Paying for College and Beyond
Getting accepted into a college or university is a proud achievement, the validation of years of hard work in high school. However, paying for college is a whole other challenge. Even when students get accepted into prestigious universities, they can't always afford to attend that institution, particularly without assistance. Fortunately, there are several options to help post-secondary school students afford tuition, books, housing, and other living expenses. This section covers the legal issues involved in grants and scholarships, how the different federal student loans operate, student loan options from private institutions, college loan forgiveness, and more.
Federal Student Loans: Overview
Most student loans are offered through the federal government, although private loans also are available through many banks and other financial institutions. In general, student loans may not be discharged in a bankruptcy or otherwise forgiven, with a few exceptions. Some loans are need-based and offer lower interest rates, while others have no financial requirements. The main types of federal student loans include the following:
- Federal Perkins Loan - Administered by the college or university (thus "indirect"); available to both undergraduate and graduate students; eligibility based on financial need
- Direct Subsidized Stafford Loan - Available to undergrads only; eligibility based on financial need
- Direct Unsubsidized Stafford Loan - Available to both undergraduate and graduate students; proof of financial need not required
- Direct PLUS Loan - Available to the parents of dependent undergrads and (independent) graduate students; proof of financial need not required; borrower must not have a negative credit history and is responsible for interest during all periods
Grants and Scholarships
Unlike student loans, grants and scholarships do not need to be repaid. While grants tend to be need-based and targeted toward lower income students, most scholarships are based on merit, usually either academic or athletic. If you need help paying for college, you should apply for any grants or scholarships that match your qualifications before pursuing student loans.
The federal government offers several different grants to college students, the most well-known being Federal Pell Grants. The amount of a Pell Grant changes annually, but the maximum annual amount was $5,775 in 2015; however, the actual award is based on financial need, the cost of attendance, and your status as either a full-time or part-time student. Those incarcerated in a federal prison or who have completed a period of incarceration for a sexual offense are not eligible to receive a Pell Grant.
Scholarships, meanwhile, are offered by a number of organizations that base eligibility on a wide variety of criteria. For instance, a Native American advocacy organization may limit its scholarship awards to Native American undergrads. Other scholarships are solely focused on academic achievement, involvement in leadership activities, or athletic performance.
Most colleges and universities are non-profit, but some colleges are operated by private entities with the goal of turning a profit. These institutions are very controversial and many have been accused of charging high costs but delivering low student outcomes, while some have faced criminal charges for fraud or other crimes. But this does not mean all for-profit colleges are a bad deal, just that prospective students need to be absolutely sure what they're getting into.
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