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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.

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.

Recommended: SoFi’s Scholarship Search Tool

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.

Recommended: Graduate Student Loans

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.

Recommended: A Complete Guide to Private Student Loans

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.

SoFi Private Student Loans
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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SOISL-Q125-019

Opting to buy a used vehicle rather than the newest model on the lot can be a great way to save some money. Used cars often cost significantly less than new cars. In addition, older cars are generally cheaper to insure (since they are worth less than new cars).

The process of shopping for, and financing, a used car, however, can feel intimidating. To demystify the process, we’ve got nine simple strategies that can help you find a reliable used car that fits your lifestyle and budget.

1. Setting a Budget for a Used Car

Before you start researching used cars, you may want to first think about how much you can afford to spend on a car and how you will pay for it.

If you will be paying cash, you may want to consider how much of your savings you can realistically put towards a car. If you don’t have quite enough, or the purchase would completely gouge your savings, you may want to spend a few more months saving up for a car.

If you will be getting a loan for the car, you’ll want to think about what would be a comfortable monthly payment. One rule of thumb is to put at least 10% down and finance the car for three years. You may also want to try to keep your total monthly auto expenses no higher than 20% of your monthly take home pay.

You can use an online auto loan calculator to get a rough idea of how much you might need to spend each month on financing.

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2. Getting Financing Before You Start Shopping

If you plan to get a loan to buy the car, it can be a good idea to get preapproved for a car loan from a bank, credit union, or another lender before you start shopping.

While you may opt to go with financing offered by a car dealership, having a pre-approved car loan offer in your back pocket can give you a great negotiating tool. Dealers tend to mark up the interest rate to make a profit, but if you already have a deal in place, they will know they need to beat it in order to get your business.

Even if you’re going to buy a car through a private sale, having a pre-approved loan in place will allow you to jump on a great deal as soon as you find it.

Recommended: Buying a Car with a Personal Loan

3. Choosing Your Ideal Car

Now that you have a car buying budget in mind, you may want to look into what types of cars you can get for that money.

Do you need a truck, SUV, or sedan? You can save money outright by buying a smaller car and also down the line if it’s good on gas mileage. If safety is a top priority, you may want to check out the Insurance Institute for Highway Safety Ratings to see which cars perform the best in crash tests. You can also narrow the field by making a list of must-have features, and then searching for cars that have them using a search tool like Edmunds Car Finder.

Once, you’ve narrowed your list to three target models that you can research in more detail. You may also want to read reviews about the cars you’re interested in on sites like Kelley Blue Book and J.D. Power.

Recommended: How to Save Up for a Car

4. Shopping for a Used Car

Once you know how much you can spend and what kind of car is going to be a good fit for you, you can actually begin shopping for a used car. There’s no need to start driving to car lots all over town — you can browse through tons of vehicles online.

Good places to look include: used car superstores like Carmax or Carvana, used car dealerships, as well as new car dealerships (which often also sell used cars, though not always at the lowest prices). You may also want to look at listings from local private party sellers, which you can find on Craigslist, eBay Motors, Facebook Marketplace, and Nextdoor.com.

💡 Quick Tip: Are you paying pointless bank fees? Open a checking account with no account fees and avoid monthly charges (and likely earn a higher rate, too).

5. Researching the Car

Once you’ve pinpointed a vehicle you might want to buy, it can be a good idea to find out as much as you can about the vehicle’s history.

You can get a vehicle history report from a company like Carfax or Autocheck , which can tell you if the car has any red flags, such as reported accidents or flood damage, as well as information on the car’s maintenance and service history. To get a report, you’ll need to get the car’s vehicle identification number (VIN) or license plate number from the seller. There is typically a fee for running a report (around $25) but many dealers will provide the report for free.

You may also want to run the VIN number through the United States Department of Transportation Recalls site to check for any safety recalls. If there have been any recalls, it’s a good idea to make sure that the issue has been fixed.

6. Going for a Test Drive

It can often be helpful to try before you buy, especially when it comes to buying a car. A car dealership will typically let you take a few cars for a drive so you can get a sense of how they feel.

You may want to call ahead before visiting a dealership to make sure they have the car on the lot that you’re interested in so you can see it that day. A private seller will also likely allow you to take the car for a brief spin to see how you like it.

Some things to consider when going for a test drive:

•   How well the car accelerates and corners
•   If the breaks are responsive
•   If there are any unusual noises or vibrations that could indicate a mechanical issue
•   How well the car fits you — is there enough leg room? Can you comfortably reach all of the controls?

7. Inspecting a Used Car

Even if you’re far from a car expert, it can be a good idea to do a visual inspection of the car. Is the car’s body and paint in good shape? Are the lights all working? Are there signs of cracks or water inside the lights?

You may also want to turn on the air conditioning and heating, radio, and navigation system and make sure they are all working properly.

When examining the interior, you’ll want to make sure it is in decent condition and there aren’t any unpleasant smells — a moldy smell can indicate flood damage and cigarette smells can be hard to get rid of.

8. Getting a Mechanic to Inspect the Car

Unless you are buying a certified used car with factory warranty coverage from a dealership, you may want to consider getting a car you are close to buying inspected by an independent auto mechanic. While this does involve an investment of some cash (typically $100 to $200), it can potentially save you from dealing with a costly repair soon after you buy the car. The inspection report may also give you some bargaining power when haggling over the price of the car.

9. Negotiating the Price of a Used Car

It’s rare that you’re going to come across a used car price where the seller is unwilling to budge, even a little. Before you negotiate a car deal, however, you’ll want to have all your research ready, including how much the average make and model car for a particular year goes for, and any concerns or issues that came up during your personal and professional inspection.

If you’re negotiating with a dealer, it can be a good idea to keep the focus on total cost of the car, rather than bring a trade-in or financing into the mix. Dealers may want to merge all of the numbers into one deal, which can be confusing — and also make a not-so-good deal look better.

When discussing price at a dealership, you may also want to make sure you are talking about the out-the-door price, including all fees (so there aren’t any surprises).

The Takeaway

Buying a used car can be a smart buying decision. To make sure you get a car that suits your needs and budget, however, you’ll want to research your options, come up with a target price range, and line up financing before you shop.

When shopping for used cars, it’s a good idea to learn a car’s history, test drive the car, and also have it professionally inspected.

Knowing the value of the car in the open marketplace can help you negotiate a good price. If you don’t like the deal, there’s nothing wrong with walking away.

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As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 3.80% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant. SoFi members with Qualifying Deposits are not eligible for other SoFi Plus benefits.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 3.80% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.

Separately, SoFi members who enroll in SoFi Plus by paying the SoFi Plus Subscription Fee every 30 days can also earn 3.80% APY on savings balances (including Vaults) and 0.50% APY on checking balances. For additional details, see the SoFi Plus Terms and Conditions at https://www.sofi.com/terms-of-use/#plus.

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