The cost of college can be high, including tuition, books, room and board. Most students do not pay the full cost themselves, however, and that's where financial aid comes in.
What is financial aid?
Financial aid is money provided to help students and their families pay for college. In the United States, governments and other sources make more than $135 billion available for this purpose every year. Some financial aid is available to students on the basis of financial need, or through academic merit, or some other criteria.
That money comes in different forms, from different sources, in different amounts, often with different applications. No wonder it can feel confusing.
Three general types:
Generally, students may receive three different types of aid: (1) “gift aid” (grants, scholarships, and tuition assistance, like the Pell Grant, that do not need to be paid back); (2) “work-study” (work opportunities that earn money toward college and also do not need to be paid back); or (3) “loan aid” (student loans do need to be paid back and students should be careful to avoid too much debt.)
How does financial aid work?
- You apply for financial aid by completing your Mos profile or by submitting the necessary applications. When you do that, you list the school or schools you are interested in attending. You may also apply to independent scholarships.
- The Federal Government processes the information provided to determine how much your family can afford to pay for college each year. (The government refers to this amount as your "Expected Family Contribution" or EFC.) If you applied for aid from your State, the State Government may also process the information provided. Your information is then sent automatically to the financial aid offices at the school or schools you selected. Scholarship providers process your scholarship applications.
- College financial aid offices (a) receive your financial aid application information from the government, as well as your college application, (b) decide how much aid to offer each student, and (c) send each student a financial aid Award Letter detailing the school's offer, which may include a combination of gift aid, work-study, and student loans. Scholarship providers notify students of their awards.
- Once you know which school you will be attending and whether you will receive outside scholarships, you get to decide which elements of the school's Award Letter to accept or not. For example, offers of work-study jobs or student loans may be declined. For work-study jobs, you get to decide how many hours to work each semester.