About Student Financial Aid

Financial aid is a term used to describe all sorts of different forms of monetary support given to students to help them afford a college education. Financial aid can include loans, scholarships and grants, as well as federal and private student loans.

With college costs constantly rising, there has been a groundswell in the number of students applying for and receiving financial aid to pay for college.

Depending on the sort of financial aid a student qualifies for, his/her education costs could be completely or partially covered; if he/she is lucky, that student may qualify for certain grants or scholarships that will not need to be repaid. Financial aid is often essential for students to attend college and the benefits of financial aid are many.


If you are sending your child off to college, first you have a real careful discussion about responsibilities; who’s going to pay what and second that you have a four year plan. I have seen many families that just put it together, the schools, the student’s dreams, you work so hard to get there, you want to make it possible and after the first year, they sense they have just run out of money. And you really have to have a four year plan and know how it’s going to be financed each year and also, a good open conversation with the student as far as who is responsible for what part of the bill. One year for example if the student is going to work, how much money that you can contribute. A lot of students now for example, the summer before are going away to college , I know and it’s nice to have a good time there, but they could work that summer and maybe bring some money with them to school to help with the personal expense allowances. So I think that a good conversation and a four year plan and a careful adherence to a budget will be the most important things.

The Scholarship Center


financial aidFinancial aid programs help students pay for their education, or parents who want to contribute funds to their children’s college education. For so many students, financial aid is the gateway to college. Financial aid has given millions of students the opportunity to receive higher education and realize their educational goals. Subsidized federal loans, a common form of financial aid given to students who demonstrate a degree of financial need, save students thousands by not accruing interest while the student is in school; Pell Grants, another form of need-based financial aid, can cover thousands of dollars towards tuition that never need to be repaid.

Should I apply for financial aid?

Everyone should apply for financial aid, regardless of the family’s wealth.

There are three strong reasons why you should complete the federal financial aid form, called the FAFSA (Free Application for Federal Student Aid):

  1. To qualify for need-based financial aid. Need-based financial aid consists of grants, student loans, and federal work-study jobs.
    • Grants are “free money” that you don’t have to pay back, such as scholarships and awards.
    • Student loans (that have to be paid back eventually) carry with them the advantage of low-interest rates that don’t start accruing interest until after the student has graduated.
    • Federal work-study, which are on-campus jobs often involving community service or work related to the student’s field of study.
  2. To automatically establish a line of credit with the federal government that will allow the family to borrow as much low-interest, unsecured money as it needs to help with all college costs not covered by financial aid. If you don’t get enough financial aid from the college, you can turn to this reliable source of money.

    Low interest loans from the government provide some significant benefits:

    • You can use them to enable you to re-direct out-of-pocket “college money” to pay off higher-interest debt you might have.
    • If you have investments growing at 8% (for example) and can borrow relatively low-interest loans you can use these long-term government loans instead of cashing out your long-term investments to pay for college (and getting hit with capital gains taxes). Using “cheap” government money often makes good financial sense.
  3. To hedge against the unforeseen. Jobs get lost, marriages fail, earthquakes and hurricanes happen, and our bodies sometimes fall victims to debilitating illness. In the event that any of these unpleasant and often unexpected events occur, if a financial aid form is on file at the college, you can call the financial aid officer at the school and discuss this “special circumstance.” The law allows the college to recalculate the family’s ability to pay based not upon past income but on the projected income and asset picture created by this new condition. College personnel are usually very willing to help families in distress to continue with college. But the key to getting their help is having a FAFSA on file at the college the student is attending.

What types are available?

Financial aid comes in all shapes and sizes. It can be given out by the federal government, as well as state and local governments, businesses, individuals and private organizations. Financial aid is an umbrella term that includes scholarships, grants, work-study programs and both federal and private student loans.

merit loansWhat are merit and need based scholarships?

Merit based scholarships are awarded based on academic performance and may cover all or a portion of a student’s college and living expenses. Need based scholarships, on the other hand, are awarded on the basis of a student’s financial need and involves a complete evaluation of the family’s income and expenditures.

What other options are available?

Work-study programs provide funds to students to help them pay for tuition and other expenses by providing students with part-time jobs while they are in school.

The last form of financial aid a student should explore is student loans. Federal student loans should be taken out before private student loans and as their name suggests, are disbursed by the federal government. Federal student loans generally have lower interest rates than private student loans, thought they have lower borrowing limits and shorter repayment periods. Private student loans should only be considered after federal student loans are exhausted and it is essential to compare your private student loan options before applying. A good final form of financial aid, you can search, compare and apply for private student loans by using our Student Loan Comparison Tool above.

Analyzing Your Student Aid Report

Once you file your FAFSA, you’ll soon receive your Student Aid Report (SAR). In your SAR, you will find summarized data outlining your Expected Family Contribution (EFC) towards your total cost of education. Read on for tips on what to expect from your SAR and what steps you should take once you receive it.
What to Do Once You Receive Your Student Aid Report:

All About the FAFSA and CSS Profile Forms

Should I take out a private student loan? SimpleTuition’s Monisha Perkash explains.

In this video, Monisha Perkash talks about the proper role of private student loans in the paying-for-college process. Private loans should only be used once all other financial aid options have been exhausted, so make sure that you’ve explored federal and school-specific options before turning to a private student loan. If you do need a private student loan, be sure to compare carefully and borrow only what you need – no more.

Do you know what kinds of student loans you have?

College on the Cheap’s street team interviewed some college students and asked them a few questions about loans, including what the difference is between subsidized and unsubsidized loans, whether you should take out a private student loan or federal student loan first, and some basics about Stafford Loans. Their answers weren’t always spot-on, but definitely entertaining.

Need a private student loan? Compare your student loan options all in one place. SimpleTuition

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