Scholarships, Work Studies, and Student Loans: Understanding Your Options

By: Ella Shaby, Northbrook Financial Intern Spring 2024

Paramount student loans are an unfortunate reality for many young Americans approaching their college years, with the average rate of tuition reaching a national Cost of Attendance1 (CoA) average of $36,436 in the past academic year (Hanson). Even with programs such as Student Loan Forgiveness and the One-Time Student Debt Relief Program, many continue to be burdened with student debt long after graduation. So, how can some students manage their debts with less difficulty despite similar financial situations while others remain trapped for years? Understanding financing options for higher education and building a plan to maximize your college experience while minimizing the financial impact is key.

With that said, what options are available for students to help cover the cost of higher education?  

The below list identifies the primary options available to students, listed in the preferred order to accept them:

  • Scholarships 
  • Work studies 
  • Federal subsidized loans 
  • Federal unsubsidized loans 
  • State loans 
  • Private loans


Although the following options are commonly accessible, availability varies depending on many factors, such as location, institution, and individual eligibility criteria. More research is required based on each individual to determine what scholarships your institution or external organizations offer and for which you are qualified to apply.

  • Merit-based scholarships: Awarded based on academic achievement, standardized test scores, extracurricular activities, or other accomplishments.
    • These are often obtained through the institution’s admissions office or alongside an acceptance to an honors program of some sort within that institution.
  • Need-based scholarships: Provided to students who demonstrate financial need, often determined by family income and assets.
    • These are often obtained through forms filed directly through the institution or forms such as The Free Application for Federal Student Aid (FAFSA).
  • Athletic scholarships: Offered to student-athletes who excel in sports, typically at the collegiate level.
    • These are often obtained towards the end of an individual’s high school career through a complex system of networking with various college coaches in your desired sport as well as the successful application of a Division-I or Division-II school, high academic achievement, and the registration to either the NCAA Eligibility Center or the NAIA Eligibility Center depending on your desired/accepted institution.
  • Ethnicity-based scholarships: Aimed at students from specific racial or ethnic backgrounds, designed to promote diversity and inclusion.
    • These are often obtained through the completion of an application to an applicable scholarship filed through the institution itself or external programs.
  • Subject-specific scholarships: Granted to students pursuing studies in particular fields or disciplines, such as STEM (Science, Technology, Engineering, and Mathematics), humanities, or the arts.
    • These are often obtained through the completion of an application filed through the institution’s specific school of study in which you are majoring or interested.
  • Career-specific scholarships: Available to students pursuing careers in specific industries or professions, such as healthcare, education, or business.
    • These are often obtained through professional organizations incentivizing employees to pursue higher education.
  • Organization-specific scholarships: Offered by companies, non-profit organizations, community groups, or foundations based on specific criteria, such as affiliation with a particular organization or community involvement.
    • These are often obtained through professional and non-professional organizations with whom you may have a personal or charitable relationship.
  • Location-based scholarships: Provided to students from specific geographical regions, states, or countries, often to support local education initiatives or address regional needs.
    • These are often obtained through the institution, usually offered by public universities for in-state students. 

Work Studies:

Work-studies are part-time employment opportunities universities offer in exchange for money towards the CoA for eligible students. Students must demonstrate financial need through a completed FAFSA form to participate in work-study programs. Eligibility is generally assessed through economic need, enrollment status, and available funding. After completing your FAFSA, you can indicate an interest in a work-study in the institution’s financial aid application. Once awarded a work-study, students can search for various work opportunities both on and off campus, including jobs within the university and in nonprofit organizations, government agencies, or other community service positions.

Note: Students who secure a work-study job are typically paid at least minimum wage, although the exact wage may vary depending on the job and location. Work-study earnings are usually paid directly to the student in the form of a paycheck rather than being applied directly to tuition or fees, and it is, therefore, the student’s responsibility to allocate their paycheck to whatever they deem necessary, whether that be tuition, housing, textbooks, transportation, or anything else. 

Federal, Subsidized Loans:

Federal, subsidized loans are a type of loan for students who demonstrate financial need through the FAFSA. The most critical factor of subsidized loans is that during determined periods (generally ranging from as little as half of graduation time to a few years after graduation), the Federal government excuses/covers any interest that would accrue. This allows the student to borrow money for tuition, interest-free, for a specific time while focusing on their studies. Additionally, subsidized loans typically have lower interest rates than unsubsidized and private student loans. These two factors make subsidized loans a more practical and affordable student borrowing option. The amount of money students can borrow through subsidized loans, however, is limited and varies depending on their year in school and dependency status.

Federal, Unsubsidized Loans:

Like federally subsidized loans, students must complete the FAFSA, and their college or university’s financial aid office determines eligibility for federal, unsubsidized loans. Federal unsubsidized loans differ from subsidized loans in that the government does not cover the interest while the borrower is in school, during the grace period after leaving school, or during deferment periods. This means that interest accrues on the loan from when it is disbursed until it is paid in full. While unsubsidized loans may not offer the same interest benefits as subsidized loans, they provide valuable financial assistance to students who may not qualify for the need-based aid provided by subsidized loans.

State Loans:

Individual states offer state loans which are typically designed to supplement other forms of financial aid, such as federal loans, grants, and scholarships. State loans for tuition may have varying terms and eligibility requirements depending on the state where the student resides or attends college. Generally, state loans for tuition offer competitive interest rates and flexible repayment options compared to private loan options, making them an attractive option for students who need additional funding beyond what federal aid covers. Students interested in state loans should contact their state’s higher education agency or visit their state’s financial aid website to learn more about available programs, eligibility criteria, and application procedures.

Private Loans:

Private loans are offered by private financial institutions, such as banks or online lenders. The government does not back these loans and typically requires a credit check, with interest rates and terms varying depending on the lender and the borrower’s creditworthiness. Private loans may offer in-school deferment options2, but interest often accrues during this period. Additionally, loan limits are determined by the lender and may require a cosigner, especially for borrowers with limited credit history, which is common among undergraduate students. Furthermore,  interest rates, only competitive within the banking/institutional market, are typically incomparable to that of federal or state loans. Before taking any private loans, students should ensure they have exhausted scholarship: work-study: federal: and state aid opportunities, carefully compare loan options between banks, and consider the terms and conditions to find the best option for their remaining financial needs.

KeyTake Away:

Navigating the complex landscape of student loans can be overwhelming, but understanding your options for financing higher education is crucial. Exploring various payment plans and exhausting all ideal available aid options can significantly lower your financial burden and mitigate the student debt you graduate with. Taking proactive steps to finance your education wisely can pave the way for a brighter financial future beyond graduation.

Terms and Definitions:

  1. The Cost of Attendance refers to an estimate of the total expenses a student might incur while attending an educational institution for a particular academic period, typically one academic year. It includes various expenses such as tuition and fees, room and board , books and supplies, transportation, and personal expenses.
  2. In-school deferment options refer to provisions within student loan agreements that allow borrowers to postpone making payments on their loans while they are enrolled in school at least half-time. During this deferment period, borrowers are typically not required to make monthly loan payments. This provides temporary relief from loan repayment obligations, allowing students to focus on their studies without the immediate financial burden of making loan payments.

Works Cited:

Hanson, Melanie. “Average Cost of College [2023]: Yearly Tuition + Expenses.” Education Data Initiative, 18 Nov. 2023,  

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