A Breakdown of the Different Forms of Financial Aid

There are many types of student financial aid

Flickr user krhawlings

Oftentimes when searching for colleges, the cost is always one of the biggest concerns. College is growing more and more expensive, but it’s also more important than ever to have a college degree. Luckily there are many different ways to pay for college that doesn’t solely rely on out-of-pocket funding. Here we will break down the different types of student financial aid and the different sources of funding.

All in all there are four major categories of aid: scholarships, grants, loans, and work studies. Four different major sources typically give out aid: the institution, the state, the federal government, or private sources.


By far and away the most common form of student financial aid, scholarships are essentially gift money that does not have to be paid back. This is ideal for students, because it does not accumulate debt for them.

Non-competitive forms of aid, merit scholarships award students who meet certain requirements–like a GPA of 3.0 or higher. Other scholarships can be student-specific, like being a member of a certain religion or are of a specific race. Need-based scholarships award to students who demonstrate financial need, and who could not otherwise attend due to financial restrictions.

Scholarships are most often awarded by individual institutions–the universities and colleges themselves–and the federal government. But many scholarships come from private sources as well, including companies, religious organizations, and even families.


Offered by the federal government some individual institutions, grants are another form of aid that do not have to be repaid. Like scholarships, need-based, merit-based, and student-specific grants exist. Grants are highly competitive and sought after.

Though sometimes used interchangeably with “scholarships” grants are not entirely the same. Scholarships are typically merit-based, while grants tend to be need-based, meaning most grants are related to the student’s financial situation at home. Scholarships also tend to have more rules or requirements attached to them.


Unlike scholarships and grants, loans have to be repaid. The average bachelor’s degree-seeking college student will borrow about $35,000 to pay for their college education. Of the 1.8 million students who graduate with bachelor’s degrees every single year, 1.28 million of them graduate with student loan debt. Yikes.

Loans are often a necessary, but stress-inducing form of financial aid. They can come from the federal government or private sources. Federal loans come in two forms: subsidized (the government pays the interest while you’re in school) and subsidized (where the student is entirely financially responsible).

Private loans come from private banks, and often balance with the aid the student receives from the government. These are largely dependent on the student’s credit score and financial habits. Private loans are usually a last resort source for financial aid.

Work Study

A work study is essentially what its name implies–a student works while they study at college. The federal government typically sponsors a work study program. The student can work on or off-campus and their payment goes towards tuition, room and board, or other college expenses. Pay and work can vary, though it is usually a university-based position–hopefully in the student’s interest of study.

For all of these options, a student should put time, effort, and dedication into the research and application processes. Weigh the pros and cons, explore every option, and make plenty of backup plans.


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