Financial Aid: Everything You Need to Know
This is a form of monetary assistance provided to students to help them settle college payments. It can take the form of private or federal loans, grants, scholarships, and work-study programs. As college tuition prices today are skyrocketing, it’s no longer possible for most families to afford the entire amount on their own. This is where financial aid can help by filling in the gaps. Using financial aid, a student can cover most of their higher education costs, including tuition and fees, books and supplies, room and board, and transportation.
Several sources (government and private) offer financial aid. This includes state and federal agencies, community organizations, colleges, corporations, foundations, and more. Before seeking financial aid, it’s important to know the different types one can get.
There are mainly two types of financial aid available for students, namely need-based and merit-based. The former is awarded based on the awarding organization’s evaluation of a student’s ability to pay for college. In contrast, merit-based aid is given for demonstrated ability or special talents, such as in academics, music, athletics, or other areas. Let’s examine the categories under these two types of aid.
Scholarships are typically based on a student’s merit rather than their financial need and don’t need to be repaid. Colleges, universities, or private organizations offer them. Grants don’t need to be paid back and are awarded by the state or federal government. However, a student should usually have a financial need to qualify for them.
Federal student loans refer to fixed-interest-rate loans given by the government. For undergraduate students, there are direct subsidized or unsubsidized loans, while graduate students can opt for direct unsubsidized or direct PLUS loans. Work-study programs fund part-time jobs, while private student loans are variable- or fixed-rate loans given by a credit union or bank.
To become eligible for most financial aid, students will need to complete the FAFSA (Free Application for Federal Student Aid). After they have filled the FAFSA and submitted it, they should check their FAFSA status to ensure the DOE (Department of Education) processed it correctly. They need to review their Student Aid Report and correct any mistakes, which they might have made on their application. It’s important to keep note of all the deadlines for one’s financial aid application to make sure the application is sent before the cut-off dates.
The amount of financial aid a student gets will depend on rules established by the different sources and federal, university, and state guidelines.