Financial aid, you know you need it, but do you know exactly what it is? With so many potential sources of college funding available, it is pretty easy to get the terminology mixed up! This post should help sort out the types of financial aid that are available to current and future college students.
Federal Financial Aid
Federal financial aid is tuition assistance provided by the federal government to a student, and it is generally paid directly to the college or university. Federal aid can take the form of grants or subsidized loans, and eligibility is always tied to the student’s income and his or her parents’ income (if the student is under 24 and unmarried). This means federal aid is need-based rather than merit-based.
Federal aid currently takes on two forms: grants and subsidized loans. Need-based federal grants include:
- Pell Grant – up to $5,550 annually for any student with unmet financial need
- Teacher Education Assistance for College and Higher Education Grants (TEACH) – Provides up to $4,000 annually for students pursuing a career in education. Applicants must agree to teach for four years in an approved subject at a low-income school. If you don’t meet that requirement within 8 years of graduation, you’ll be required to pay back the grant as a loan!
- Iraq & Afghanistan Service Grant – pays up to $5,550 like the Pell Grant, but it is only available to students who served the military in Afghanistan or Iraq. The requirements for financial need are less restrictive than the Pell Grant, but otherwise the program operates in a very similar way.
- Federal Supplemental Educational Opportunity Grant (FSEOG) – provides up to $4,000 in addition to the Pell Grant, but it is only available for students with the highest amount of unmet need.
In addition to grants, some students will also qualify for subsidized student loans. While these funds do have to eventually be paid back, they are offered at a much lower interest rate than private student loans and they don’t tend to accrue fees while you’re still enrolled.
To apply for any of the federal aid programs, one must complete the Free Application for Federal Student Aid, or FAFSA. Learn more about that process and how to complete your application here.
Institutional Financial Aid
While many colleges and universities have their own financial aid departments, these programs are a bit different than the federal grants available. For one thing, it is the school you are attending, and not the government, who decides exactly how much money is available and who is eligible. Another difference is that many institutional aid programs are merit-based, meaning that your grades rather than your financial history are most important in determining who gets free funds.
Need-based Institutional Aid is used by colleges and universities to attract well-qualified students who might not be able to afford the school’s tuition on their own.
Merit-based Institutional Aid is used to attract the students with the highest grade point averages and standardized tests scores, even if they could otherwise afford to attend.
The best way to apply for institutional aid is to get in contact with your college’s financial aid department as soon as you can! As soon as you hear back from the admissions office, your next step is to get in contact with aid and see what kind of options you qualify for.