As we review and analyze students’ financial aid offers each year, I’ve found many families have similar questions that I hope to address here. One of the most confusing parts about the financial aid process it seems, is what kind of aid a student could be eligible for, and where that aid is coming from.

Most parents also wonder what aid needs to be covered by the family, or paid back, and what aid will renew over the 4-5 years for an undergraduate degree. Below I’ve listed every kind of financial aid that may show up in a student’s aid package, and where they come from.

Federal Financial Aid – aid offered as a result of filing the FAFSA. If a college requires the FAFSA as part of their financial aid process then they participate in federal funding programs. These offers are actually funded by the government and are generally renewable if a student meets SAP (Satisfactory Academic Progress).

  1. Loans: federal student loans will likely be part of any student’s financial aid package. Subsidized loans are need-based and have part of the interest covered by the government. Unsubsidized loans are offered to everyone (as long as the student is otherwise eligible). These must be paid back after graduation.
  2. Grants: federal grants are always need-based. There are several different kinds available, if a student is eligible. Common types are Pell, FSEOG, and TEACH.
  3. Work-Study: certain on-campus jobs, or off-campus jobs with a school-affiliated organization, are paid for and dictated by the government program. Students must use their paycheck towards educational expenses.

State Aid – every state is different when it comes to offering aid for college. In general though, a student must be a resident of that state and have graduated from high school in that state. Most states require the FAFSA to be filed, but pay attention if your state also requires its own form, or requirements, to become eligible.

This is totally separate from in-state tuition, but the tuition discount at most state colleges is also considered part of a student’s “financial aid”.

  1. Scholarships – these are generally merit-based (from test scores or GPA), but can sometimes be need-based as well.
  2. Grants – these are almost always need-based.

Institutional Financial Aid – these types of aid also vary widely, depending on the amount and types of donors a college has. Colleges always have their own method of deciding how their own aid is awarded. However, a college can choose to only require the FAFSA form to collect information for a student. Many colleges do have their own forms though, for both merit-aid and need-based aid.

  1. Loans – not as common, but some colleges do offer their own loans to students above and beyond the federal student loans. These must be paid back to the college, but are generally comparable in amounts and interest.
  2. Grants – these are generally offered based on financial-need. These are generally renewable if a family’s financial situation remains the same.
  3. Scholarships – these could be merit/academic-based, achievement-based, or based on a specific set of criteria that a student meets. Sometimes these are also based on financial-need. These are often renewable if a student continues to meet SAP as set by the college.
  4. On-Campus Job – if a student plans to live on or near campus, these can be a great way for a student to earn extra money, contribute to their college community, and make friends, without ever leaving campus. The difference to applying on-campus rather than for (federal) work-study, is that hours are not regulated and any income earned is discretional. A student is not required to use their paycheck toward educational expenses. Also, a student could work as much, or as little, as their college will allow.

Private/Outside Aid – this section is essentially all other types of aid or funding that may be available to a student. Your college will need to know about any of these funds, if you plan to also apply for financial aid.

  1. Student – earnings and savings available prior to starting college are both sources of educational funding that may be a factor when budgeting college costs.
  2. Parents – parents also have earnings and savings, or certain education and asset funds, which may be available for funding college. These largely make up your family’s EFC (Expected Family Contribution) when the college considers a student’s aid package.
  3. Family – grandparents, or aunts and uncles, etc. may also have their own education plans, or funds available for a student to use.
  4. Work – summer jobs, or any jobs held outside of campus during the year will contribute towards a student’s income that is counted as student aid. You will have to decide what’s right for your family in terms of hours worked and money earned for the school year.
  5. Local Scholarships – local businesses and organizations often award small scholarships if a student simply requests it, or completes the requirements to receive it. Check first with your high school guidance counselor, parents’ work, place of worship, or community organization that you’re involved in, to see what may be available to you.
  6. National Scholarships – there are several scholarship-search tools available online that a student can research and apply for. These tend to be very competitive so each student’s family will need to decide if the amount of effort is worth it to apply. You don’t want these to hinder your grades or other application requirements!
  7. Private Loans – probably best used as a last resort, but several banks and lenders have student loans available. A co-signer is usually required, as these certainly must be paid back.

If you have another topic, or specific questions on this one that you wish I had addressed, please feel free to reach out! We are always updating blog posts, or can create a new one based on your topic of interest.

Scroll to Top