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How Aid Works

Financial aid programs provide support for students to help meet the costs of obtaining a college education. Funding for such programs is provided by the federal and state governments, the individual colleges and universities, and a variety of other public and private sources.

Financial aid is split up into two categories based on the reason the money is awarded:

Achievement-based aid is awarded to students who have a special characteristic, skill, talent, or ability. Typically achievement-based aid is in the form of scholarships.

Need-based aid is provided to students who demonstrate financial need. Most financial aid, particularly public-funded aid, is awarded on the basis of financial need determined through the application process and in accordance with a prescribed federal formula.

4 Basic Types of Financial Aid Programs Available

GRANTS: Federal or state gift assistance with no obligation for work or repayment

LOANS: Providing funds now, but with a future repayment obligation

SCHOLARSHIPS: Gift assistance with no obligation for work or repayment

WORK-STUDY: Part-time work while attending the institution

Most often, financial aid will come to the student in the form of a package consisting of a combination of the different types of aid available. The combination of aid offered depends on the timeliness with which the application process is completed by a student and parent, a student's financial eligibility, the availability of funds, and a student's year in school.