Throughout my career, I have come in contact with several students and families who have asked, what exactly is financial aid? Financial aid is money that the government and/or organizations award or lend to students to help them with paying for college. “Financial aid” is an umbrella term which includes grants, scholarships, work-study, and loans. This article provides a description of each type of financial aid.
Grants are funds that usually do not have to be repaid. This type of aid is awarded by the federal government, state, or a student’s college or university. The Federal Pell Grant is a widely known grant for income-eligible undergraduate students. Individuals can apply for the Federal Pell Grant and other grant programs through completing their Free Application for Federal Student Aid (FAFSA). Once the FAFSA is complete and submitted, it is passed along to a student’s state and their prospective institution(s) to determine if they are eligible for grant aid. In certain situations, grant aid may have to be repaid. For instance, if a student withdraws from school prior to completing their enrollment period, a portion of their grant may have to be repaid.
Scholarships are a type of fee-free aid that is usually awarded based on an individual’s merit, skill or ability. For example, a student may be eligible for a scholarship because of their exemplary grade point average. Since scholarships are offered by various sponsors including colleges and universities, community organizations, and individual donors, the deadlines and eligibility criteria vary. Many scholarship applications are similar to college applications and require students to submit their transcripts, letters of recommendation and an essay. However, there are some scholarship sponsors that seek videos, art work or nominations in the place of traditional application materials.
3. Federal Work-Study
The Federal Work-Study Program is open to individuals with financial need. This financial aid option allows students to work part-time while they are in school. Work-study is coordinated through an institution’s financial aid office. Also, students seeking working-study positions can usually secure employment on-campus or off-campus. Work-study compensation is at least minimum wage and payment is disbursed according to an institution’s payment schedule. A great thing about work-study is that students are paid in the same manner as a traditional job and can use these funds to pay for tuition, books or other expenses.
Loans are money that students and families can borrow to pay for college. This type of financial aid must be repaid to the lender. Student loans can be borrowed from the federal government or a private lender (e.g. banks). Loans offered through the government typically have flexible repayment choices and lower interest rates than loans offered through private lenders. Loans also have specific terms. Before signing for a student loan, it is important to make sure that the terms and conditions of the loan are well understood.
When inquiring about funding for college, remember that there are different types of financial aid which may require employment or have an interest rate. It is important to consider present circumstances as well as future goals when making decisions about financial aid.
Debt-Free Scholars, LLC (DFS) is an education consulting business that provides college counseling and financial aid counseling to students, families, and various communities. DFS provides services to help individuals graduate from college debt-free. DFS has assisted students with earning nearly one million dollars in scholarships and other sources of fee-free funding.