Your Guide to Financial Aid

Whether you’re pursuing a degree for the first time or you’re a longtime learner looking to further your education, financial aid will likely be an important component of your journey. 

But with so many options, it can be difficult to figure out what’s best for you. This guide will walk you through different types of financial aid, criteria for qualifying for financial aid, and potential next steps.

What is Financial Aid and How Does It Work?

Financial aid is funding that is available exclusively to students to help them pursue higher education. It can help cover the cost of tuition, fees, and other related expenses. Financial aid can be available for undergraduate studies and most graduate-level programs.

Aid is available from federal and state governments, colleges and universities, and even private organizations. Financial aid comes in a broad range of options, including grants, loans, work study, and scholarships.

To determine which type of aid is best for you, you must determine your eligibility and explore the unique conditions for the different types of financial aid. 

What Are Different Types of Financial Aid?

It is important to determine if the financial aid for which you are applying is the type you have to pay back or the type you don’t. Each type of aid has its own application process and conditions, including if and when you must pay back the money. 

All federal aid eligibility is determined via the Free Application for Federal Student Aid, or FAFSA. Grants, loans, or scholarships through nonfederal organizations will have their own unique application process. 

Below are explanations of the types of financial aid you are likely to encounter, divided between aid that must be repaid and aid that does not. For more detailed information, visit studentaid.gov.

Financial Aid That Must Be Repaid

Loans

Loans are borrowed and must be paid back with interest. Understanding the various options is crucial to ensure that you stay on top of your payments. 

Federal Loans

Students apply for and receive federal loans via the FAFSA. 

• Direct subsidized loan: For undergraduate students. The interest is paid by the US Department of Education while the student is in school, as well as during periods of deferment. 
• Direct unsubsidized loan: For undergraduates and graduate students. The borrower is responsible for all interest at all times.
• Direct PLUS Loan: For graduate and professional students, as well as for parents or guardians of dependent undergraduates. The borrower is responsible for all interest.
• Federal Perkins Loan: For undergraduate and graduate students who demonstrate an exceptional financial need. The loan is made by the participating school. No interest accrues while the student is in school, or in a grade period and during periods of deferment. The interest rate is typically lower than that of other types of loans.

Private Loans

Private loans are distributed by individual financial institutions. The interest rates and loan terms are set by the financial institution that underwrites the loan.

Examples of private loan lenders include Sallie Mae, Wells Fargo, and alternative lending platforms like LendKey.

Be aware of the source of any private loan, as well as the terms and conditions. 

Financial Aid You Do Not Repay

There are several types of financial aid that you do not need to pay back. 

Grants

Grants generally do not have to be paid back and are awarded only to students with financial need. The following are grant programs available through the US Department of Education. 

• Federal Pell Grant: For undergraduate students with exceptional financial need.
• Federal Supplemental Educational Opportunity Grant (FSEOG): For students with exceptional financial need. Not all schools participate.
• Teacher Education Assistance for College and Higher Education (TEACH) Grant: For undergraduate and graduate students planning to become an elementary or high school teacher. Upon accepting this grant, the student must commit to completing a teaching service obligation. If this obligation is not fulfilled, the grant will be converted to a loan that must be repaid with interest. 
• Iraq and Afghanistan Service Grant: For students with a parent or guardian who died after the events of 9/11 as a result of military service in Iraq or Afghanistan. To qualify, a student must have been under the age of 24 at the time of their parent or guardian’s death, or enrolled in college or career school at least part-time.

Scholarships

Scholarships are generally provided by the school or a separate organization. Students do not have to pay back scholarship money.

Many educational or philanthropic organizations offer scholarships to students, such as Nitro College. Actress Jameela Jamil launched the “I Weigh” scholarship and Minecraft even offers a scholarship.

Student Scholarships offers a database of currently active scholarships for which you can apply. 

Harvard Extension School offers a variety of scholarships and grants, including the Lowell Teachers Scholarship and the Leonard J. Russell Scholarship.

Work Study

Work study is a federal work program through which undergraduates and graduate students at participating schools earn money to help pay for school. These programs provide eligible students with part-time employment while they are enrolled in school. Work study is available to students with financial need. 

Employee Tuition Reimbursement

Many employers, including Harvard, offer a tuition reimbursement program, which covers some or all of the cost of an employee’s education, most likely within the purview of the company’s specific policy. Check out our blog post about tuition reimbursement.

Who Qualifies for Financial Aid?

Each type of financial aid has its own eligibility requirements. 

When you apply for aid with the FAFSA, it will compile a variety of your demographic and financial information into a personalized Student Aid Report (SAR). 

The SAR informs you of your potential eligibility for different types of federal aid. The SAR is also available to the schools you include on the FAFSA.

Generally, students must demonstrate financial need, which is the difference between the cost of attendance at a school and the student’s expected family contribution. While cost of attendance varies between schools, expected family contribution is typically a fixed amount as determined by FAFSA.

Each school’s financial aid office determines how much financial aid you are eligible to receive from that particular school.

Can I Get Financial Aid For Graduate School?

There are multiple options for graduate students seeking financial aid. 

Graduate students must fill out a FAFSA to qualify for federal aid, but the process differs in a few ways. 

Graduate students only have to enter information about their own income and assets, not their parents or guardians.

Unfortunately, graduate students are ineligible for direct subsidized loans, as well as for Pell Grants. 

Graduate unsubsidized loans have borrower caps, but federal grad PLUS Loans do not have a borrower maximum.

In addition, you may want to consider seeking out fellowships, scholarships, or an internship or assistantship role to help finance a graduate education.

Can I Get Financial Aid As An International Student?

Most foreign citizens are not eligible for federal student aid from the US Department of Education. International students should consult their schools of choice about financial aid options. 

Is There A Limit To How Much Financial Aid I Can Receive?

In cases of federal, state, and institutional aid, individual schools determine the aid types and amount you are eligible to receive each academic year. 

The limits vary depending on what year you are in school and whether you are a dependent or independent student.

Other types of financial aid may have additional limit guidelines, so make sure to read the fine print when applying and accepting aid. 

Visit Studentaid.gov for more information on loan limits. 

What Is The Highest Income to Qualify For Financial Aid?

There is no income cutoff to qualify for federal student aid. However, your family’s income level determines the expected family contribution, which may be equal to or greater than the cost of a specific school. For more details, Student Loan Hero has provided a breakdown for 2022. 

Financial Aid Next Steps

Everyone deserves the opportunity to pursue an education. Financial aid can help make that journey more accessible. 

To ensure a smoother application process, make sure you have all the necessary documents and financial details together in one place. Keep track of your deadlines and don’t be afraid to ask for assistance! 

Financial aid offices are there to help, and there are plenty of online resources to look to for guidance.