Typically, there are four (4) types of federal student aid available to college-bound students who file the FAFSA – grants, scholarships, work-study and federal loans. Each of which is a special funding that can be used to pay for your education expenses, including tuition, books, housing, and other fees.

According to the Trends in Student Aid 2011 by College Board, students received an average of $12,455 in financial aid in 2010-11, including $6,539 in grant aid, $4,907 in federal loans and $1,009 in a combination of tax credits, deductions as well as the Federal Work-Study.

1. Federal Grants

Grants are need-based financial aid that are awarded on the basis of financial hardship and more importantly, doesn’t have to be repaid. There are six (6) types of federal student grants:

  1. Federal Pell Grant
  2. Federal Supplemental Educational Opportunity Grant (FSEOG)
  3. Academic Competitiveness Grant (ACG)
  4. National Science and Mathematics Access to Retain Talent Grant
    (National SMART Grant)
    No longer available as of July 1, 2011
  5. Teacher Education Assistance for College and Higher Education (TEACH) Grant.
  6. Iraq & Afghanistan Service Grant
    For students whose parent or guardian died as a result of military service in Iraq or Afghanistan after Sept. 11, 2001. The current maximum is $5,500, but must not exceed the cost of attendance for that award year.

2. Work-Study Program

The Federal Work-Study (FWS) provides jobs for students with financial need to earn money to help pay for college. This federally funded program assists students in finding on or off-campus work related to their course of study, whenever possible.

Students may work up to twenty (20) hours a week while in college and receive a monthly paycheck (based on an hourly wage) which they can use for educational expenses.

It entails a bit more effort on the part of the student, yes, but at least it provides a way to help ease the burden of paying for college. FWS jobs also provide an opportunity for the students to build networks and start sharpening work skills as well.

3. Federal Student Loans

Unlike grants, these are student aid funds that you must repay with interest. Types of federal student loans include

  1. Direct Stafford Loan
    Stafford loan comes in two flavors: subsidized and unsubsidized. When your loan is subsidized, the government will take care of paying your interest expenses while you are still in school. For unsubsidized loan, you are responsible for all of the interest that accrues.
  2. Federal Perkins Loan
    When Stafford loan and other financial aid aren’t sufficient to cover the costs, colleges may offer Perkins loan as part of their financial aid programs.
  3. Graduate PLUS Loan
    Unlike other federal loans, the Grad PLUS loan requires credit approval. While credit checks are required to be eligible, the criteria are less restrictive than those for most private student loans.
  4. Parent PLUS Loan
    Parents of dependent students may apply for a unsubsidized Direct PLUS Loan to help pay their child’s education expenses as long as certain eligibility requirements are met. Here, the parents are responsible for repayment on the loan, not the student.

If you are awarded a loan as part of your financial aid package, you may be eligible for either one, or a combination of any of the above.

These are low-interest loans you usually don’t have to start paying off until you’re out of school. So the smart thing to do is to always exhaust federal loan options first before considering a private loan which is widely considered to be an option of last resort.

While most federal student loans come with a grace period of six (6) months during which you are not required to make payments, it’s important that you plan ahead and choose the right repayment plan that best fits your financial situation – taking into account the interest rates, loan terms and monthly payments.

If you have taken out multiple student loans, you can consolidate them into one single loan after you graduate. The result is a single monthly payment instead of multiple payments – making your loan more manageable & easier to repay.

4. Scholarships

Scholarships, on the other hands, are federal or state funds awarded to deserving students who demonstrate high achievement in areas such as academics, athletics, music, art, or other fields.

  1. Robert C. Byrd Honors Scholarship Program
  2. Jacob K. Javits Fellowship Program

U.S. Department of Education provides funding to state education agencies to award scholarships to graduating high school seniors. These awards vary from a few $100 to more than $10,000 per year.

Although scholarships are also a form of financial aid, they are not part of the FAFSA process. Scholarships must be sought out and applied for individually – usually includes an essay, student résumé, and letters of recommendation.

In some cases, a copy of your Student Aid Report (SAR), which is the official results of your FAFSA, may be required as a prerequisite to scholarship application.

Similar to grants, the majority of scholarships require no repayment as long as you keep “your end of the deal”.1

  1. Keep your Grade high. Most merit based scholarships require a GPA of 3.00 or higher, which is a B average []

Last updated: February 23, 2012 by

Note: The information provided on this site is of a general nature and may not apply to your situation. Contact your financial aid administrator before acting on such information.