In the world of financial aid there are many different forms of assistance available
to students and each serves a slightly different purpose than the other. 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. Any student on the hunt for financial aid should
know what he’s looking for, what he’s found, what the award requires and how it
will help him achieve his college goals.
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 a cash award that does not need to be repaid. There are federal
grants, state grants, and grants issued by private businesses and organizations.
Many undergraduate students greatly depend on government grants to get them through
college. Why shouldn’t they? As long as students qualify financially, all they need
to do is fill out a FAFSA. Aside from the
government sponsored grant program, most grants are awarded to graduate students
who need help funding research or who intent to enter a specific field. Grant amounts
range greatly. They may be $100, $100,000, etc. Graduate school grants are not typically
used toward tuition, but rather, they are usually used for any expenses necessary
to complete your research.
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
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, loans are a form of low-interest debt that must eventually be repaid. There is a limit to how much financial assistance
a student can receive from student loans which is usually determined by how great
the financial need of the student is. For the students who do not qualify for a
need-based grant but do not have enough cash to pay for tuition, student loans are
a good option. An added benefit is that most loans do not begin accumulating interest
until 6 to 12 months after you graduate and monthly payments are also delayed until
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