FINANCIAL AID: Financial Aid 101
Paying for college takes financial aid. Financial aid is simply money that helps you pay for college. There are three kinds: Grants, Loans, and Work-Study.
Grants
Grants, also called scholarships or gift aid, are the best kind of financial aid. They are free money that you don't have to pay back. Generally, grants are awarded for one of three reasons:
Need
The student has qualified as financially needy, usually by filling out the FAFSA (Free Application for federal Student Aid), and/or the CSS (College Scholarship Service) Profile. FAFSA is for student financial aid from the federal government. There is no charge for submitting this form. The FAFSA is also required by all state and many school student assistance programs. CSS Profile is required by some private colleges and universities to obtain information not included on the FAFSA.
Merit
The student is being rewarded for good grades, athletic skill, musical talent, etc.
Employment benefit
The student or the parent qualifies for tuition assistance through an employer. Many universities, for example, give employees' children a break on tuition.
Loans
Loans are debts that you have to pay back and are obviously not as good grants. Education loans come in three major categories: federal student loans (e.g., Stafford and Perkins loans), federal parent loans (e.g., PLUS loans) and private student loans (also called alternative student loans).
Federal Stafford and Perkins loans for students are considered financial aid because taxpayers subsidize the rates so that students can borrow at a lower cost than they would get from a bank. For more information, please read our Federal Student Aid section.
Work-study
The federal government subsidizes some campus and nonprofit jobs for students. Generally, work-study jobs are awarded only to students who the college says are financially needy. The jobs typically don't pay especially well. Students may find better-paying jobs off campus. But work-study jobs have advantages. Their earnings don't reduce the student's future financial aid awards. Their schedules coincide with the school's. They are typically on campus, which reduces any commute hassle. And they are typically limited to fewer than 15 hours a week. Studies showing that students who work between five and 15 hours a week actually get better grades than those who don't work at all or work more hours.
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Bob Katz
