Financial aid is a general term that describes the various types of resources available to assist a student with his or her educational expenses. There are four primary categories into which financial aid programs may be grouped. They are:
As a college advisor, an important part of your responsibility is to make sure students and families are aware of the types of aid available to them and help them learn how to apply for these resources.
In order to advise students appropriately, you should understand that financial aid will often be described in a variety of categories. You must understand the general categories and know the finer points of each of them.
The four basic forms of aid include:
These are funds awarded usually on the basis of academic, talent or leadership abilities. Scholarships do not need to be repaid and are typically awarded on annual basis. Financial need may or may not be included when determining a student’s eligibility. Primary sources are state, institutional and private funds.
These funds are usually awarded based on financial need. Grants need not be repaid. Federal and state programs have the largest amount of resources available for grants. The federal Pell Grant is the most recognized grants program in the country and grants made through this program represent 11 percent of total financial aid awarded to students each year. Institutions and private sources may also award grants on an annual basis.
Funds awarded may or may not be based on financial need. Generally, loans must be repaid. Educational loans may be made by federal, institutional or private sources. Both students and parents may borrow funds to support the cost of postsecondary education.
Funds are usually awarded on the basis of financial need. This program provides students with part-time jobs either on or off campus to enable to student to earn funds to help with his educational expenses.
To learn more about the four general categories of financial aid, including the descriptors also used when referring to types of financial aid, download this Advisor Training Module – Chapter 7.
Student Financial Aid History Screenshot: This screenshot provides a quick glance at what a federal student loan and federal student grant summary may look like.
Student Loan Fact Sheet: This chart summarizes the interest rates, loan limits, and other terms for federal students loans issued from July 1, 2014 through June 30, 2015.