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By Anne Nyugen

As high school seniors prepare for midterms and warmer weather, they have more than just Spring Break on their minds. Most of them are considering what they will do with their lives now that high school is almost over. For many who wish to continue their education in college, two issues are their top priorities: which college to select and how to pay for it. In this piece, we'll delve into the latter.

Types of Financial Aid


There are three main types of financial aid you can use to pay for college: public, institutional, and private aid. The government gives public aid. For example, the Office of Federal Student Aid (part of the US Department of Education) offers students $150 billion annually through grants, loans, and work-study funds. Institutional aid is given by the university or institution, generally as grants, but can also include scholarships and work-study programs. If you're looking for private schools that offer some of the best financial aid, check out The Princeton Review. Finally, private aid comes from scholarships that independent organizations and donors provide. The DIME Program is an excellent example of an organization that offers scholarships to students interested in pursuing careers in finance and investing. Awards can range from $5,000 to $10,000.


"Millions of dollars in private aid are available to students, but they have to be diligent and committed to seeking them out," said Dion Woods, co-founder of the DIME Program. Woods suggests that students speak with high school guidance counselors and look for organizations that introduce students to specific careers (e.g., finance, legal, medicine, and engineering). Many times, these organizations award scholarships. You can also check out Forbes's list of the 9 Best Scholarship Websites And Search Engines, which Forbes compiled in 2022.



The Cost of Financial Aid


Interest. One of the biggest costs of financial aid can be the interest you pay from loans. The federal student loan rate is 5.50% for loans taken out this school year, but federal loans may not be enough for everyone. Students who have to take out loans from private lenders can encounter a variety of rates, from 4.43% up to 16.99%, depending on the individual and type of loan. No matter the interest rate, students can spend years and sometimes decades paying off these loans.


Taxes. Scholarships generally aren't free; they can count as income and have significant tax implications. Generally, aid used to pay for qualified tuition and related expenses is tax-exempt. However, room and board is taxable. Therefore, the "full rides" athletes get excited about comes with a hefty income tax. The NIL deals have a similar price tag. Most families aren't aware of this financial impact. One parent whose son was given a full scholarship to a university was shocked when he learned he had to pay taxes on the $30,000 received for room, board, and stipends.


Contractual Obligations. Students must fill out the FAFSA to receive financial aid from an institution. Schools use the FAFSA application to determine how much support a student needs based on their tuition, room and board, and other expenses. Institutions may lower their aid if students receive more help than their determined financial need. This is especially true of private scholarships. If a student fails to report award money, the institution can even request that the support be repaid.


Costs don't stop there. Recipients can be subject to specific terms and conditions to keep their award, which may cost time and energy. Scholarship recipients need to read through the terms and policies, as failure to maintain the requirements may result in the institution or donor withdrawing the award and requesting that the funding be repaid. Standard terms for accepting a scholarship to keep an eye out for include:


Maintaining a minimum GPA (generally 3.0-3.5)

Participating in specific sports, programs, or internships

Studying a specific major

Working in a specific career or location for a set number of years post-graduation


There are many things to consider when searching for and accepting financial aid. However, if you start the process early, explore organizations focused on introducing students to industry careers, and thoroughly evaluate the contractual obligations of any aid you receive, your future can turn out as bright as your financial award letter suggests.

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