College can come with a hefty price tag. Luckily, there are several types of support available for students who need help paying for college.
This guide to financial aid will cover everything you need to know about making college more affordable.
(Please note: The following information applies to citizens, dual citizens and permanent residents of the United States. Financial aid options and processes may differ for those who reside outside of the U.S.)
What is Financial Aid?
"Financial aid" is an umbrella term that covers all of the financial support that students receive to help pay for tuition and other costs associated with college.
Nearly 84% of college students in the United States receive some sort of financial aid which means that most students are getting support. However, more than $2 billion in federal aid goes unclaimed each year.
There are several different types of financial aid that come from a variety of donors and lenders. This makes it possible for students from different upbringings and backgrounds to find funding to help them reach their academic goals.
4 Types of Financial Aid
There are four main types of financial aid: scholarships, grants, loans and work-study. Each of these is a little different since they are designed to offer support for students with different situations.
With that said, let’s break down the different types of financial aid that are available for college students.
Scholarships are a type of funding that comes from both public and private institutions. They can cover everything from partial tuition to full tuition with room and board.
Most scholarships require students to meet certain standards once they are enrolled and classes start. Most scholarships require that students maintain a minimum GPA. For academic scholarships, this GPA is higher. For sports scholarships, student-athletes must remain committed to their sport. Full-time enrollment is another common stipulation on scholarships.
Scholarships do not need to be paid back as long as the student maintains their grades and upholds all other scholarship requirements.
Grants are very similar to scholarships, but they are typically awarded based on need versus a student’s academic, athletic or artistic performance.
This sort of financial aid can be funded by the government, institutions or private donors. Publicly funded grants are often geared towards supporting students from low-income families.
Private grants, on the other hand, can be more like scholarships. Since they are private, the donor or organization that manages the grant has the ability to restrict access however they please.
Some grants are one-time payments, and others are dispersed over the course of a student’s college career. Like scholarships, grants do not need to be paid back.
Loans are a type of financial aid that must be paid back with interest. The exact terms of a student loan depend on the specific lender.
Students can borrow from the federal government or from a private lender. Many students prefer federal loans since their interest rates are lower and a portion of the interest is tax-deductible. However, students must qualify for federal loans, so many have no choice but to borrow from private lenders.
It is important to check if the loan has a simple or compounding interest when it comes to taking out loans. With simple interest, you only pay interest on the principal (in other words, the money you borrowed). But with compounding interest, you pay interest on both the principal and the interest that has accrued.
Work-study is another option for financial aid that is a little bit different. There are two types of work-study programs: some that are government-sponsored and some that are school-sponsored. In both types of programs, students get a job on campus and work off their tuition.
For federal work-study programs, students have to demonstrate financial need. Typically, these jobs include a variety of roles around campus. You could work in the mailroom, at the library, in the gym, in the bookstore or anywhere else on campus.
Who is Eligible for Financial Aid?
Since there are so many types and sources of financial aid, pretty much anybody is eligible for funding of some type.
When it comes to need-based financial aid, only those from families with income that falls below the designated income threshold qualify. However, there are other criteria that make students eligible for aid as well.
Some other financial aid qualifiers include:
- Above-average academic performance
- Participation in specific clubs and organizations
- Stellar athletic ability
- Membership in a minority group
- Artistic abilities (performance art, visual art, music, etc.)
Students may also be eligible for grants and scholarships based on their parents’ or guardians’ jobs or involvement in different organizations.
Where to Find Financial Aid
There are quite a few places to find financial aid. Some of the top places to access financial aid include:
As we mentioned, it’s possible to get scholarships from organizations that your family is connected to, whether it be a social club or your parent’s or guardian’s employer. Reach out directly to see what those organizations have to offer.
What is the FAFSA?
A guide to college financial aid would not be complete without mentioning FAFSA. FAFSA is short for "Free Application for Federal Student Aid." This is an application that takes a student’s family finances into consideration for federal financial aid.
Basically, the FAFSA application collects information from each student and their guardians to determine the family’s estimated possible contribution to the student’s education. From there, it is determined whether the student is eligible for federally funded grants or federally backed loans.
Many schools require students to keep an up-to-date FAFSA application on file even if they are not eligible for federal aid. Although it’s meant for assessment for federal funding, this information can be used to assess eligibility for funding from private institutions, as well.
To learn more about making college more affordable, head over to Bucknell University’s Financial Aid page.