Beginner's Guide to Financial Aid and Student Loans

Beginners Guide to Financial Aid and Student Loans

The average young adult entering college does not know where to start when it comes to financial aid. There is quite a bit to be done that can lead to better financial standing despite the oncoming onslaught of tuition cost and college expenses. For many, more than one source of aid is required; for instance, federal student loans, private student loans, and scholarships are potential sources to choose from. Understanding where to start and what to look for is the first step in seeking the most efficient financial aid.

Here is a general overview of a few different forms of financial aid in college as well as some related tips. Hopefully, this can enlighten and educate students on different types of aid that are available. College students as well as high school students can begin to gain a better understanding on what they are eligible for. 

And the path forward to financing higher education and paying off debt can become that much simpler and effective.


For those who do not know, FAFSA stands for Free Application for Federal Student Aid, and it can be found on the government website after a simple Google search. Filling out this application can do no harm to the applicant. If you believe you do not qualify, fill it out anyway because the eligibility requirements are different every year. Students can become eligible for a subsidized loan which is a much better deal than some other loans. The government pays interest off while the student is enrolled in school which helps lower the overall cost of a loan. This is one of the best benefits the government can offer; the alternative is a loan that can be deferred until graduation with no government interest payments.


In light of the student loan concentration, there is much to be earned through scholarships. The sheer volume of scholarships out on the market is absurd. Scholarships have an extremely wide range of eligibility requirements including merit or heritage. Some application processes are simple and easy while some are lengthy and bothersome, but the payoff range for all of these applications is extensive. There are scholarships for almost any niche imaginable, so research is key in finding those financial aid opportunities. Here is a huge list of scholarships from online.

University Financial Aid

Many schools provide financial aid to their students in the form of grants. A grant is basically a loan, but you do not need to pay this back. These rewards are often based on merit, so the effort in high school does not go unnoticed. Eligibility for these grants may be obtained during college enrollment, so performing well can go a long way towards financial assistance. University policy regarding financial aid differs between universities.

Private Student Loans

There are plenty of companies that are specializing in private loan offers for undergraduates and graduate students. Companies such as SoFi, CollegeAve, and Sallie Mae are all competitors in the private loan game, and they are constantly trying to offer services for students who need more aid in addition to federal or university help. Another strength of these loan servicers is the flexibility in loan structure. Applicants can choose between fixed and variable interest rates, and they can select several different repayment terms.

While these interest rates may be lower, these companies do not pay off interest while the student is in school like a federal subsidized loan. Despite this, there are usually multiple payment options that allow minimal payments during school or full deferment until graduation. Overall, private loans are rising in popularity, and they are starting to take a decent portion of the total student loan sum.

Refinancing and Consolidation

After graduation, there are still some beneficial moves to consider when it comes to paying off financial aid. These moves are loan consolidation and refinancing. Plenty of borrowers have multiple loans from the government and private lenders, so the number of loans often complicates monthly payments.

The federal government offers loan consolidation offer that combines each federal loan into one lump sum. This lump sum comes with an interest rate that is a weighted average of the old loans. The borrower can also choose a new repayment length.

In addition to consolidation, many private lender companies offer refinancing options for multiple loans. Private companies that refinance offer a new loan with new interest rates; this loan is used to pay off the preexisting loans. The end result is a new loan with a new package deal in place of the old loans. This is similar to consolidation but it is a little different because borrowers may receive a new, lower interest rate.

These options simplify the debt payment process greatly, and they can save plenty of money down the road. Many sites that offer private loans offer refinancing options (see private lender companies above). One useful tool is the refinancing calculator which basically compares previous loans to refinancing options; this can be found on just about any site that offers student loan refinancing.

Prioritizing Financial Aid

Earlier the FAFSA was mentioned. This is one of the first steps towards discovering what kinds of financial aid are available since the FAFSA pretty much outlines what the federal government will contribute. This is one of the first considerations because the government offers subsidized loans that help pay interest.

There are plenty of other ways to receive aid; for instance, fitting in scholarship opportunities is another big step to consider before moving towards financial aid. Scholarships often do not cost a thing, and they can take a considerable chunk out of college tuition. University grants is another free way to finance education; just like scholarships, these are based on merit most of the time.

One of the next opportunities to look up is different private loan offers in order to receive the competition driven interest rates. It takes some research to find the best offer, but money is going to be saved down the road with the best interest rate. Once again, the key is research since there are so many different places to look for financial aid.

Down the road, loan consolidation and refinancing may be a key factor is controlling accruing interest and debt payments. Since many people require multiple loans over their enrollment, these two options are prevalent ways to simplify the road to a debt-free life.