greater your financial need (and the sooner you file the FAFSA), the more likely you are to receive a helpful aid package.
Forms of Need-Based Financial Aid
Federal Pell Grants, Federal Supplemental Education Opportunity Grants, Direct Subsidized Stafford Loans, and Federal Work-Study positions are examples of need-based financial aid. Other need-based grants or scholarships may be available from state or institutional entities.
What is Non-Need-Based Financial Aid?
Any sort of financial aid given to a student who does not qualify for need-based aid is known as non-need-based financial aid. This, on the other hand, means that the student or the student's family has more money to put toward college expenses. In other words, they don't require as much assistance.
How the FAFSA Comes Into Play
Non-need-based aid is determined in the same way that need-based aid is determined. Students complete the FAFSA as usual, and their financial need is determined using their EFC. Non-need-based financial aid is granted after need-based financial aid eligibility is determined.
Financial aid offices put together your package based on your EFC and financial need as determined by the FAFSA. Non-need help is granted after all other options for need-based aid have been exhausted.
In general, having a greater EFC increases your chances of receiving non-need-based aid.
Shapes of Non-Need-Based Monetary Help
Coordinate Unsubsidized Stafford Credits, Graduate Additionally Advances, Parent Also Advances, and the Instructor Instruction Get to for College and Higher Instruction (Educate) Give are illustrations of non-need-based monetary offer assistance.
Difference Between Need-Based and Non-Need-Based Financial Aid
Apart from eligibility (which has already been explored), the primary distinction between need-based and non-need-based financial aid is quite straightforward. Financial aid that is based on need has greater advantages than aid that is not based on need.
A handful of instances will help to illustrate this point.
Federal Student Loans
The distinctions between subsidized (need-based) and unsubsidized (non-need-based) Stafford Loans are obvious.
These federal student loans are nearly identical to those taken out by undergraduates, with one major exception: the subsidized alternative is much favored.
The government will pay off the interest on a subsidized loan during school and the six-month grace period. You're left with the principle debt when repayment begins.
Unsubsidized loans, on the other hand, accumulate interest during the school year and grace period, and the interest fully capitalizes when repayment begins.
A Subsidized Stafford Loan is a considerably more affordable and advantageous choice.
Grants
When comparing Pell Grants (need-based) to TEACH Grants, something similar can be argued (non-need).
A Pell Grant can be given to any undergraduate with any major, and it has no payback requirements.
A TEACH Grant is likewise not repaid, but it does demand that you study in education and work in the area for at least four years after graduation.
In comparison to a Pell Grant, a TEACH Grant has more restrictions and requirements.
Need-Based Financial Aid
1. Federal Work-Study
Students can get paid part-time work through the Federal Work-Study program at participating universities and colleges.
It is open to both graduate and undergraduate students. Federal loans (subsidized or unsubsidized) are less expensive than private loans and offer more flexible repayment choices.
2. Federal Pell Grants
Grants are not required to be paid back. Pell Grants are mostly given to undergraduate students. Some teacher certification programs, on the other hand, are eligible. They're for students who have special financial needs.
The maximum prize for the 2020-2021 academic year is $6,345. The financial assistance office at a university or college determines how much money students are eligible for based on their:
Cost of Attendance at a School-based on a Family's EFC (COA).
