Navigating Your Financial Aid Package
College financial aid includes grants, scholarships, work-study, and federal student loans.
You apply for federal aid by filling out the Free Application for Federal Student Aid (FAFSA®). Once submitted, students can expect to receive a financial aid award that details the type and amount of aid for which they qualify. Financial aid can be incredibly helpful when trying to finance your college education, but it’s possible that you may not receive enough to foot your tuition bill. If that’s the case, there are other options available to help you pay for your education.
Continue reading for more information on understanding your financial aid package and the options to consider should you find yourself in need of additional funding.
Key Points
• Financial aid packages may include scholarships, grants, work-study opportunities, and federal student loans. Understanding each type helps in assessing the aid offered.
• The cost of attendance (COA) encompasses tuition, fees, room and board, and other expenses. Comparing the COA with the total aid offered is crucial to determine out-of-pocket costs.
• Subtracting grants and scholarships from the COA provides the net price, which is the actual amount you need to pay or cover through loans and other means.
• Carefully compare financial aid packages from different institutions, considering factors like the balance between loans and grants, to make an informed decision.
• If you don’t have enough federal student aid to cover the cost of college, you can rely on private student loans. Private student loans do not offer the same protections and benefits as federal student loans, so should be used as a last resort.
What Is Financial Aid?
Financial aid is financial assistance provided to students to help cover the cost of higher education, including tuition, fees, books, and living expenses. It can come from the federal government, state agencies, colleges, and private organizations. Financial aid is typically awarded based on financial need, academic merit, or other eligibility criteria.
Types of financial aid include grants, scholarships, work-study programs, and student loans. Grants and scholarships do not need to be repaid, making them the most desirable forms of aid. Work-study programs allow students to earn money while in school, while student loans must be repaid after graduation. Understanding financial aid options can help students reduce their educational costs and manage their finances effectively.
How Does Financial Aid Work?
Financial aid works by providing students with funding to help cover the costs of higher education, such as tuition, fees, books, and living expenses. Students typically begin by completing the Free Application for Federal Student Aid (FAFSA) or the CSS Profile to determine their eligibility for various types of aid. Based on financial need, merit, or other qualifications, students may receive grants, scholarships, work-study opportunities, or student loans.
How Do I Apply for Financial Aid?
In order to get any financial aid package for college, the first step is generally to fill out a Free Application for Federal Student Aid, commonly known as FAFSA.
The FAFSA for the 2024-25 school year became available Dec. 30, 2023, and the application cycle ends on June 30, 2025. Some states and colleges have separate deadlines for the FAFSA to determine aid. Contact your school’s financial aid office for questions about the deadline for your state or school.
Filling out the FAFSA requires some basic financial and income information. If you’re a dependent student, then you’ll need your parents’ financial info as well.
All federal loans, both subsidized and unsubsidized, require a FAFSA in order to determine eligibility. Colleges may also use the FAFSA to determine their own financial aid awards and packages, based on things like the Student Aid Index and financial need.
After you fill out the FAFSA, the Office of Federal Student Aid at the U.S. Department of Education will process your FAFSA and send you a Student Aid Report (SAR), which is essentially a summary of your information. It’s usually worth reviewing this information in detail to confirm that all of the information is accurate. If you find a mistake after reviewing your SAR, you’ll likely need to update or correct your FAFSA.
The SAR will include the calculated Student Aid Index (SAI), which is how much you and/or your family can be expected to contribute personally toward your education.
Then, colleges use this information to determine eligibility for university, local, state, and federal financial aid. Sometimes schools may ask for additional information, particularly if you are applying for school-specific scholarships.
The schools will then assemble a financial aid package that could be made up of grants, loans, work-study, and other waivers, and send you an “award letter.” Reviewing your award letter carefully can help you choose the financial aid mix that is right for you.
What Are the Different Types of Financial Aid?
A financial aid package is a list of different amounts of money in different forms of loans, grants, work-study, or other tuition waivers that should add up to cover the cost of the college, minus your Student Aid Index.
Here are the different types of financial aid you may see in your financial aid package:
Grants and Scholarships
Grants and scholarships don’t have to be repaid, so they are sometimes referred to as “gift aid.” These could be school, state, or federal scholarships and grants you qualified for and were awarded.
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Work-Study
This is part-time work you will do and be paid for. You’ll be paid at least the federal minimum wage, but depending on the job, you could earn more. Being granted work-study in your aid package does not always guarantee a job. Depending on the school you attend, you may be matched with a job or you may have to apply for and secure your own job.
Federal Student Loans
Federal loans can be either subsidized or unsubsidized, and usually have lower interest rates than private loans. There is also typically a cap on how much you can borrow.
Subsidized loans are for undergrads and are awarded based on financial need; additionally, the government pays the interest on them while you’re in school at least half-time, during your grace period, and during periods of deferment.
Unsubsidized loans are available to undergraduate and graduate students and are not awarded based on financial need. This type of loan accrues interest while a student is enrolled at least half-time, during the loan’s grace period, and during other periods of deferment.
Borrowers have the option to make interest-only payments during this time, but are not required to do so. If the interest on the student loan accrues, at the end of the deferment period it will be capitalized or added to the principal value of the loan.
There are also PLUS Loans for parents and graduate students, which are also unsubsidized.
Beyond Federal Financial Aid: Private Student Loans
Private student loans are not part of a federal financial aid package. Private student loans can be borrowed from a private lender, which typically have more stringent financial qualifications and, like federal loans, must be paid back with interest. Typically, that interest also accrues while you’re in school.
Check the terms of any private student loans you’re considering and the interest rate being offered to get a sense of how they stack up to federal loans. Federal loans also offer benefits that private student loans do not, such as income-driven repayment plans and deferment options.
In order to make the decision that’s best for you, you’ll want to compare the total cost of attendance, how much gift aid is being awarded, and the loans you’ve received and their terms. This should give you a better idea of how much any federal loans will cost you, and whether there is a gap in funding.
The total cost of college may change over a student’s enrollment, so it generally needs to be calculated each year. Consider things like fluctuation in tuition rates, federal interest rates, and your financial aid award which, among other factors, have the potential to change.
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What Should I Know About Financial Aid Deadlines?
Financial aid deadlines vary depending on the type of aid and the institution, so it’s crucial to stay informed and apply on time. Federal aid deadlines are set by the U.S. Department of Education, while state and institutional aid may have earlier deadlines.
For the 2024-25 academic year, the FAFSA deadline is June 30, 2025. The deadline for the CSS Profile is Feb. 17, 2025.
Some scholarships and grants operate on a first-come, first-served basis, meaning funds could run out before the deadline. Missing deadlines can result in reduced aid or lost eligibility for grants and scholarships. To ensure you receive the maximum aid available, check deadlines for the FAFSA, CSS Profile, and specific schools, and submit applications as early as possible.
How Do Schools Award Aid?
Schools award financial aid based on a combination of factors, including financial need, merit, and availability of funds. They use information from the FAFSA or CSS Profile to determine need-based aid, while scholarships and grants may be awarded for academic, athletic, or other achievements.
Schools allocate funds based on their financial aid policies, federal and state regulations, and institutional resources. Once aid is determined, students receive an award letter detailing their financial aid package, which may require acceptance and additional steps to secure funding.
When Will I Receive a Financial Aid Award Letter?
The timing of your financial aid award letter depends on when you submit the FAFSA or CSS Profile and the school’s processing timeline. Typically, students who apply early can receive their award letters as early as late winter or early spring, often between February and April.
However, some schools may issue award letters on a rolling basis, especially for students who apply later. If you’re an incoming freshman, you’ll usually receive your financial aid package shortly after your college acceptance. Returning students may receive their award letters later in the spring or early summer before the next academic year begins.
Should I Appeal a Financial Aid Award?
It is possible to appeal a financial aid package, particularly if you had a change in circumstances or if there was a gap between the cost and the award. While writing an appeal letter might be a first step if your financial aid package isn’t enough to cover the cost of college, it doesn’t guarantee your award will change.
It also might be the case that circumstances change and you lose your financial aid or portions of your award package. In these situations, there are options in addition to or besides appealing.
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The Takeaway
Your financial aid package will state the amount and types of aid you receive. Financial aid includes scholarships, grants, work-study, and federal student loans. Carefully compare your financial aid awards at each college when you are making your college decision.
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.
FAQ
What types of financial aid might be included in a financial aid package?
A financial aid package may include scholarships, grants, work-study opportunities, and federal student loans. Each type of aid has different terms and conditions, so it’s important to understand them to make informed decisions.
How can students compare financial aid packages from different colleges?
Students should carefully review each financial aid award, considering factors such as the balance between loans and grants, the total cost of attendance, and any conditions attached to the aid. This thorough comparison helps in making an informed college decision.
Why is it important to understand the components of your financial aid package?
Understanding the components of your financial aid package is crucial because it allows you to know how much financial support you’re receiving and what your financial responsibilities will be during and after your education. This knowledge aids in effective financial planning and decision-making.
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Please borrow responsibly. SoFi Private Student loans are not a substitute for federal loans, grants, and work-study programs. We encourage you to evaluate all your federal student aid options before you consider any private loans, including ours. Read our FAQs.
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