Scholarships, Grants, Fellowships, Internships and Loans Explored
In the world of financial aid, there are many different forms of assistance available to students and each serves a slightly different purpose. Many students assume that words like scholarship, grant, fellowship, internship, and student loan are interchangeable. They are not, however, and the consequences of misunderstanding which form of financial aid you are looking for or receiving can be far-reaching. For each variety of assistance, there are different tax stipulations, service requirements and repayment expectations attached. Students on the hunt for financial aid should know what they are looking for, what they have found, what the award requires and how it will help them achieve their college goals.
Most scholarships are financial awards given to eligible students with no strings attached. Typically, if you win a standard scholarship, unless it is renewable, your interaction with the donor ends the day you receive your check. According to the IRS, if you are not pursuing a degree, the entire scholarship is taxable. For those students using the scholarship for college, any portion used for tuition, fees, books, and supplies is not taxable. Any funds remaining after your expenses are paid for, however, are subject to tax. There is not typically a service requirement or other stipulation attached to the scholarship upon receipt of the award; however, you should check to be certain. Scholarships are offered in many varieties—sweepstakes, essays, competitions—for traditional and non-traditional students alike. Occasionally scholarships require that you do a specified amount of community service after receiving the award.
Like scholarships, grants are cash awards that do not need to be repaid. There are federal grants, state grants, and grants issued by private businesses and organizations. Grants are frequently awarded to graduate students in exchange for research work, but one of the best-known student grants, the federal Pell Grant, is awarded to undergraduate students. Grant providers will stipulate whether their grant should be used toward tuition, research costs or additional expenses.
Fellowships are typically awarded to pursuers of graduate or doctoral degrees. Although providers don’t seek repayment, they will frequently ask that students perform research work as a part of the deal. The work may be tedious, but it is usually worth the effort; it is not uncommon for stipends, in addition to tuition coverage, to be a part of the fellowship package. Fellowships tend to be lucrative, and they can get pretty competitive. Students who demonstrate exceptional merit are usually the top runners.
Most students know the difference between a scholarship and an internship; however, for those that need clarification, an internship is an opportunity to work within a business or organization that you would otherwise need a degree to hold a position in. While some internships offer monthly stipends for students participating in their programs, others are unpaid. There are many professions that require students to have participated in an internship program before they can be hired as an employee. It’s a good idea to find out how most professionals in your field of interest secured a position in their field because you will likely discover that without the help of an internship most would not be where they are today. When you are considering an internship there are several things to think about before you accept a position. Ask yourself: How will it help me? What is the time commitment? Is there a stipend? And of course, is there a possibility for employment after the internship?
Believe it or not, student loans qualify as financial assistance; however, federal loans are a form of low-interest debt that must eventually be repaid. There are limits to how much financial assistance students can receive in the form of federal student loans, ones frequently determined by a student’s financial need. For the students who do not qualify for a need-based Pell Grant but do not have enough cash to pay for tuition, student loans are a good option. An added benefit is that interest on certain federal loans does not begin to accumulate until 6 to 12 months after graduation and monthly payments on many federal and private student loans are likewise delayed until that time.
While not all forms of financial aid, such as loans, provide you with free college money, they help you pursue a higher education and get training in the career of your interest. When looking for ways to fund your education, you should check out all the different options available, from college grants to student loans. Any form of aid will help get you on the career path you desire.
Scholarships.com is a great place to start your search for free money for college. We match you with scholarships and foundation grants that are a good fit. To help you keep track of all the possibilities, we send updates on new scholarships and approaching application deadlines. No matter what your college dreams are, Scholarships.com provides you with the tips and tools to get you where you want to be.
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