As part of your application for college, you may be filing a financial aid application. Wondering what scholarships, loans, or grants are available? Find out about financial aid options are available for students headed to college in this article.

What are Financial Aid Options for College?

There is college aid available from schools, federal government, state agencies, and private companies and individuals. The three main types of aid are loans, scholarships and grants or gift aid, and work study.


Loans are aid to help with college costs that must be repaid. Loans reportedly make up 54% of financial aid. Loans may be need-based or not need based. Need-based loans tend to have a lower interest rate. Some loans do not accrue interest until after graduation. Loans may be in the name of the student or of other family members (likely parents). 

  • Perkins Loans

The Federal Perkins Loan is a low-interest loan for students who have financial need. There is no loan fee. There is a grace period, and repayment begins either nine months after you graduate or leave school or when you go below half-time status. 

  • Direct Loans and FFEL Program

Direct loans are also known as the Wiliam D. Ford Federal Direct Loan Program. FFEL is the Federal Family Education Loan Program. Each set of loans includes the Stafford Loans for students and the PLUS Loans for parents of undergraduates, but the Direct loans goes directly from the Federal Government to the school, whereas the FFEL funds go through private lenders, for example, banks and credit unions. Thus, with Direct loans, there is no need to seek out a lender.

Schools may participate in one or both programs, but students cannot receive both kinds of loans for the same enrollment period. The loan fee is deducted from each disbursement. 

  • Subsidized Stafford or Direct Loans

Subsidized loans are based on financial need and have a built in grace period before repayment, during which interest is not charged. This is what is referred to be the loan being “subsidized.” Unlike Federal Perkins Loans, the interest rates of Direct and FFEL Stafford loans are variable. 

  • Unsubsidized Stafford or Direct Loans

Unsubsidized loans are not based on need. The interest is charged from the time the loan is disbursed, and it is capitalized if it accrues, that is, added to the principal. 

  • Federal PLUS loans

PLUS loans are available to parents of dependent undergraduate students who meet enrollment requirements. Although there can only be one loan per student, parents can take a Direct PLUS loan for one child and an FFEL PLUS loan for a sibling at the same time.

There are also private loans, college-sponsored loans, and other loans offered by private organizations and foundations.

Scholarships and Grants

Scholarships and grants are types of gift aid•aid that does not require repayment. 

  • Scholarships

Scholarships vary widely in amounts and criteria. Scholarships can be based on a various factors, depending on who is offering them. Factors may include: 

  • academic performance 
  • belonging to some organization or association or club 
  • cultural background 
  • disability 
  • extracurricular activities 
  • financial need 
  • leadership qualities 
  • major course of study or intended career 
  • military status or status of parent(s) 
  • other talents 
  • parents' employment 
  • place of residence or origin 
  • religious affiliation 
  • student's employment 

  • Grants

Federal and State grants are based on financial need. There are also grants through schools and other sources. These are three of the most important federal grants. 

    • Pell Grant

The Pell Grant is a federal grant that is need-based financial aid and does not have to be repaid. It is available to undergraduates who do not have a bachelor's degree and are US citizens or eligible non-citizens. Students must hold a high school diploma or GED. FAFSA must be filled out. 

    • FSEOG Grant

The Federal Supplemental Educational Opportunity Grants (FSEOGs) are grants for undergraduate students who have the most need. Not every eligible student receives this grant, because the awards are based on the funds available at the particular school. 

    • Two New Grants

Two new grants in the 2006-2007 school year are the Academic Competitiveness Grant which is only for the first two years of college for students who completed a rigorous high school program and the SMART Grant (National Science and Mathematics Access to Retain Talent Grant), which funds third and fourth year students. Both of these grants require Pell Grant eligibility as a prerequisite.

Grants through other organizations vary in their amounts and criteria.

Work Study

The Federal work-study program helps a student pay for education costs through part-time employment, while gaining work experience, usually on campus or in the local community, and sometimes in the field of their major. Jobs include assistantships in computer labs, research labs, offices, libraries, and students services. Students earn at least the federal minimum wage.

Written by Mary Elizabeth

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