Types of College Financial Aid

How your financial need is met is as important as how much of it is met. Consider final out-of-pocket costs rather than total offered. Here is a basic breakdown of how financial aid is distributed.

Scholarships (merit-based aid)

Scholarships are based on academic or other achievements, like music or athletics. Because they are merit-based, talent-based, or leadership-based, they are typically available to every student who qualifies for them—regardless of financial need.


Grants are funds that don’t have to be repaid. In most cases, you must demonstrate financial need to receive a grant. Grant eligibility is determined by information provided on your FAFSA and can be funded by federal and state governments, as well as the college you plan to attend.


Loans have to be repaid and must earn a favorable interest rate and payback schedule to be considered as financial aid. Many students and families borrow money through the Federal Stafford Loan Program, which awards aid based on financial need. Federal student loans are the most affordable loans available to students, with the lowest interest rates and payments deferred until after graduation.

Check to see if the school you want to attend is a direct lending school, which means you can obtain education loans, including the Stafford Loan, without using a private lender like a bank or credit union. If you need additional funding, private lenders are an option.


Campus employment offers students an opportunity to work on campus and contribute to their educational expenses. A wide variety of positions in professional campus settings that align with student career pursuits may be available.

Websites you need to know

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