There is a lot of unnecessary confusion about college financial aid. In fact, many people have serious misconceptions about what financial aid is. So, let’s clear up some misconceptions by defining financial aid and the most important financial aid terms.
Financial aid is not, as many folks think, simply “free money”. And it can come from many sources…colleges themselves, private donors, foundations and organizations, and via both state and federal programs. Aid can come in the form of scholarships, pay for work, and loans.
Many people think the terms scholarships and financial aid are synonymous. Actually, scholarships…also called grants…are one form of financial aid. Scholarships, requiring no repayment, are frequently awarded to high achievers, students whose abilities may be valued, or students whose families belong to a sponsoring organization (church, civic organization, corporation, etc.).
Not all financial aid requires demonstration of financial need. A student’s financial aid is determined by a formula which is applied to the answers a student submits on the free federal financial aid form (FAFSA). Students must submit a FAFSA (on paper or online) if they wish to apply for need-based financial aid.
At some colleges only a FAFSA is required. Other colleges may require you to complete their own institutional financial aid form as well.
Most colleges and universities offer a form of aid called work study, which allows students to earn money working in campus offices (and occasionally off-campus non-profit organizations). Work study funds, and loans, are referred to as self-help aid.
Students with financial need, as established by the FAFSA, may qualify for government subsidized, low interest loans. Those without need can also borrow, but at higher interest rates.
Once you understand the terms we have just discussed, there is not too much more you have to know or do. Just meet all deadlines, carefully read all financial aid information available to you, and do not hesitate to contact your college office of financial aid if you have questions or problems of any kind.
Best wishes as you pursue your education.