Financial aid is money allocated to college students to pay tuition and other education related expenses.
The three most common types of financial aid are the following:
Grants
These are the financial aid awarded to students in the form of scholarships or other assistance programs. Unlike student loans, grants do not have to be repaid. The following are common reasons students are awarded grants:
Need: Students are awarded grants because their parents do not make enough to pay for their college, or they cannot pay for their education themselves. Students can apply for federal grants by filling out a Free Application for Federal Student Aid (FAFSA).
Merit: Students are frequently awarded scholarships for academic performance or excelling in extra-curricular activities.
Employment benefit: Students receive financial aid because they have an immediate family member working for the college they attend or their employer assists them with tuition expenses.
Loans
Students who cannot pay for their education can take out student loans to pay for tuition and other education related expenses. Unlike grants, student loans must be repaid with interest. Stafford and Perkins student loans are subsidized by the government through the duration of a student’s college education. These loans can be borrowed at low interest rates. There are many schools and private organizations which provide qualifying students with loans without interest rates affixed to them. Parents can borrow money from the federal government in the form of PLUS loans at low rates compared to money loaned by banks.
Work-study
Many campus jobs available to students are subsidized by the federal government. Students who qualify for federal financial aid are the ones usually offered these jobs, but they often do not pay well. In most cases, higher paying jobs can be found off campus. However, there are many benefits of having a work-study job. For example, income earned from these positions will not affect whether students qualify for additional financial aid. Moreover, students with work-study jobs do not have to leave campus, and as a result, cut their transportation costs. Additionally, most work-study jobs do not require students to work more than 15 hours a week, so they can focus more on their studies.