Basic Types of Financial Aid
Financial aid is the money students receive to help pay for college. While more than 63 percent of students enrolled in four-year universities currently receive some form of aid, many say they still do not understand all the options available and find it difficult to know what kind of financial aid to choose.
Although the U.S. Department of Education's Federal Student Aid (FSA) program is currently the largest source of student aid in the United States—funding more than $80 billion a year in grants, loans and work-study programs—it is not a student's only choice when determining how to pay for college. A number of non-profit organizations and private sources are also available to help students pay for college through scholarships, grants, fellowships, and loans. Overall, some of the most popular financial aid options include:
GrantsCommonly referred to as "gift aid," federal and state funded grants can be used to pay tuition, fees, room and board, and miscellaneous educational expenses such as books and supplies. Grants do not have to be repaid so long as the student continues meeting all grant requirements, which may included a minimum GPA or continued college enrollment. They are generally awarded on the basis of financial need or academic merit.
Currently, some of the most common federally-funded grant programs for undergraduate students include federal Pell grants, Supplementary Educational Opportunity grants, SMART grants, and Academic Competitiveness grants. In addition, many states offer their own grant programs as well.
ScholarshipsLike grants, scholarships are another form of "gift aid." The difference, however, is that scholarships are more commonly awarded based on academic or athletic achievement rather than financial need. There are hundreds of thousands of scholarships available in the United States, which are given out by private organizations, non-profit groups, schools, and government organizations annually. There are so many, in fact, that many scholarships go without recipients each year due to a lack of applicants.
Students interested in applying for scholarships should check online, ask their school counselor, or speak with a librarian. These individuals should be able to recommend scholarships that you may be especially well suited for due to talent, educational level, and familial or ethnic background.
FellowshipsAcademic fellowships are given to undergraduate and graduate students to help fund a certain area of study or research. Like scholarships, fellowships do not have to be repaid. The main difference, however, is that fellowships are awarded with specific goals in mind, rather than for the general purpose of paying for college. Fellowships are generally given out to students for several reasons, including the conduction of research in a specific field, academic achievement, regional residence, and future career plans.
Work StudyWork study is a federally funded program that pays students to work part-time jobs on campus. What work study jobs oftentimes lack in pay, they make up for in flexibility. On-campus employers commonly make accommodations and exceptions for academic schedules, especially during midterm and finals periods. On average, work study students earned $1,447 per school year, working 10 to 12 hours per week. As an additional benefit, on-campus work study jobs often give students a chance to work with their undergraduate peers and learn more about their campus.
LoansA number of loan options exist for students looking to fund their education through both federal and private lenders. Unlike scholarships and grants, loans must be repaid, although the specific rates of interest and repayment dates differ depending on the loan type.
Federally-funded education loans are the most popular for parents and students looking to cover the gap between financial aid awarded and the expected family contribution. Federal PLUS, Perkins, Subsidized and Unsubsidized Stafford or Direct Loans are the most common, although other smaller government funded educational loan programs exist.
For those who need additional funding sources, a number of universities sponsor their own loan programs. While harder to receive, these loans usually have a better interest rate than federal student loans. In addition, a number of private lenders offer educational loans to parents and students, although these nearly always carry higher interest rates than other types of educational loans.
Additional Resources:
National Center for Education StatisticsKnowHow2Go.org
US News – Glossary
Going2College.org
Cornell University Career Services
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