Financial Aid FAQs: Understanding Your Options for Paying for College

Financial aid can turn college dreams into reality by funding tuition, books, and materials. As you begin to look into available degree and certificate programs, you also want to consider your options for financial aid. You may find that you qualify for different types of aid based on your circumstances. 

What Is Financial Aid?

Financial aid is supplemental funding that can help cover the cost of enrolling in a degree program. Aid can consist of loans, scholarships, grants, or work-study programs.

Most college students require some type of financial aid, as many cannot rely solely on personal savings or family wealth to pay their tuition and fees upfront. As a result, there are a variety of resources available to help students understand their financial aid options and which kind of financial aid package is best for their needs.

How Does Financial Aid Work? 

Financial aid is designed to help bridge the gap between the cost of attending college and what you and your family can reasonably pay. In most cases, you’ll start by completing the Free Application for Federal Student Aid (FAFSA), which schools use to determine your eligibility for federal grants, loans, and work-study, as well as some state and institutional aid. Your school’s financial aid office then builds an aid offer based on factors like your enrollment status, cost of attendance, and demonstrated financial need. This aid package may include a combination of grants, scholarships, loans, and work-study opportunities. You’ll review your options, accept or decline specific components, and complete any additional steps (like loan counseling or signing a promissory note) before funds are disbursed to your student account.

Who Qualifies for Financial Aid?

Eligibility for financial aid depends on several factors, including your citizenship or eligible noncitizen status, enrollment in an eligible degree or certificate program, and maintaining satisfactory academic progress as defined by your school. Many types of federal aid require you to have a high school diploma or equivalent and to complete the FAFSA each year. Financial need plays a major role for need-based aid like Pell Grants, but merit-based scholarships may consider your academic performance, professional achievements, or other qualifications. Some aid programs are reserved for specific populations, such as military-connected students, parents, or students pursuing certain fields. Because requirements can differ across programs, it’s important to review guidelines carefully and reach out to your financial aid office with questions.

What Does Financial Aid Cover?

Financial aid can cover any costs associated with earning a degree or certificate at a college. Depending on the type of financial aid you secure and the college that you choose to attend, you may be able to use it to pay for tuition, fees, books, housing, technology, or transportation.

What Are the Four Types of Financial Aid?

There are four main types of financial aid available to help students pay for college: loans, grants, scholarships, and work-study programs.

Student Loans

Student loans are commonly used to finance the costs of higher education. According to the National Center for Education Statistics, nearly 38 percent of full-time, degree-seeking college students relied on student loans during the 2020-2021 school year. 

If you choose to take out a student loan to finance the cost of education, it's crucial to know that repayment is required. Before accepting a federal student aid package or a private student loan, you should feel comfortable with the loan terms (including interest accrual) and the repayment deadline.

What’s the Difference Between Federal and Private Loans?

Federal student loans are funded by the U.S. Department of Education and typically offer fixed interest rates, income-driven repayment options, and potential forgiveness programs. Private student loans are offered by banks, credit unions, and other lenders, and their terms vary widely based on your credit history, income, and the lender’s policies. Federal loans generally provide more borrower protections and flexible repayment options, while private loans may require a co-signer and can have variable interest rates. Because of these differences, many students consider federal loans first before exploring private loan options.

Grants

The U.S. Department of Education offers various grants for college students that help cover the costs of their degree or certificate program. Grants do not have to be repaid, making them particularly valuable for students.

There are three types of grants available to college students through the U.S. Department of Education:

• Discretionary grants – Awarded through a competitive process to qualifying students
• Student grants – Awarded to college students based on financial need
• Formula grants – Awarded to students based on formulas that Congress determines. There are no applications for formula grants.

Scholarships

Scholarships are a form of financial aid provided to students through various governmental agencies, nonprofit organizations, private corporations, and colleges. Similar to grants, scholarships do not have to be paid back.

Start searching for scholarships early – there are thousands available. Some are based on financial need, while others are merit-based. There are also scholarships for students from particular backgrounds or cultures, those studying a specific field, or those who have completed extensive community service.

Military Aid

There is federal student aid available to military families in the form of scholarships and grants. Active-duty service members, in addition to veterans or those interested in the military, should explore their options for financial aid.

According to the Federal Student Aid office, military aid for college is available to veterans who have served, active-duty military personnel, and students considering entering the military. Additionally, family members of veterans and active-duty service members may be eligible for military financial aid programs.

The most well-known types of military aid include:

• ROTC scholarships – The Army, Air Force, and Navy offer ROTC scholarships to students pursuing high-need degree programs and may be interested in a military career. ROTC scholarships are merit-based programs.
• VA education benefits – Veterans, surviving spouses, and family members may be eligible for financial aid through the Department of Veterans Affairs.
• Service grants or Pell Grants – Students whose parent or parents died as a result of military service in Iraq or Afghanistan may be eligible for grant funding for their education.

Employer Tuition Assistance

Students working full or part-time may find that their employers provide tuition assistance. Tuition assistance programs can help offset the cost of your degree or certificate program while allowing you to acquire relevant competencies for your current career.

How Do You Apply For Federal Financial Aid?

To determine what type of financial aid package would be best, you want to start by filling out the Free Application for Federal Student Aid form, aka FAFSA form.

What Is the FAFSA Form?

The FAFSA form is a free application through the Federal Student Aid office. Once you have completed the form, your college will utilize the provided data to award you a financial aid package. The criteria for determining your package may include your income level, financial need, and expected family contribution (EFC). You must fill out the FAFSA form every year you are enrolled (or EFC).

When is FAFSA Due? 

Submitting your FAFSA form on time ensures you receive the maximum financial aid package. It is recommended that you submit your form by October 1 of the year before the academic year in which you plan to enroll. However, the official FAFSA deadline is June 30 of the current academic year in which you are enrolled.

What’s the Difference Between Need-Based and Merit-Based Aid?

Need-based financial aid is available to students who qualify based on their income level or demographic data. Merit-based aid, on the other hand, is available to qualifying students based on their grade point averages or accomplishments in a particular activity.

Can I Receive Financial Aid Every Year?

In many cases, you can receive financial aid each year you’re enrolled, as long as you continue to meet eligibility requirements and submit the FAFSA annually. Your aid is not automatically renewed at the same level; it can change from year to year based on your family’s finances, your enrollment status, and available funding. For example, moving from part-time to full-time or vice versa may impact the amount of aid you receive. You may also become eligible for new scholarships or grants as you progress in your program. To avoid gaps in funding, pay close attention to application deadlines and respond promptly to any requests for additional documentation.

How Can You Maximize Your Aid Award?

You can maximize your financial aid package by pursuing as many scholarships and grants as possible before applying for federal student aid, as this ensures you do not take out more loans than necessary.

When and How Will You Receive Financial Aid?

You will receive a financial aid package after being accepted to the college you applied to. The package will be based on the data available in your FAFSA form, and it will be broken down into money that does not have to be paid back, money that must be earned through work-study, and money that must be paid back.

What If Your Financial Aid Is Not Enough?

You may need to take additional steps to supplement the financial aid you receive. This can include:

• Working part-time
• Developing payment plans with your college or university
• Securing private loans

Do You Have to Repay Financial Aid?

If you take out student loans, you will be required to repay your financial aid. Repayment on federal student loans begins six months after you graduate from college or stop taking classes. Private student loans may have different terms that require you to pay them back while still attending school.

What Factors Affect Your Financial Aid Eligibility?

The financial aid package you receive will vary based on a variety of criteria, such as:

• Family income, assets, and household size
• Number of family members attending college simultaneously
• Academic performance and achievements
• Changes in family circumstances, like unemployment or medical expenses

What Happens If My Financial Situation Changes?

If your financial situation changes significantly, such as a job loss, reduced income, or unexpected medical expenses, you should contact your financial aid office as soon as possible. Schools may be able to review your circumstances through a process sometimes called “professional judgment” or a “special circumstances appeal.” This involves submitting documentation so the financial aid office can reassess your eligibility for need-based aid. While a change in circumstances does not guarantee additional funding, it can sometimes result in an updated aid offer that more accurately reflects your current ability to pay. Keeping your school informed early can help you understand your options and plan ahead.

Can I Lose My Financial Aid?

Yes, it is possible to lose some or all of your financial aid if you no longer meet the program requirements. Common reasons include not maintaining satisfactory academic progress, withdrawing from too many courses, falling below the minimum enrollment status, or defaulting on a previous federal student loan. In some cases, not meeting specific conditions tied to a scholarship (such as a required GPA or major) can also lead to reduced or lost funding. If your aid is at risk, your school may provide a warning period or academic plan to help you get back on track. Always read the terms of your aid carefully and ask questions if you’re unsure about the requirements.

Is Financial Aid Available for Graduate Students?

Yes, financial aid is often available for graduate students, though the types of aid may look different from undergraduate options. Many graduate students rely on federal student loans, such as Direct Unsubsidized Loans and Grad PLUS Loans, which generally require completion of the FAFSA. Some institutions also offer graduate scholarships, assistantships, employer tuition benefits, and payment plans to help offset costs. While federal grants are more limited at the graduate level, you may find additional funding through professional organizations or field-specific fellowships. Checking with your school’s financial aid office and exploring external scholarship databases can help you identify options that fit your program and career goals.

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