One of the greatest misconceptions about financial aid is that it’s only offered to students who are very poor, very smart, or exceptionally talented. In fact, most students in the U.S. receive some form of financial aid. Nearly two-thirds of all undergraduates, for example, take out a student loan to help finance their education. Few students could otherwise afford post-secondary education.
Financial aid may come in many forms, from grants and scholarships, which do not need to be repaid, to loans, which do need to be repaid with interest (but usually only after graduation). Financial aid may be need-based, awarded to students who come from lower income families. It may also be merit-based, awarded to students who exhibit talent in academics, athletics, arts, music, public service or any number of other areas. Many scholarships, however, do not even require that the student excel in any particular area, but simply that they write an essay and/or meet certain qualifications such as ethnicity, religion, field of study or location. Finally, regardless of personal and social-economic background, nearly all students (or their parents) can qualify for student loans which typically defer repayment until some time after graduation.
The sources of financial aid are seemingly endless: the federal government, state and local governments, the college or university itself, businesses, banks, and thousand of other private and public organizations. The options may seem daunting, but a quick read through the articles published here at MyPlan.com will help you navigate the sea of possibilities and provide you with actionable steps to procuring financial aid.
Types of Financial Aid
In general, there are five categories of financial aid (listed below). To learn more about the different forms of financial aid, click on one of the following links:
Grants: A grant is financial aid you don’t have to repay. Generally, you must be an undergraduate student, and the amount you receive depends on your need, cost of attendance, and enrollment status (full time or part time). Grants are awarded by the government and/or institution on the basis of financial need. Read more...
Scholarships: Scholarships are a form of gift aid because they do not need to be repaid. They are given to students to help pay for their education; most scholarships are, in fact, restricted to paying for tuition expenses only, although some scholarships will also cover room and board. Scholarships are awarded to students who apply for them and who demonstrate talent in areas such as academics, athletics or arts, or who meet certain qualifications such as field of study, ethnicity, gender, religion, location, etc. Read more...
Loans: Loans are essentially borrowed money you must repay with interest. You can be an undergraduate or graduate student. Parents may also borrow to pay the education expenses of their dependent undergraduate students. Maximum loan amounts depend on your grade level in school. Loan terms vary by program or lender; the best terms are need-based government programs. Read more...
Work-Study: Work-study is a federal program which provides students with part-time employment to help them pay for educational expenses. The program encourages community service – jobs may be on-campus or off-campus – and gives students valuable work experience while they continue to study. Read more...
Other Options: Explore other options for financing your education, including the military and AmeriCorps. There are also a couple of lesser known options for significantly reducing your tax liability with the IRS if you are a student of if your parents have dependents who are students. Read more...
Advice on Applying for Financial Aid
Throughout the MyPlan.com Financial Aid Guide, you'll find numerous tips for successfuly procuring financial aid, but the three most important pieces of advice we can offer are:
- Don’t wait until you get accepted at a college before starting to think about financial aid. Applications for most financial aid programs must be submitted well before you would normally have received a college acceptance letter. Most types of aid also tend to be awarded on a first-come, first-served basis. Since most students will apply for some type of financial aid, you shouldn't wait too long to get started.
- Know your deadlines and which forms you need to fill out. If you haven’t visited the financial aid website of the colleges you’re applying to, drop everything you’re doing and go there now! We’ll forgive you for leaving our website. You must find out which forms they require and when they need to be submitted by. In addition, you’re likely need supporting information (like parental tax information) that could take a while to prepare.
- Even if you don’t think you’ll qualify, you should apply for financial aid every year. Most financial aid programs are based on the free FAFSA form provided by the federal government, so there’s no excuse for not applying. In addition, there are many factors used in computing need that change every year. Your own personal situation may also change from year-to-year, such as state of residence, family income, number of family members going to college, etc. You may find yourself eligible for aid even if you didn’t think you would be or were declined in previous years.
In the next article, entitled Applying for Financial Aid, you’ll find a detailed step-by-step guide to applying for Financial Aid. Information on deadlines and forms are provided as well as practical advice & tips for maximizing your chance of getting aid.