With rising tuition rates and student loans, financial aid packages are more important than ever. College financial aid can be a great way to cover the cost of higher education or pay back loans after graduation.
Explore the different categories and types of financial aid, learn how it’s calculated, and where you can seek grants and scholarships.
Student Financial Aid: Need-Based vs. Merit-Based
The two most common categories of financial aid are need-based and merit-based.
Need-Based Aid
Financial need means that a student’s family can’t afford to pay for college expenses out of pocket. Thus, he/she may receive a grant or other type of need-based award after applying for financial aid.
Merit-Based Aid
Academic merit refers to your academic record and achievement. If you scored well on SATs or ACTs and earned high grades in high school, you may qualify for this aid category.
Financial Aid Types
There are four main types of financial aid: scholarships, grants, loans, and work-study opportunities.
- Scholarships
Get awards based on your academic achievement and don’t worry about paying the funds back later on.
- Grants
Secure funding based on financial need. Like scholarships, you won’t have to repay grants.
- Employment (Work-Study)
Schools may have loans and work-study programs that allow students to gain work experience while making money to offset their school expenses. Since these jobs are for college students, they are more flexible than your typical part-time or full-time job off-campus.
- Loans
Students may want to avoid taking out loans for college because they’ll have to repay them with interest after graduation. Though the last resort, it’s a financial aid option for those who need it.
How Aid Is Calculated
Financial aid is calculated based on your family’s income, assets, and other factors. When it comes to federal student aid programs, eligibility is determined by need. This refers to how much money you and your family have versus the cost of college attendance.
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Financial Aid Sources
Financial aid comes from various sources:
State and Federal Government
The state and the federal government may offer some form of assistance to families whose children are pursuing post-secondary education. This can take the form of grants or scholarships (which don’t have to be repaid).
Private Organizations
Community groups, national and local businesses, and religious organizations may have grants and scholarships available.
Colleges and Universities
Most colleges and universities award institutional aid to their students. Visit your university’s financial aid office to get more information.
Employers
Check with your parent’s employer to see if they offer scholarships or educational benefits.
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Final Thoughts on Applying for Financial Aid
If you want a bright future and a good education, it’s crucial to have all your ducks in a row. This means making the most out of the resources available to you. Financial aid is a game-changer for many students today, especially those who don’t come from wealthy families or have parents willing to pay their way through school.
Thinking about applying for financial aid, there’s no better time than now to begin!
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