What are the four different kinds of financial aid a student may receive?
There are four main types of student financial aid:
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Grants
You don’t usually have to repay a grant, although you should always check the terms. Most providers issue grants based on financial need.
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Scholarships
A scholarship is money for school that you don’t have to repay. There are need-based and merit-based scholarships.
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Loans
These are funds you borrow. You will have to pay back a loan with interest. Always check the terms and conditions before you sign a loan agreement.
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Work-study
A work-study is an opportunity that a college provides to help students earn money while they study at that school.
The federal government also helps some college students through the Lifetime Learning Credit. This is a tax credit program for which you and your family may be eligible when completing your federal tax return. Find tax credit information for students on the Internal Revenue Service (IRS) website.
What is a financial aid package?
Schools may offer you a financial aid “package” that combines different kinds of aid. The amount of your package depends on your financial need.
Your financial need is calculated based on the data you input on your Free Application For Federal Student Aid (FAFSA®). You can find out early if you qualify for federal aid by accessing the Federal Student Aid Estimator. However, you will still need to complete the actual FAFSA® Application.
Most federal and state aid is awarded based on financial need rather than academic merit. Academic merit can mean showing a specific Grade Point Average (GPA), athletic, or artistic talent.
Facts to remember about financial aid eligibility
College is a big investment, but it’s the most important one you can make in your future. Take time to learn your financial aid options before you make any college decision. College financial aid officers can help you find ways to pay for your education. Keep in mind these facts:
- Student Aid Index
The amount of financial aid you get depends on your SAI (Student Aid Index). While your SAI is usually the same for all colleges, the amount of aid you need will change based on the cost of each college.
- Financial need
You'll need more financial aid to pay for a more expensive college. But that doesn't mean that a less expensive college can give you enough money to cover all your college costs. Learn how to define your financial need (PDF).
- Scholarships
Colleges deal with outside scholarships in different ways. Sometimes, an outside scholarship won't change your college aid. It could reduce your loans or even take away some of the money the college gives you, so read the fine print.
- Deadlines
Fill out a FAFSA® each year. Always check with your college to find out if they have an application deadline. Remember that every scholarship you apply for can also have a different deadline.
Sources of student aid
Who offers student financial aid? You may be eligible to receive financial aid from various sources, so be creative when you search. Popular sources are:
- Federal and state government.
- Colleges, universities, and career schools.
- Civic and religious groups.
- Parents' employer or union.
- Businesses and nonprofit organizations.
Check for scholarships and grants that may be available for your gender, ethnic identity, athletic or artistic ability, school major, and outside-of-school activities.
Remember that your best resource is the financial aid office at the college or university you wish to attend. Contact financial aid offices at the same time you submit your admission application.
What is the best time to apply for financial aid?
The best time to start looking into financial aid is when you're in your last year of high school. Follow this checklist when you do apply for financial aid:
- File your FAFSA early
Missing your college’s FAFSA® priority deadline could prevent you from receiving some types of federal, state, or institutional financial aid. Remember to pay attention to and follow deadlines.
- Do your homework
Find out about your college’s financial aid application process – make sure you get any and all forms and remember deadlines.
- Open your mail
Open everything that comes in the mail or by email from the colleges you are applying to, especially if it is from financial aid offices. Don’t miss out on an important part of your aid package because you did not complete a form.
- You are your best advocate!
Do your research, follow deadlines, and contact your school’s financial aid office. Remember the phrase, “The squeaky wheel gets the grease?” Stay on top of your financial aid needs.
- Keep a checklist
College prep means more than taking specific classes. Find checklists from the U.S. Department of Education to set yourself up for success.
More resources
Learn more about the Free Application for Federal Student Aid (FAFSA®) and its key to applying for federal and state student financial aid.
- Financial aid tips and search tools: Click on scholarships to access search databases. Click on Calculators for tools to figure out college costs, savings goals, and how much financial aid you may need.
- FastWeb: Customized search tool for college and trade school scholarships.
- College Board: Find information on the SAT and other testing, college planning, scholarship search tools, and more.
- College Navigator: Search for colleges by state, major, level of degree program, and type of institution. Each school has a card that details retention rates, accreditation, financial aid, and much more.
- Federal Trade Commission: Read up on scholarship scams and how to avoid them.
Read more about paying for college (PDF).
Read about college degree accreditation and why it’s important when looking for financial aid.
Learn more about federal loans.