Financial Aid: What Is It and How Do I Get It?

Formal education isn’t cheap. But selling your stuff and turning to an all-ramen diet isn’t the answer. Want to learn the ins and outs of financial aid? Start here.

If you’re looking to go to school, you either know or will quickly learn that college can be extremely expensive. And it seems like every year it becomes less and less affordable. Yet many employers think of a college degree as a necessity for any potential candidates. So how do you pay for a formal education without having to work 168 hours per week? One solution is financial aid.

Financial aid is any money you receive to help you cover the costs associated with education. Sometimes the money is in the form of a loan—which is expected to be repaid—and other times the funding is not intended to be repaid (who doesn’t like free money?). There are several different sources for financial aid.1 These include:

    • Universities and Colleges

 

    • The Federal Government

 

    • The State Government

 

    • Private companies

 

    • Banks and lenders

 

Each of these sources offers different forms of financial aid to help you get a large chunk of that degree paid for. Forms of financial aid are:

  • Loans

A student loan can be obtained from a bank, the government or various private lenders. These must be paid back over time and will accrue interest in the meantime. The College Board has a helpful student loan calculator so you can find out what you can afford to borrow. Learn more in Surviving the Student Loan Battle.

  • Scholarships

Scholarships are referred to as “gift aid” because they do not have to be paid back. You can find scholarships through colleges, the federal and state government, and private companies. They are usually awarded for academic achievements, athletic abilities or interest in a particular area, like volunteering. To get started, visit the Federal Student Aid Scholarship page.

  • Grants

Grants are also gift aid, and do not need to be paid back. They come from colleges and the government, and are typically need based—meaning they are awarded based on the financial circumstances of the student or their family. Check out The Federal Student Aid Grants page for more.

  • Work-Study

The Federal Work-Study Program offers a way for students to work paid, part-time jobs in order to cover part of the cost of college.2

Now the question is, how do you get all this free money floating around? Is it like getting in one of those money-blowing machines where you try to catch as much cash as you can? No. But that would be more fun.

The first step would be to fill out the Free Application for Federal Student Aid (FAFSA). This is a form that’s processed by the U.S. Department of Education and reviewed by colleges and state agencies to decide how much financial aid you’ll receive. You can find more information about the FAFSA here.

The biggest key to paying for college is putting in the work. Apply with the FAFSA, scour the internet for relevant scholarships, and search for affordable loans that meet your needs. There are thousands of financial aid opportunities out there. You just have to put in the time and effort to find them.

References:

  1. “Education Planning – Financial Aid” Investopedia. Accessed February 15, 2016. https://www.investopedia.com/exam-guide/cfp/education/cfp5.asp
  2. “Financial Aid Can Help You Afford College” Big Future. Accessed February 15, 2016. https://bigfuture.collegeboard.org/pay-for-college/financial-aid-101/financial-aid-can-help-you-afford-college

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