There are four types of financial aid for college students: grants, scholarships, student loans, and work-study programs. Depending on your family finances, financial need, academic record, extracurriculars, and demographics, you may be able to apply for all four types of financial aid.
According to the College Board, approximately two-thirds of college students receive some form of financial aid--and here at Edmit, we know many of you are interested in finding out just how much money you can get for college.
According to the U.S. Department of Education, grants and scholarships are “free money”--money allocated for higher education expenses that does not need to be repaid. Both grants and scholarships can come from federal or state governments, directly from one’s two- or four-year college or university, businesses, religious groups, civic associations, and nonprofit organizations. Many grants and scholarships are awarded on a competitive basis, and can be one-time gifts or recurring over the duration of one’s education.
Student loans are funds allocated for higher education expenses and will need to be repaid, with interest, after graduation. There are two types of student loans: federal and private. Federal student loans, administered by the U.S. Department of Education, fall into four areas:
Subsidized--allocated for undergraduate students with financial need
Unsubsidized--allocated for undergraduate, graduate, and professional students regardless of financial need
Direct PLUS loans--allocated for graduate or professional students, or parents of dependent undergraduate students
Direct Consolidation loans--allocated for students who would like to combine all their federal student loans into one account.
Private student loans are loans for education expenses from private institutions, such as local banks, national banks, and credit unions.
Historically, federal student loans have lower fixed interest rates than private student loans. Additionally, federal student loan servicers may have more flexibility regarding repayment plans, including deferment and income-based repayment plans, compared to private student loan lenders.
The federal work-study program funds part-time jobs at participating colleges and universities around the country, enabling students to earn a pre-set amount of money each semester to put toward education and living expenses. (Fun trivia: When in college, the Edmit team’s work-study jobs included stints at our campus Parking & Traffic office and Career Services department.) Ideally, work-study jobs are intended to provide on-the-job work experience that relates to the student’s major, although each student’s work-study experience will vary based on campus need, job openings, and hiring practices. Federal work-study jobs are available to both part-time and full-time undergraduate, graduate, and professional students who demonstrate financial need.
Your eligibility for financial aid can be based on your financial situation or non-financial factors.
Need-Based Financial Aid
Need-based financial aid refers to financial aid funding that’s awarded to a student based on their financial profile, and can include grants, scholarships, student loans, and work-study jobs. If a dependent student and their parents don’t have the financial means to pay for a given college, they may qualify for need-based financial aid. Colleges and universities use the FAFSA and CSS/PROFILE to get a holistic picture of a student’s finances and determine eligibility for need-based aid.
With the exception of the Iraq and Afghanistan Service Grants, most federal aid is need-based aid, with the federal government determining eligibility solely from a given family’s finances. Private aid can be both need-based and merit-based.
Merit-Based Financial Aid
Merit-based financial aid typically comes the form of grants or scholarships, often requires an application and/or selection via committee, and typically rewards a student’s accomplishments and talents, particularly in the areas of academics, athletics, arts, and volunteer or charitable works. Some merit-based aid may consider financial need in eligibility criteria; others will take a need-blind approach.
Merit-based aid options are vast and varied. Individual academic departments may have scholarships specifically for promising students by major. Local businesses and civic organizations may allocate scholarships for high school students, especially those headed to specific four-year colleges in the region. There are niche scholarships, with funding available for hundreds of interests ranging from civic-minded bowlers to aspiring cosmetologists and beauty school students.