Need-Based Financial Aid: Everything You Need to Know
Refers to a form of monetary relief provided to students on the basis of their inability to cover their entire college expenses without assistance. Need-based financial aid is distributed through colleges, state governments, and the federal government. A student’s eligibility for this financial aid is determined using the FAFSA. In some cases, students may have to submit an additional form like a CSS profile. This depends on the student’s state and the school where they are applying.
Some common sources of need-based financial aid include:
Federal Pell Grant: This is the most sought-after need-based financial aid program and is awarded to undergraduate students who demonstrate substantial financial need. Typically, federal Pell Grants are only awarded to students who’ve not earned a professional, bachelor’s, or graduate degree.
Federal Supplemental Educational Opportunity Grant: Students who received a Pell Grant but still need financial assistance for college may be eligible for the FSEOG program. The purpose of these grants is to supplement Pell Grants for students who demonstrate an elevated level of financial need.
Work-study program: The federal work-study program aims to provide students with part-time work to help pay their educational expenses with the money they earn. The program includes different types of on-campus and off-campus jobs.
Institutional grants: Unlike federal aid, institutional grants are offered by universities and colleges. In most cases, institutional aid is actually a scholarship or grant. Students need to consult the school’s financial aid office to find out what type of need-based financial support it may offer.
Direct subsidized loans: Taking out a direct subsidized loan is a popular way to pay for college. Here, the U.S. government pays the interest on the loan as long as the student is in school at least half-time. Only undergraduates, who’ve a demonstrated financial need, can be eligible for a direct subsidized loan.
State grants: A student’s state may award them with a need-based grant for college. While the majority of states use the FAFSA to ascertain financial need and eligibility for grants, some have their own applications. Interested students should consult their school’s financial aid office to find out whether a separate application needs to be filled out for this aid.
Whether a student needs to pay back their need-based financial aid depends on the type of financial aid they received. If the student receives a need-based grant to pay for college, they typically won’t need to pay back this amount. However, there’re exceptions to this rule. Unlike scholarships and grants, all loans have to be paid back.