What to Know Before Applying for Financial Aid

Financial aid may — or may not — impact your credit scores, depending on which option you pursue and your repayment habits

You’ve turned in your last final exam and emptied your high school locker. You have a college acceptance letter in hand, and next week, you’ll put high school behind you forever. The world is your oyster – but first, you need to figure out how you’ll pay for college.

Or maybe you’ve made it through college, successfully navigating 8 a.m. classes and late-night study sessions, spring formals and football seasons. You’re ready to go out into the world – after you finish graduate school.

As you look at financial aid options, there are a few things you should know. There are many different financial aid options available to students regardless of credit history. Some of those options – such as student loans – require repayment. But others — such as grants or scholarships — are generally not repaid, unless there is a change in a student’s enrollment status or, in some circumstances, financial need status. Some options may be reflected on your credit reports and may potentially impact credit scores, while others may not.

“Going to college is an exciting educational step, but it’s an important financial decision, too,” said Faith Sandler, executive director of The Scholarship Foundation of St. Louis, Mo., a nonprofit organization that aims to provide access to higher education to students in the community who lack the financial means to attain their educational goals.

“Many students are making their first important (and legally binding) financial decisions as they turn 18, so it’s critical that they stop, think, ask questions, and understand what their signature on an enrollment or loan document will mean,” Sandler said. It is also important to understand how the options you choose may – or may not – be reflected on your credit reports and potentially impact credit scores.

There are some student loans designed to help those people with little to no credit history. Some types of loans, along with options such as grants or scholarships, may not require a credit check at all. Research all the different options to decide what’s best for you.

Financial aid can include scholarships, federal grants, federal student loans, private loans and more, and each option may have its own pros and cons.

If you request it, payments on most student loans can be deferred while a student is enrolled, meaning payments don’t begin until after school is completed

Most colleges and universities, along with other organizations and companies, offer scholarships to qualifying students for a wide variety of qualifications: academics, athletics, creative endeavors, leadership and community service are among the most common. Scholarships can be need or merit-based and generally don’t have to be repaid, but may have standards for maintaining the award from year to year.

Certain local or national organizations, groups and clubs may also offer independent scholarships. You can check with your school guidance counselor or advisor or search online for scholarships that may be available in your area or field of expertise.

State and federal grants are awarded to undergraduate or graduate students. While federal grants are based on financial need, qualifications for state grants can vary. Most federal grants require students to attend four-year colleges, universities, community colleges or career schools. Like scholarships, state and federal grants generally do not have to be payday loans South Carolina repaid, unless there is a change in a student’s enrollment or financial need status.

If you’re just graduating high school and looking into financial aid, don’t worry about a lack of credit history

Federal student loans are loans funded by the U.S. Department of Education. These loans generally come with a fixed interest rate, which means the interest rate stays the same over the life of the loan.