What Is Financial Aid?

College fees can be shockingly expensive. High school seniors may feel overwhelmed by all the cost talk. Fortunately, there is some good news. Asking yourself “what is financial aid?” Let’s break it down.

College student researching financial aid on her laptop at campus.

What is Financial Aid?

There are several forms of financial aid to help cover the cost. The five main types of financial aid are grants, scholarships, institutional aid, federal student loans, and private student loans. Work study is an additional option for students who can juggle course work with part-time employment. Each of these has its own qualifying criteria. Moreover, every organization that offers financial aid also has their own unique requirements to qualify.

Grants

Grants are a form of gift aid, in that you don’t have to pay interest or return the money. This is money given to qualifying students by the federal and state governments. There are several types of grants that you may qualify for depending on your circumstances. The most well-known grant offered by the federal government is called a Pell Grant. To qualify for the Pell Grant you must be a full-time student and you must be able to demonstrate financial need.

Scholarships

Scholarships are another form of gift aid. They are offered by various organizations and each one has a different set of qualifying requirements. Whatever award money you win is yours to keep. Scholarships may be offered for academic or sports accomplishments, artistic or musical achievements, computer skills or just about any reason. The internet is the best place to start your search for scholarships but it’s not the only place. Also check with your academic counselors your parent’s place of employment, community notice boards, your church and the local newspapers.

Institutional Aid

Institutional aid is awarded by colleges and universities. Every single college has its own criteria for awarding students financial aid packages. Institutional aid makes up a large chunk of all financial aid awarded. If you’re curious how much a particular school might award you in aid, check out College Raptor’s free match tool!

Federal Student Loans

You can get student loans from various sources. Federal student loans have the lowest interest rates and the most flexible terms. They come in two forms – subsidized and unsubsidized. With subsidized loans, the interest starts accruing only six months after you graduate college. These are the cheapest loans available. Unsubsidized loans begin accruing interest from the day they are disbursed. These are the second cheapest type of loan available.

Private Student Loans

The one downside of federal student loans is there is limit on how much you can borrow. Your limit will depend on your personal financial situation and your EFC or Estimated Family Contribution. If you need more money than you qualify for, you’ll have to borrow from private lenders such as banks or credit unions.

Many students turn to private loans to cover the rest of the cost of college, but it shouldn’t be your first step. When it comes to private loans, it pays to do your research and compare various lenders. Our Student Loan Finder will allow you to do just that–see rates from a number of reputable lenders side by side.

Work Study

These are specific on-campus jobs that are reserved for students who demonstrate financial need. Most work-study positions require students to work no more than 15 to 20 hours a week. If you can handle coursework while working part-time this is a great way to earn money and reduce your overall debt.

You must complete the FAFSA or Free Application for Federal Student Aid to receive any type of federal student aid. This includes grants, federal student loans and work-study. You may also need the FAFSA for institutional aid and some scholarships.

Basic Steps For Seniors To Take

The most important thing to do in your senior year is to fill and submit the FAFSA. To receive financial aid for your first year in college, the completed FAFSA must be submitted the year before you start college. That means you will have to submit your first FAFSA while you’re in your senior year.

The FAFSA opens on the 1st of October. Ideally, you should fill in the application and submit it as close to this date as possible. The earlier you apply, the better your chances of getting the maximum aid due to you.

Important Note: Check the deadlines of each school you’re applying to. The financial aid deadline of some schools is earlier than the FAFSA deadline. This is especially important if you’re applying early action or early decision.

Start by getting your own FSA ID at the Federal Student Aid website. Once you have your own FSA ID, you can start filling the application.

You will need these details to fill out the form:

  • Social Security number
  • Mailing address
  • Savings bank balance
  • Financial information
  • Up to 10 schools you want to send the details to

If you’re applying as a dependent student, your parents will have to create their own FSA ID and fill in details of their finances.

In addition to filling the FAFSA, you should also start exploring scholarships during your senior year. Make a shortlist of those you qualify for along with the requirements and deadlines, and start working on your scholarship applications.

Also speak to the financial aid offices of the colleges on your shortlist. You may get some helpful first-hand information from them that you can use to maximize your aid.

Financial Aid FAQ

Here are a few common questions students have about financial aid.

Q: Should I fill the FAFSA even if I don’t qualify for it?

A: Yes, absolutely. Calculating financial aid eligibility is complicated. Most families forfeit the financial aid due to them simply because they mistakenly believe they don’t qualify. Every student must submit the FAFSA. In addition to federal aid, this application is also used for awarding institutional aid, work-study, and some scholarships.

Q: Do I need to fill the FAFSA just once or every year?

A: You will need to fill the FAFSA for every year that you need financial aid. Without the FAFSA you won’t receive any federal, state or institutional aid for that particular year.

Q: Do I need to be admitted at a particular college before applying for financial aid?

A: No. Submitting the FAFSA is a prerequisite for receiving financial aid. You can fill out the FAFSA any time after October 1 while you’re in your senior year. The information on the form will be shared with the 10 colleges you’ve listed on the form. The schools will use that information to put together a customized financial aid package for you. However, you will only receive the funds after you are admitted at that particular college.

Q: How much financial aid will I receive every year?

That depends. The amount of financial aid you qualify for will depend on your financial circumstances and your family’s EFC.

Q: How many scholarships can I apply for each year?

There’s no limit to the number of scholarships you can apply for each year. You can apply for as many as you want. Better still, there’s no limit to the amount of money you can win. The only limiting factor is the amount of time you have available to put together your application for each award.

Now that you know the basics of financial aid, go out and get the aid you deserve!

 

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