Education costs money...lots of it. Financial aid is the key to ensuring that you can focus on your studies without worrying about the money. But the financial aid process can be complicated. What kind of financial assistance do you qualify for? Are you eligible for financial aid awards if you don’t demonstrate financial need? Do you qualify for free money or do you have to repay your federal or private loans?
You’ve got lots of questions about the financial aid process. Fortunately, we have all the answers.
But before you read on, here’s the most important thing to know. Everybody should apply for federal aid every single year they plan to attend college or grad school. Financial aid isn’t just awarded to students in need. There are financial aid options for students with every kind of background, including students with financial security.
Financial aid is for everybody. Make sure you find out what your options are.
Now that we’ve gotten that out of the way, read on. In this guide, we walk you through different types of financial aid, how to get it, and what to do with it.
The U.S. Department of Education provides more than $120 billion in financial aid every year to help students pay for college or career school. This financial aid is distributed through the Department’s Office of Federal Student Aid (FSA) in the form of student loans and need-based grants, as well as work-study programs. Most U.S. citizens planning to attend an accredited college, university, or vocational school are eligible for some form of federal aid. Even if you don’t believe that your family income qualifies you for need based aid, you should apply for federal financial aid to learn more about your eligibility for federal student loans, state-based college loans, and other financial aid options.
Federal Financial Aid refers to the array of programs funded through the Department of Education and designed to help students pay for college, graduate school, or career school. Federal Financial Aid is available only to students attending schools which have earned accreditation from a regional or national accreditor that is recognized by the U.S. Department of Education. Students attending schools which are not accredited will not be eligible for federal student loans or federal need-based grants.
Federal Financial Aid takes three primary forms:
The first step to accessing federal financial aid is completing a Free Application for Federal Student Aid (FAFSA).
Every student attending an accredited college, university, or professional college should fill out a Free Application for Federal Student Aid (FAFSA). You’ll need to complete this form annually to determine your financial aid eligibility for each year that you attend college, grad school, or professional school.
*Additional requirements may apply to non-U.S citizens, students with criminal convictions, and students with intellectual disabilities.Back to Top
Gather all of your materials and information in advance. This should make completing the FAFSA a relatively easy and straightforward process. You’ll need to do the following in order to complete your application:
Create FSA ID- Sign on to the Student Aid website and create your FSA ID. You can do this even if you aren’t ready to begin filling out your form. Setting up your ID in advance should give you time to manage any unforeseen challenges accessing your application, and it can give you a clear idea of the materials and information you’ll need to gather in order to complete your FAFSA.
Gather Documents- Your FAFSA will typically require you to locate a number of documents. You will use these documents as references, but you may be asked to send copies of certain materials. Never send original documents such as a Social Security card or Driver’s License. You will likely require the following for reference:
Start Form- The FAFSA for each upcoming school year becomes available for completion on October 1st. Do your best to get started on the application process as early as possible. There are four ways to fill out your FAFSA:
Once you get started with your application process, you may want to mark important deadlines in your calendar or planner.
Federal Deadlines for the 2023-24 Academic Year
Online FAFSA Form submission: by 11:59 p.m. Central time (CT), June 30, 2024.
FAFSA corrections or updates: by 11:59 p.m. (CT), September 14, 2024.
Federal Deadlines for the 2022-23 Academic Year
Online FAFSA Form submission: by 11:59 p.m. Central time (CT), June 30, 2023
FAFSA corrections or updates: by 11:59 p.m. (CT), September 9, 2023
Every college has its own deadline for FAFSA submissions. Be sure you have all the deadlines for your prospective schools marked in your calendar. Any earlier deadlines from your prospective colleges will supersede a later federal FAFSA deadline. These deadlines may impact your eligibility for certain institutional aid programs. Contact your college’s financial aid office to find out more about institutional aid options.
Every state has its own submission deadlines as well. You must adhere to these deadlines in order to be eligible for financial aid from the states in which your prospective schools are located. Visit the Student Aid website to find out the 2020-21 deadlines for states relevant to your college search.Back to Top
You should receive a Student Aid Report (SAR) within three weeks of completing your FAFSA. Your SAR will not indicate the size or form of your financial aid package. The SAR is a summary of the data you’ve submitted on your FAFSA, as well as an indication of your eligibility for need-based grants. Your eligibility for certain need-based loans or grants will depend on your family’s Expected Family Contribution (EFC) - a figure which is derived from the sum of a percentage of your family’s net income and a percentage of your family’s net assets. Your SAR will indicate your EFC. Review and confirm that all of your personal information is correct. If anything is incorrect on the SAR, you will need to provide corrections through the FAFSA application website.
Once you’ve been accepted to a college or school on your FAFSA list, you will receive a financial aid award letter directly from that school indicating what kind of aid you’re eligible for, and in what amount. The timing and form of your award letter (electronic or mailed) will vary depending upon the school to which you’ve applied and the timing of your application.
According to debt.org, many students finance their education by combining an array of financial aid types. The following are the most common:
Loans which are funded by the federal government and processed through the Federal Office of Student Loans fall into four categories:
For students and parents who require additional funding after federal loans have been exhausted, private education loans are an option. This is a widely used option - more than $11.6 billion was borrowed through private lenders in 2018 - but there are a number of factors to consider before taking out private loans.
Unlike federal loans, there is no nationwide fixed interest rate. Variable interest rates will depend on factors like your personal credit history and the private lender who ultimately signs over your loan. Typically, these interest rates are higher than those available with federal loans. Sometimes these rates are markedly higher.
Likewise, repayment terms are not always as favorable. While federal loans generally defer payment until graduation, some private lenders may not defer payments. Borrowers may be expected to begin repaying loans while still in college or graduate school. Finally, federal repayment often provides options for forbearance in the event of financial hardship.* These options may not be as readily available with private loans, and the penalties for late payments and loan defaults would likely be greater as well. Given these considerations, it’s important to shop wisely for a private loan if this is a necessary component of your financial aid outlook. Look for lower interest rates, more flexible repayment options, and lenders with a positive track record.
*Forbearance denotes a temporary halt on your repayment plan, usually granted by a lender for financial hardship. While the borrower is not responsible for repayment during a temporarily approved forbearance, interest will continue to accrue on the principal loan amount.
In addition to the federal financial aid for which you are eligible, you may also be eligible for state financial aid. Available loan, grant, and scholarship programs will vary from state to state, as will eligibility requirements. After completing your FAFSA, find the online portal for financial aid in any states where you are considering attending college. Your eligibility from one state to the next may help shape your ultimate enrollment decision. Visit the National Association of Student Financial Aid Administrators (NASFAA) portal to find out about financial aid in the states that matter to you.
You can also take advantage of State & Regional College Tuition Discounts to earn in-state rates by attending college in either your home state or a neighboring state.
A number of colleges provide both need-based and merit-based aid to eligible students. In particular, private and elite colleges will use a supplemental form - in addition to the FAFSA - in order to determine additional aid eligibility as funded directly through the college. The College Scholarship Service Profile (CSS Profile) form helps roughly 250 participating colleges and universities determine which students qualify for need-based financial aid based on their family’s ability to pay for colleges, and which students qualify for merit-based aid based on academic or athletic achievements. Be warned that the CSS Profile is generally considered a challenging and time-consuming application process.Back to Top
While student loans must be repaid, need-based grants typically do not need to be repaid. However, most are also available only to those with demonstrated financial need.
Federal Pell Grants are awarded to low-income students based on need. Unlike loans, Pell Grants do not need to be repaid. Eligibility for Pell Grants is determined based on expected family contribution (EFC), and is available to undergraduate students in the amount of $6,345 during the 2020-2021 school year, though the amount may vary depending on financial need, the cost of the school, and full- or part-time student status. Some graduate students may also qualify for the Pell Grant in specialized circumstances.
The Federal Supplemental Education Opportunity Grant is also provided to students based on demonstrated financial need and does not require repayment. This grant is available to undergraduate students who have already qualified for a Federal Pell Grant but who both require, and are eligible for, further financial support. Students may be given an amount between $1000 and $4000 each year on top of the sum provided through the Pell Grant program. The annual FSEOG grant amount will vary based on the extent of each student’s financial needs. Students must have completed a FAFSA, must claim full-time status, and must have qualified for a Pell Grant, in order to qualify for the FSEOG program.
Iraq and Afghanistan Service Grants are awarded to college applicants who lost a parent or guardian who served as a member of the armed forces and gave their life in Iraq or Afghanistan following the events of September 11th. Eligible applicants must have been under 24 years of age, or already enrolled at least part-time in college at the time of the parent or guardian’s death. Additionally, eligibility is reserved only for those who qualify for all conditions of a Federal Pell Grant except for the expected family contribution (EFC) condition. The sum for the Service Grant will typically match the amount awarded for Federal Pell Grants in a given year. For the 2020-2021 school year, that sum is capped at $6,345. As with other federal grants, recipients do not need to repay the awarded sum.
The TEACH grant is distinct from other federal grants in that students must take certain courses, and commit to certain post-graduate jobs in order to be eligible. Failure to meet these conditions can result in the grant becoming a loan which must be repaid. To earn a TEACH grant, an applicant must complete a FAFSA, qualify for federal student aid, enroll in a TEACH-participating undergraduate or graduate school, enroll in a TEACH-Grant-eligible program, meet basic academic performance thresholds (which may vary per school and should be discussed with your school’s financial aid office), receive TEACH Grant counseling, and sign a TEACH Grant Agreement to serve.
This agreement commits the applicant, upon program completion, to serve in a high-need field, usually in a school or service agency serving low-income families, and for at least four complete academic years within eight years of graduation. TEACH Grant recipients will generally be awarded up to $4,000 per year, which does not need to be repaid if the conditions outlined above are all met.Back to Top
Work-Study is a program through which qualifying students can supplement other forms of scholarship and financial aid with part-time work. Payment for this work is typically provided through federal work-study programs, and sometimes through state-based programs.
There are more than 3000 colleges and universities which offer some form of work-study for eligible students. In many cases, once you’ve qualified for work-study participation, it will be up to you to secure an actual job. Contact your college’s office of financial aid to find out if work-study is available, and learn more about actual working opportunities in your chosen field or academic discipline. Jobs may be found both on- and off-campus.
While work-study will typically only offset a modest portion or your college cost, there is also tremendous value in gaining real work experience, especially for work that is concentrated in your area of study. As of the 2017-18 school year, the maximum awarded sum was $5,920, though the average amount per student is usually lower than $2000. The size of your overall pre-approved work-study sum will vary based on financial need as well as enrollment status. The sum that you are awarded will dictate how many hours you can work within the program.
Want to know more? Check out our Focus on Work Study Programs for more helpful information.Back to Top
Scholarships are also a critical dimension of paying for college, and can come from an extremely wide range of potential sources. Like federal grants, scholarships do not need to be repaid, though some may require you to meet certain conditions - often academic-performance-based - in order to keep your scholarship or carry it over to a new school year.
Unlike federal grants, your eligibility for scholarships is as varied as the number of scholarships out there. And it’s worth noting that there are many many scholarships. These scholarships form a critical part of the college financial picture. A wide range of universities, professional associations, extra-curricular organizations, athletic programs, religious institutions, non-profits, charitable organizations, government agencies, corporations, and private benefactors make scholarships available to college and graduate students.
The qualifying conditions, award sizes, and deadlines for these scholarships are extremely varied. However, you are advised to pursue any and all scholarships for which you believe you might be eligible. Awards are given for athletic, academic, artistic, or extracurricular performance; for special affiliations, community organization, or charitable action; for noteworthy personal achievements, for excellence in a specialized skill area, or for commitment to a future occupational path. Other scholarships are awarded based on a combination of financial need and merit-based achievement.
Determine the areas where you most stand out as a student, a person, and a developing professional. Seek out scholarship awards that match your greatest areas of interest, achievement, and strength. Even after you have applied for traditional financial aid, dedicate a meaningful amount of time and effort to pinpointing relevant scholarships and submitting applications.Back to Top
Whether you plan to take a semester abroad, or you intend to pursue and complete an entire degree course at an international university, you may be able to access the same federal student aid program to fund your studies.
If you are planning a semester abroad, you’ll begin the process of applying for financial aid the same way you would if you were studying on an American campus: Fill out your FAFSA. As noted above, your FAFSA will determine your eligibility for certain loans and grants. In order to determine how your financial aid can be used to fund your study abroad program, you will need to contact the financial aid office for your American college or university. First and foremost, your American college must participate in the federal student aid program in order for your study abroad program to be eligible for financial aid.
If you are hoping to receive financial aid for a study abroad program, start the process of securing that aid as early as possible. You will have to complete a lot of paperwork for both your American school and the international school where you’ll be studying. Give yourself plenty of time to get it done.
If you are planning to earn a degree from an international school, and you require financial aid, your first step should, once again, be to fill out your FAFSA. But you must also be aware that American federal financial aid can only be used to attend a participating international school.
Be sure that the college or university you hope to attend is on the following list, the Federal Student Aid office’s index of International Schools That Participate in the Federal Student Loan Programs.
If your school falls on this list, you should be able to receive financial aid. But be warned that applying your financial aid to international school will inherently be a more complex and time-consuming process. Complete your FAFSA and establish personal contact with the financial aid office at your international college as early as possible. Give yourself plenty of time to respond to requests for additional information and paperwork, and take this additional time to also research other international study requirements such as student visas, specialized housing forms, medical insurance, and more.
While financial aid is very much available to students who attend participating international schools, be sure that you are punctual about getting your materials together, and that you remain in contact with the financial aid office at your international school to ensure everything is processed with accuracy.
Visit the Student Financial Aid office to learn more and begin your application process for international student financial aid. Also, be sure to check out our Focus on Tips for International Students in the U.S. for more tips if you are an international student planning to attend a university in the U.S.Back to Top
You’ll have a number of repayment plan options for your federal student loans. You’ll choose your repayment option after you’ve taken out your loan. The repayment plan options available to you will depend on your financial profile. Before making any concrete decisions, you will likely want to consult an advisor from your school’s financial aid office, or a representative from your private lender’s office. Be sure that you make an informed decision about your repayment plan because you will be responsible for honoring that commitment upon graduation.
Regardless of the repayment plan you choose, once payments begin, you will most likely pay monthly installments on your principal amount along with an additional fixed interest charge based on the nature of your loan. (i.e. Stafford, PLUS, private, or otherwise). Any payment deferments or forbearance options will be specific to your loan type. The following are the most common repayment plans.
A Note on Forbearance: Many individuals struggle to pay their student loans upon leaving school or graduating, even those who are working full-time. If you do struggle to meet your monthly repayment commitments, it’s important that you take the appropriate steps by reaching out to your lender. Do not let late payments pile up, and do not risk defaulting on your loan repayment responsibilities. This can result in late payments, can delay the long-term prospects of repaying your loan and can, consequently, cost you a great deal more in interest rates. It may also damage your credit rating, and that of any cosigners such as a parent or spouse.
Be aware that most federal loan repayment plans include options for forbearance, typically in the event that the borrower is facing financial hardship. If you qualify, you could be relieved of monthly payments for a predetermined amount of time (usually a few months). Though you will still accrue interest during such periods of forbearance, you would not incur any late fees or damage to your credit rating. Take advantage of these leniencies if you need to.
Want more information on repaying your student loans? Check our our Focus on Repaying Student Loans!
For many students, loan repayment can be a complicated and costly undertaking that includes multiple lenders, multiple monthly repayment commitments, and multiple monthly deadlines. Loan refinancing can help simplify this process and control your costs. Major private lenders like Lending Tree, LendKey, and SoFi offer student loan refinancing programs which allow you to consolidate your existing federal and private loans under a single, new private loan.
By refinancing, you will typically be able to lower your monthly interest rate, and reduce your collection of loan installment plans to a single, manageable monthly payment plan.
In order to be eligible for loan refinancing, you must have at least a “good” credit rating and a reliable source of income. If you don’t meet these conditions, you may need a parent or spouse to cosign. If you do require a cosigner, remember that failure to make timely payments will negatively impact their credit rating.
But if you do meet the basic conditions for loan refinancing, it is usually beneficial to pursue this option. You will likely save money over the life of your repayment plan.
Want more information on refinancing your student loans? Check out our Focus on Refinancing Your Student Loans to learn more!
There are a number of federal loan forgiveness programs aimed at relieving the burden and improving the financial outlook for borrowers who fall into an array of categories. Some loan forgiveness programs are subject to change, expansion, or elimination based on current policy orientation. However, at the time of writing during the 2019-2020 academic season, the following are current loan forgiveness programs.
Visit the Federal Student Aid portal to learn more about current loan forgiveness programs.
Visit the Federal Student Aid portal to find out if you are eligible for the Perkins Loan cancellation program.
Be sure to learn more about potential loan forgiveness programs specific to your profession, especially if you anticipate carrying a high student loan debt burden into your career.
Want more information regarding loan forgiveness programs? Check out our Focus on Loan Forgiveness Programs to learn more!
Looking for more information, take a look at our Focus on Federal Grants for College article for more helpful information!
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