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.