What are the types of financial aid?
Once you have completed the
Free Application for Federal Student Aid (FAFSA) and colleges
receive the results, various types of financial aid may be combined
into a financial aid package offer to you.
For many types of aid, how much you receive will depend on your
financial need, and in most cases, the school won't tell you how
much aid you qualify for until you've been accepted for enrollment
and have completed their financial aid form. However, this is not
true for merit-based assistance, that is, for scholarships.
Scholarships are usually awarded directly by the sponsoring
organization and do not depend on a financial aid package.
Categories of Financial Aid
Merit-based assistance is awarded to students
with a particular skill, achievement, talent or characteristic,
usually as a scholarship. Most scholarships require separate
application from you, often with
written essays and letters of recommendation or referrals.
Need-based assistance is provided to students
who cannot afford college using only their own or their family's
financial resources. The level of need is determined through
federal, state and institutional formulas. The most common forms of
need-based aid are grants, work-study programs and subsidized
student loans, which means the federal government pays the
interest on the loan for you while you are in school. You must
Free Application for Federal Student Aid (FAFSA) to obtain
federal and state need-based aid. Your college may require an
additional application for institutional aid.
Gift aid is money that does not normally have
to be repaid, such as grants and scholarships.
Self-help aid usually requires repayment, such
as student and parent loans, however work-study programs are also
considered self-help aid.
Tax Credits and Savings reduce the amount of
federal taxes the taxpayer owes and could result in a larger tax
refund. There are two different opportunities of this type: the American Opportunity Scholarship and the Lifetime Learning tax credit. In addition,
there are other tax code provisions that provide
incentives for continuing your education.
Specific Types of Financial Aid
are awarded to students who meet certain criteria. They can be
need- or merit-based and they are gift aid, so do not have to be
paid back. There are thousands -- and you may qualify for some! We
recommend you begin reviewing scholarship opportunities as early as
middle school. This will allow you to make sure you have planned
how to meet the eligibility requirements by the time you
- Merit awards can be conditional on financial
need or not.
- Grants are awarded to students based on
financial need and they do not need to be paid back.
- Student employment programs (Work-Study) offer
you a way to earn money while you are attending college and may or
may not depend on your financial need. Jobs may be at the school or
in nearby communities. You are paid an hourly wage set by the
school. For more information, contact a financial aid counselor at
the college you plan to attend.
- Loans (to you or your parents) are funds you
borrow that you must pay back, usually with interest. Most
financial aid packages include some loans.
Arizona State University student Andrew Rigazio had good grades
in high school, but he wishes now that he'd been more involved in
extracurricular activities. He says he thinks that would have
boosted his chances of receiving scholarships. Ultimately, he
applied for almost every community scholarship he was eligible for
- 21 in all - and didn't receive any.
"When it comes to financial aid, apply early and often," he
recommends. "The most work you will usually have to do is get a
letter of recommendation or write a short essay. But that work
could lead to a one, two or even three thousand dollar scholarship.
The reward that you could obtain far outweighs the amount of work
necessary. And even if you strike out like I did, you gain a lot of
experience in resume building and essay writing and other important
skills you may have not obtained another way."
You can download this excellent publication for students and
parents published by the U.S. Department of Education. This booklet
is a comprehensive guide to federal student aid programs.
Flight school student Max Kahlhamer didn't qualify for any
merit-based scholarships. But he used his savings and federal
student loans to help pay for his education at UND in Grand Forks.
He also received a gift scholarship awarded to students pursuing an
aviation career and he receives free room and board in exchange for
his work as a resident assistant.
"That's a big help, not paying for room and board," he says. "I
can keep costs low."