Table of Contents:
- What You Need To Know About Paying For College
- What Are the Different Types of Student Financial Aid?
- Scholarships
- How To Get an Academic Scholarship
- Federal Student Aid
- Federal Student Loans
- Grants
- Work-Study Jobs
- Private Loans
- What Is FAFSA?
- How To Fill Out Your FAFSA
- How To Correct or Edit Your FAFSA
- Accepting Financial Aid
- Repaying Your Student Loans
- Financial Aid FAQ’s
Financial aid for students is funding designed to assist with post-secondary education, including higher education at colleges, universities, and community colleges, as well as non-degree programs and vocational training at trade schools. This funding can come in the form of loans, scholarships, federal aid, grants, or work-study jobs.
In this guide, we’ll cover what you need to know about financial aid; everything from the different types to deadlines, to resources to help you get started.
What You Need To Know About Paying For College
The average cost of college for students in the United States is $38,270 per year.1 Over the course of 4 years, students can spend over $500,000 earning a bachelor’s degree.1 Since not everyone has $500,000 laying around, the average student will have to budget, plan, and form a proactive strategy when it comes to paying for school.
The foundation of paying for college starts with forming good financial habits. Budgeting apps can be a helpful place to start learning how to track your expenses, manage your budget, and even set financial goals.
You can try Piere for free to start creating your student budgeting plan straight from your phone!
What Are the Different Types of Student Financial Aid?
The most common types of student financial aid are:
- Scholarships
- Federal student aid
- Work-study jobs
- Private student loans
Below, we’ll go into detail about each aid type, the qualification requirements, and how you can start your application process.
Scholarships
A scholarship is essentially a monetary gift towards your education. Unlike loans, you don’t have to pay back the money you receive from a scholarship. Students may receive scholarships based on education, athleticism, location, race, family economic status, or other merits.
You can find scholarship opportunities for free at:
- Schools
- The reference section at your local library
- Your employer or your parents’ employers
- Local businesses
- Private companies
- Nonprofit organizations
- Community or religious centers
How To Get an Academic Scholarship
Working hard to earn a high GPA in high school (3.5+), providing strong SAT/ACT scores, and being involved in extracurricular activities can help secure scholarships and even qualification for certain types of financial aid.
Some scholarships only require a simple application where students give their information and provide necessary credentials (transcripts, tax documents, etc.) to apply. Other scholarships have questionnaires, essays, or other requirements in order to apply.
You can use the following websites to help you find scholarships:
You can also find help applying for scholarships on the U.S. Federal Student Aid website.
Federal Student Aid
You can apply for federal student loans by filling out the FAFSA. Qualification for federal student loans is typically need-based, meaning the students who come from families with lower income and less assets will be prioritized over students from high-income families.
Federal Student Loans
After filling out your FAFSA, you may receive offers for federal student loans as part of your school’s financial aid offer. Like any loan, you will eventually have to repay the balance for these loans, plus interest and fees. However, many federal student loans come with a grace period that allows students to postpone repayment until after they are out of school, usually 6 months post-graduation.
Common types of federal student loans are:
- Direct Subsidized Loan — Up to $5,500 for eligible undergraduate students who demonstrate financial need.
- Direct Unsubsidized Loan — Up to $20,500 for eligible undergraduate, graduate, and professional students.
- Direct PLUS Loan — Loans for parents who are borrowing for their dependent undergraduate student or eligible graduate or professional students. Loan amounts can be as much as the total cost of attendance.
- Direct Consolidation Loans — Option for students with eligible federal student loans who want to combine their balances into a single loan.
Grants
Similar to a scholarship, a grant is a type of financial aid given to a student, and generally does not have to be repaid. In order to qualify for a grant, students must meet certain academic, financial, or other need-based requirements.
Some common Federal Grant Programs include:
- Federal Pell Grant — Up to $7,395 awarded to undergraduate students (who have not earned a bachelor’s, graduate, or professional degree) on a financially need-based basis.
- Federal Supplemental Educational Opportunity Grant (FSEOG) — Up to $4,000 awarded to undergraduate students (who haven’t earned a bachelor’s, graduate, or professional degree) on a financially need-based basis.
- Teacher Education Assistance for College and Higher Education (TEACH) Grant — Up to $4,000 awarded to undergraduate, postbaccalaureate, or graduate students on track to earn a degree intended for teaching elementary or secondary school in a high-need field.
Work-Study Jobs
A work-study job provides part-time employment for undergraduate and graduate students that allows them to earn money that goes directly towards their education expenses. Work-study programs are available to full-time or part-time students and may be paid on an hourly or salary basis, depending on whether they’re an undergraduate or graduate student, and the employer.
You can find more information on work-study programs on the U.S. Federal Student Aid website.
Private Loans
Students can also fund their education with private loans. Loan amounts, interest rates, and repayment terms are determined by factors like income, assets, and credit history. You don’t have to fill out the FAFSA in order to qualify for private student loans; you would just apply directly with the lender.
Popular private student loan providers include:
Keep in mind that private student loans are generally not eligible for deferment or forbearance, and you may have to start making payments on your loan while you are still in school.
What Is FAFSA?
The Free Application for Federal Student Aid (FAFSA) is the form students must fill out in order to be considered for and receive federal student aid. States and colleges may also use information from your FAFSA to award grants, scholarships, loans, or other financial aid.
Federal funds are limited, so it’s important to complete your FAFSA ASAP if you want to make the most of your potential federal student aid.
Generally, the FAFSA deadline is 11:59 p.m. Central time (CT) on June 30 of each year. You can find more information on FAFSA Application Deadlines on the U.S. Federal Student Aid website.
How To Fill Out Your FAFSA
The first step in filling out your FAFSA is to make a StudentAid.gov account. This account is what you will use to fill out your FAFSA for your whole college career, so make sure to save the login credentials. You can also check the status of your FAFSA, make changes, and review your FAFSA with your StudentAid.gov account.
Once you have your account, click “Start New Form” to get started. Some documents you’ll want to have on hand when filling out your FAFSA include:
- Your family’s most recent tax return
- Any records of child support received (if applicable)
- Current balances of cash, savings, and checking accounts of both you and your parent(s)
- Net worth of investments, businesses, and farms (if applicable)
If you are filling out a paper FAFSA form, do not mail these documents along with your form! Simply use them as a reference when filling out the FAFSA.
If you need help filling out your FAFSA, StudentAid.gov provides these free tools:
- If you’re on the online version of the FAFSA, select the question mark icon next to a FAFSA question to get more information that may answer a question you may have.
- Check out the FAQ page on StudentAid.gov.
- Use the AI assistant found on the online form.
- Contact the financial aid office of the school you plan to attend directly.
Once you complete your FAFSA form, it should be processed in approximately 1-3 days if you submitted online. If you submitted a paper FAFSA it may take about 7-10 days to process.
IMPORTANT NOTE: Be sure to check the status of your FAFSA after submitting to make sure there are no actions required on your part. If you are missing information or have filled in incorrect data, your FAFSA form won’t be processed.
How To Correct or Edit Your FAFSA
To correct or make changes to your FAFSA form online, you can go to your StudentAid.gov account and make any necessary updates. If you are a dependent student and are making updates to our parent(s) information, your parents will have to re-sign the FAFSA form electronically.
If you are making changes using the paper FAFSA Submission Summary you received in the mail, simply make the updates required, sign the document, and send it to the address listed.
Accepting Financial Aid
After filling out your FAFSA, you may be awarded several loans/forms of financial aid. You don’t have to accept every loan, and you don’t even have to accept the full loan amount (Your school will inform you how to request a lower loan amount in the aid offer). Remember, you can always increase the amount later if you need.
When accepting financial aid, try to gauge your loan amount to the cost of your tuition and living expenses. Borrowing only what you need can save you from not only over-borrowing and paying hundreds of dollars or more in extra interest costs, but from potentially adding years to your repayment terms as well.
Repaying Your Student Loans
Eventually, you’ll need to repay your student loans. Depending on your loan structure, you may have to start making payments on your student loans right away, meaning you’ll be responsible for making monthly payments while you’re in school. Other loans have a grace period where students don’t have to make payments while enrolled in school full-time, and for up to 6 months after they graduate (Keep in mind that interest is still usually accruing during this time).
There are some exceptions, such as deferment or forbearance, where students can temporarily pause their student loan payments, or student loan negotiation options for those who can’t afford to repay their loans.
Financial Aid FAQ’s
When will I know how much federal financial aid I get?
Once your FAFSA has been processed (1-3 days for online submissions, or 7-10 days for mail-in submissions), you can log into your StudentAid.gov account to view your “Eligibility Overview.” Here you’ll be able to see an estimate of how much funding you’re likely to receive in Federal Pell Grants and Federal Direct Loans, as well as your eligibility status for the Federal Work-Study Program.
What’s the difference between subsidized and unsubsidized federal loans?
Subsidized federal loans are need-based and do not accrue interest while you are enrolled in school at least half-time, during your grace period, or during approved deferment periods. Unsubsidized loans are not need-based, and interest begins accruing as soon as the loan is disbursed, even while you are in school.
What is need-based financial aid?
Need-based financial aid refers to the system of assigning student aid based on the financial situation and income of the student’s family, not on the individual student’s academic (or athletic) merit. This type of financial aid, funded by the federal government, state governments, and individual colleges, is to help with tuition and other education costs for students who cannot afford college on their own.
Your eligibility for need-based financial aid will be determined by filling out the FAFSA.
What is student loan delinquency vs. default?
Student loan delinquency happens when a student misses a payment, usually resulting in missed payment fees and damage to their credit score. Students can rectify a delinquent loan by catching up on their payments.
Student loan default occurs when a student has stopped making payments on their loan for more than 270 days past a scheduled due date.2
Can I pause my student loan payments temporarily?
Yes. Deferment and forbearance are options for people who are in a short-term financial bind and need to temporarily suspend their student loan payments. With deferment, interest won’t accrue on some types of loans, while interest will accrue on all types of loans during forbearance.
Also, if you plan to pursue loan forgiveness, any time spent in loan deferment or forbearance won’t count towards your forgiveness requirements, meaning you won’t make any more progress towards your loan forgiveness until you resume your loan repayment.
Can I submit the FAFSA if I don’t have my tax information yet?
Yes, you can submit the FAFSA using estimated tax information if your tax return has not been filed yet. However, you’ll need to update your FAFSA later with the correct tax information to avoid delays or changes in your financial aid eligibility.
Do I need to reapply for financial aid every year?
Yes, you must submit a new FAFSA for each academic year you want to receive financial aid. Financial circumstances, enrollment status, and aid availability can change year to year, so reapplying ensures you receive the correct amount of aid.
What happens if my family’s financial situation changes after submitting the FAFSA?
If your family experiences a significant financial change, such as job loss or reduced income, you can contact your school’s financial aid office to request a review through a process called professional judgment. The school may adjust your aid eligibility based on updated financial information.
Can I get financial aid for part-time enrollment or online programs?
Yes, financial aid may be available for part-time students and those enrolled in online programs, but eligibility and award amounts may be reduced. The school must be accredited and participate in federal student aid programs for you to qualify.
How does financial aid affect my credit score?
Grants, scholarships, and work-study programs do not affect your credit score. Student loans can impact your credit, but making on-time payments can help build positive credit history, while missed payments may harm your score.
What should I do if my financial aid offer isn’t enough?
Start by contacting your school’s financial aid office to discuss an appeal, payment plan options, or additional institutional aid. You can also look for outside scholarships, reduce education-related expenses, or carefully consider supplemental loan options if necessary.
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