Paying for post-secondary education can be a significant stress point for students. Rising tuition costs, an increase in housing and rental prices, and the burden of living away from home for the first time can be overwhelming.
The average cost of tuition at public institutions is $9,600 per year, according to U.S. News. It means that most students will pay $38,400 for a four-year degree. Up to 40 percent of students seek student loans each year to help cover the cost, and 70 percent of graduates have some level of debt when they leave the school.
If you’re looking to reduce the financial burden of furthering your education, student loans and scholarships are the two most common ways to cover the costs.
What is a Student Loan?
A student loan is a financial aid given to someone who wants to further their studies but does not have enough to cover the costs of attending post-secondary. They are offered by financial institutions like a bank or by the government.
Some of the details of a student loan that you need to know are:
- They are paid to the student directly. It will be your responsibility to use the money to pay your school for tuition, buy your books, etc.
- A lump sum is given at the beginning of each semester. You’ll need to budget and spend wisely to make the money last.
- When you graduate, you’ll be expected to pay back the loan, and you’ll also be charged interest.
- You can use student loan funds to cover any expenses you have as a student. That means tuition, books, activity fees, student union costs, etc.
- Lenders may require that you have a co-signer for the loan before they approve your application.
Benefits of Student Loan
Taking out a student loan can help you cover expenses while you complete your education. Some of the benefits include:
- access to a large amount of money to cover your costs while you study
- as you pay it back, you’re building a good credit rating
- it is based on your financial need rather than your academic performance
Drawbacks of Student Loan
The major drawback of having a student loan is that you’ll be expected to repay the loan in monthly installments with interest. Unfortunately, that has been a burden that many people cannot handle.
About 20 percent of students are unable to pay back their student loans. Many may eventually need to declare bankruptcy.
A scholarship is awarded to individuals who are pursuing post-secondary education at a college or university. They are offered by different organizations, from corporations to non-profit groups to churches and more. Some private individuals may also provide scholarships.
To receive a scholarship, applicants must meet certain criteria that are specific to the scholarship and organization. It may include academic performance, social merit, talents, etc.
Scholarships come in various amounts, and it is important to note that it’s unlike a single scholarship that will cover all your tuition, books, etc., costs. Most will help with the cost of schooling, but you’ll still need to find a way to cover the other expenses.
Some things you’ll need to know about scholarships include:
- Money is paid directly to the school or educational institution, not to the student.
- You will not have to pay the money back.
Benefits of Scholarships
One of the biggest benefits of using scholarship money to pay for your studies is that you don’t have to pay it back. That not only relieves your financial burden now but also in the future.
- Networking – many organizations offer scholarships, allowing you to get to know more people in the same industry as you or have the same interests. These contacts could lead to job success after you graduate.
- Inspiration – Scholarships are usually awarded based on your performance at school. It can serve as an excellent motivator for you to study hard and get good grades. Having these high scores will help you not only for future scholarships but also job prospects.
- Reputation – Being awarded a scholarship is a sign of distinction. It shows that you have initiative and demonstrate valuable qualities. Remember that building your reputation that future employers will see starts now – not when you graduate. Being awarded scholarships can go a long way to making your reputation as someone sought after in the working world.
- Multiple sources – You can apply for several scholarships to help you cover the costs. The awards are not exclusive, which means you can be awarded various scholarships.
Drawbacks of Scholarships
While being awarded a scholarship has some advantages, there are some drawbacks as well, such as:
- You could be competing against a large number of other students for the scholarship.
- There will be extra pressure on your performance while at school to keep your scholarship award or qualify for a future one.
- Scholarships are highly specialized to the organization that issues them. You’ll need to fit the criteria to be eligible to apply.
A Financial Option Fit for You
Paying for post-secondary education can be difficult for many students. Statistics show that it can cost $40,000 to earn a four-year degree. And that is only for the tuition. Students also need to find a way to cover the cost of their books, school supplies, technology, activity fees, student union fees, housing, and food costs.
Have you been wondering how you’re going to pay for it all? Most students benefit from scholarships or taking out a student loan. Yet, there are some differences between the two options, and you must understand what is involved so you can pick the financial solution that is right for you.