Approximately 60 percent of all college students receive some type of financial aid each year. With the cost of books, tuition and room and board reaching all-time highs, more students seek out supplemental methods of financing their higher education in the form of grants, scholarships and low-interest loans.
Grants and scholarships are free money that a student need not repay. Student loans may be subsidized or non-subsidized, and the student must make minimum monthly payments after he completes his education and enters the workforce. Some private scholarships may have additional requirements.
The most common source of financial aid comes from the federal government in the form of Pell Grants and Stafford Loans. Other sources come from private grants and scholarships or from institutional aid that originates with the school where the student enrolls. Institutional aid is often funded by private endowments from former school alumni, but if the school has an athletic team that generates revenue, a portion of the proceeds may go toward offering sports and academic scholarships.
Grants and scholarships are gifts that a student may use toward tuition and room and board or toward book fees. Students must declare their awards when applying for additional financial aid, and the school may adjust additional aid that the student is qualified to receive. A credit rating is not a factor when applying for student loans.
All federal and state aid and most institutional aid is awarded based upon financial need. This excludes school scholarships that offer a student financial aid in return for participation in a sports or on an academic team. Students seeking financial aid will fill out the Free Application for Federal Student Aid (FAFSA), and depending upon their financial status they will receive an Expected Family Contribution (EFC) number. Any costs that exceed the EFC are eligible for financial aid. (See Additional Resources.)
Although some students will receive a high EFC number, they may not be able to afford a college scholarship. This occurs when their parents make a substantial amount of money but carry a large amount of debt that is unaccounted for on the FAFSA. In this situation, the student may apply for independent status or contact the school financial aid office directly and explain the situation.
Some students do not attend college out of fear that a previous drug conviction will make them ineligible for financial aid. However, due to changes in the FAFSA, even a student with a prior drug conviction may receive financial aid as long as the conviction did not occur during the previous calendar year and during a time when he was already receiving financial aid from the federal government. (See Additional Resources.)
The FAFSA is a free application provided by the federal government. If any website charges for access to the FAFSA, it is not a legitimate site. Fill out the application only on the official FAFSA website. (See Additional Resources.)