Types of Financial Aid
When savings and current earnings aren't enough to meet your education expenses, financial aid is designed to fill the gap. Financial aid is money that is given or loaned to you to help pay college expenses. The single largest source of financial aid is the federal government, followed by state governments, colleges and private organizations.
Financial aid falls into three general categories: Free Aid, Work Aid and Loan Aid.
FREE AID
Grants, which do not need to be repaid, are typically awarded based on financial need. Two of the largest grant programs are the Federal Pell Grant and the Federal Supplemental Educational Opportunity Grant (FSEOG). Additional grants are awarded by the federal and state governments, colleges and independent organizations.
Scholarships are awarded for a variety of reasons, including academic achievement, financial need, community involvement, organizational membership and ethnicity, to name a few. Scholarships do not need to be repaid and are typically awarded on an annual basis. While the federal and state governments award some scholarships, the majority of funds are offered by private organizations.
WORK AID
Work-study programs, offered by the federal and state governments as well as individual schools, provide part-time jobs both on and off campus to enable students to earn funds to pay their education expenses. Most work-study students also gain valuable work experience and greater exposure on campus.
LOAN AID
Because of the rising cost of higher education, the majority of families rely on loan aid to cover a portion of their education expenses. In 2004, loans comprised 45% of the financial aid awarded to families. In total, $55 million of the $122 million in aid awarded each year is in the form of loans. Education loans come in three forms: federal, private and institutional.
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