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It doesn’t matter whether you’re the student or the parents wading through college application and tuition figures: Going to college is a huge life decision, almost always synonymous with huge sticker shock.

According to U.S. News & World Report, the average cost for tuition and fees to attend a private college for the 2022-2023 academic year was $39,723. The price tag for a public college was $10,423 as an in-state student and $22,953 as an out-of-state student. Tuition, it should be noted, does not include room and board and other living expenses.

Fortunately, there are financial aid systems in place for college students to help offset the high costs. Here’s what you need to know about college financial aid, including how it works, the different types of financial aid, and how to apply.

What Is Financial Aid?

Broadly speaking, the term “financial aid” refers to any funding that doesn’t come from the student’s (or their family’s) savings. It can be heartening to know that schools typically don’t expect enrollees to cover college costs from their savings and income alone. According to the 2023 Sallie Mae survey How America Pays for College, the typical family covered 29% of college costs with scholarships and grants.

Financial aid is available from a variety of sources, including federal and state agencies, colleges, high schools, community organizations, foundations, and corporations. It can be awarded in the form of loans, grants, scholarships, and work-study programs. The type of aid determines whether it will have to be repaid or not: federal grants don’t need to be repaid, for example, but a loan will.

You can generally use financial aid to cover a range of college-related costs, including tuition and fees, room and board, books/supplies, and transportation.


💡 Quick Tip: Fund your education with a low-rate, no-fee SoFi private student loan that covers all school-certified costs.

Federal Student Aid

To apply for federal financial aid, you simply need to fill out the Free Application for Federal Student Aid (FAFSA). This form is required in order to be considered for federal aid as well as for most college and state assistance. (Some private colleges use a supplemental form called the College Scholarship Service Profile, or CSS, which is more detailed and can be more time-consuming to complete.)

The FAFSA form is known for being cumbersome, but the U.S. Department of Education rolled out a simplified FAFSA for the 2025-2026 academic year. The next form, for the 2027-2028 academic year, will be released in stages: The first students will get access on October 1, 2025, with the remainder receiving the form on or before December 1, 2025.

There’s a run-down of the deadlines here, but the key one for the 2025-2026 academic year, for example, is June 30, 2026 to submit your FAFSA; the window for corrections or updates is by 11:59 p.m. Central Time, September 14, 2026. Note that each state and college may have its own deadlines on top of that.

The Federal Student Aid office advises filling out the FAFSA as soon as possible after it becomes available, even if you’re unsure whether or not you will qualify for any financial aid.

Some states award aid on a first come basis, so submitting a FAFSA application early could be helpful. A FAFSA application is also a pre-requirement to be considered for federal grants like the Pell Grant, which is “usually awarded only to undergraduate students who display exceptional financial need and have not earned a bachelor’s, graduate, or professional degree.”

The FAFSA is also required to be considered for the federal work-study program, which provides part-time jobs to help pay for education expenses. Such programs usually encourage community service work and work related to the expected course of study. Here’s studentaid.gov’s official site tackling the FAQs of these highly variable programs.

State-Based Student Aid

Depending on where you live or choose to go to school, you’ll likely also have access to aid at the state level. Virtually every state education agency has at least one grant or scholarship available to residents, and many states have a long list of available student aid programs.

While eligibility for state-based financial aid is usually restricted to state residents attending a college in-state, that’s not always the case. SoFi has a state-by-state breakdown of grants and scholarships available for college students.

Some schools may also offer state-based aid or discounts.

Merit- vs Need-Based Financial Aid

Financial aid can generally be broken down into two types — need-based aid and merit-based aid.

Some federal aid is need-based — like the Pell Grant and Direct Subsidized Loans (more on this loan type below) — meaning eligibility is based solely on the assets and income of the prospective student and their family. Factors like test scores or athletic ability, for example, have no bearing here.

The opposite is true for merit-based scholarships, which are based on a student’s talents and interests, whether they are artistic, academic, or athletic. A student’s financial situation is not considered here.

To learn about both merit- and need-based aid programs that may be a good fit for you, it’s a good idea to talk to your high school guidance counselor, as well as the financial aid office at your selected school.

You’ll be automatically considered for many need-based aid programs just by filling out the FAFSA. However, you may also want to search for private scholarships (which can be merit- or need-based) online. While these awards tend to be small, you may be able to combine several scholarships, which could make a dent in your expenses.

Recommended: What Is a Scholarship & How to Get One?

Federal Student Loans

Most students’ federal financial aid packages include federal student loans, which are awarded based on financial need and the cost of attending college. These include Direct Subsidized Loans, Direct Unsubsidized Loans, and Direct PLUS Loans.

The advantages of federal student loans include low, fixed interest rates, no credit checks required to borrow them, unique borrower protections (like forbearance and deferment), and repayment plans based on income and/or your commitment to eligible public service work post-graduation.

With Direct Subsidized Loans, the government pays the interest while the student is attending school at least half-time. That’s what the “subsidized” means here. These loans are awarded based on financial need.

Direct Unsubsidized Loans, on the other hand, are awarded regardless of financial need. However, you are responsible for paying the interest on these loans from the moment you get them, though you can defer making any payments until six months after you graduate. While you are in school, the interest will accumulate and get added to your loan balance.

Direct PLUS Loans are also unsubsidized, and are awarded to either eligible graduate students or parents of undergraduate students and require a credit check to ensure there’s no “adverse credit history.” In short, that means they can be more difficult to qualify for as compared to Direct Unsubsidized Loans.

💡 Quick Tip: Parents and sponsors with strong credit and income may find much lower rates on no-fee private parent student loans than federal parent PLUS loans. Federal PLUS loans also come with an origination fee.

Private Student Loans

If your federal student aid package and other forms of funding don’t quite cover your cost of attending college, there are also private student loans to consider.

Private student loans are offered by banks, credit unions, and online lenders. The interest rates may be fixed or variable, and are set by the lender. Unlike federal student loans, private student loans require a credit check. Students who have excellent credit (or who have cosigners who do) tend to qualify for the lowest rates.

An advantage of private student loans is that you may be able to borrow up to 100% of the cost of college tuition and living expenses. However, private loans don’t always offer the same protections, such as income-driven repayment plans, that come with federal loans.

If you’ve exhausted all federal student aid options, no-fee private student loans from SoFi can help you pay for school. The online application process is easy, and you can see rates and terms in just minutes. Repayment plans are flexible, so you can find an option that works for your financial plan and budget.

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When companies reduce the dividends they pay investors, or stop paying them altogether, it can mean different things. Sometimes it’s a result of lower earnings or a shortage of available cash. Other times, a company is uncertain about the future, and wants to keep cash on hand to protect it against unforeseen risks or seize unexpected opportunities.

And sometimes, it’s because the company’s leadership thinks they can offer shareholders more value by investing the cash currently earmarked for dividends back into the business itself.

A Look At How Dividends Work

The reason that a company will offer a dividend in the first place is to reward shareholders. In some cases, companies pay dividends only to preferred stock shareholders, or pay a higher rate to certain classes of shareholders than others.

Most companies offer the regular cash payouts because management believes that paying a dividend is a better use of that capital than any strategic growth opportunities the company would otherwise invest in.

Companies that offer dividends are usually established businesses in mature industries, such as healthcare or utilities. They typically pay out their dividends on a regular schedule, annually, semi-annually, or even monthly.

Investors often rely on dividends, either as part of their investing strategy, or as a source of income. Dividend-paying stocks are especially popular among retirees, who use the income to help cover living expenses. Companies suspending dividends run the risk of alienating a sizable portion of their shareholders.

It’s important for investors to understand why a company in their portfolio has cut its dividend, and to use that information to determine whether that stock still makes sense for their broader investing strategy or whether it might be time to sell the stock. Sometimes when a company cuts its dividend, its stock price will also fall.


💡 Quick Tip: Before opening any investment account, consider what level of risk you are comfortable with. If you’re not sure, start with more conservative investments, and then adjust your portfolio as you learn more.

Examples of Dividend Cuts

History has provided many examples of companies that reduced, suspended or eliminated their dividends. We’ll start with a recent example, and cite several others from the past few years.

Intel — Dividend Reduction

In early 2023, Intel announced that it was cutting its quarterly dividend by almost two-thirds. That put the company’s dividends at their lowest levels since before the financial crisis in 2007. Intel’s leadership cited slowing business growth and an attempt to reallocate capital as the primary reasons for the dividend reduction.

Meredith Corp. — Dividend Suspension

In April of 2020, media company Meredith Corp, suspended its dividend payments. The move came just over two months after it had announced a dividend hike. The company eliminated its dividend amid widespread reductions in expenditures, including salary cuts after it had seen significant advertising cancellations and delays.

Antero Midstream — Dividend Reduction

In February of 2021, Antero Midstream reduced its dividend by 27%. The company, which builds and operates pipelines, storage facilities and other infrastructure for natural gas, and water handling and treatment, cut the dividend in order to grow.

By cutting its annual dividend from $1.23 a share to just 90 cents, Antero Midstream was able to free up an estimated $65 million to invest in new infrastructure. Unlike some other companies who eliminate or trim their dividend because of business reversals, Antero made the move in response to promising signals about growth opportunities. Even with the cut, the company maintained a 10.3% dividend.

Estee Lauder — Dividend Suspension and Reinstatement

Also in 2020, Estee Lauder announced it would suspend its dividend payments. At the time, the cosmetics giant paid an annual dividend of $1.92. The company projected that as fewer people went out socially during the pandemic at the time, they’d spend less on makeup — a projection proven correct. At the time, the company also announced other spending cuts, suspending stock buybacks and cutting executive pay by as much as 30%.

But as shops, restaurants, and bars began reopening in the first quarter of 2021, makeup sales also rose. As Estee Lauder benefited from higher sales it responded by reinstating its quarterly dividend. In May of 2021, it announced a quarterly dividend of 53 cents per share.

Healthpeak Properties — Dividend Reduction

Healthpeak Properties, a real estate investment trust (REIT) focused on properties related to life sciences, medical offices and senior housing, cut its quarterly dividend payment in February of 2021 from 37 cents per share to 30 cents per share.

At the time, Healthpeak had $1.6 billion in free cash flow. But it had concerns about the future, given the potential of recent pandemic-related mortalities to drive down demand for senior housing. Its net income in 2020, at $413.6 million, was already much lower than the $787 million it had made in dividend payouts in 2020. The dividend reduction freed up an estimated $150 million in cash flow for Healthpeak, which the company intended to use to transition its holdings away from senior housing.

National CineMedia — Dividend Reduction

During the pandemic, people stopped going to the movies. That had a major impact on theater chains, but also on companies like National CineMedia, which sells pre-screening advertising at theaters across the United States.

That’s why the company cut its quarterly dividend from seven cents to five cents per quarter in early March of 2021. At the time of the cut, the company was in solid financial shape, with enough cash to cover its expenses. But even with ample cash, the company trimmed its dividend amid concerns about how long it will take for theaters to return to pre-pandemic normals.

The Walt Disney Company — Dividend Suspension

In May of 2020, The Walt Disney Company announced it would suspend its dividend payments due to the impact of the coronavirus on its theme parks.

The dividend suspension occurred as the company’s earnings had plummeted due to the pandemic. By eliminating its semi-annual dividend, which it had kept at 88 cents a share since 2018, the company saved $1.6 billion of much-needed cash to preserve liquidity.

While Disney has not announced plans to reinstate its dividend, the company’s entry into the video-streaming business with its Disney+ service has many investors looking at the stock as less of an income investment, and more as a long-term growth play.


💡 Quick Tip: All investments come with some degree of risk — and some are riskier than others. Before investing online, decide on your investment goals and how much risk you want to take.

The Takeaway

Companies cut their dividends for many reasons, using the move as a way to preserve cash for future investments or during uncertain times. While investing in dividend stocks can be a smart way to generate income or increase returns on a portfolio, it’s important for investors to understand that dividends are not guaranteed in perpetuity and to consider changes in a company’s dividend payout as one factor in analyzing the value of that stock.

If you want to make dividends an important component in your investing strategy, you’ll need to do a good amount of research. There’s also some luck involved — you never know what might inspire companies to cut dividends.

Ready to invest in your goals? It’s easy to get started when you open an investment account with SoFi Invest. You can invest in stocks, exchange-traded funds (ETFs), mutual funds, alternative funds, and more. SoFi doesn’t charge commissions, but other fees apply (full fee disclosure here).

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