The Ultimate Guide to Federal Student Aid

While there isn’t much good news when it comes to college tuition costs, there is one bright spot: you probably won’t have to pay the sticker price. Almost all U.S. residents (and some international students) qualify for some form of federal student aid.

What is Federal Student Aid?

The federal government began offering money to students who demonstrated financial need way back in 1965. These days, they dispense more than $120 billion annually to approximately 13 million students. That aid comes in three forms—grants, loans, and work-study. 

Grants

Federal student aid grants are exactly what they sound like—money given to students to enable them to pursue their post-secondary education or career study programs. Grants do not need to be paid back—this is free money given based on financial need. So, if you are planning to attend a college or university in the U.S., and you go through the federal application process for student aid (which we’ll discuss in more detail below), and can demonstrate that you fall into a certain category of need, you will be granted a sum of money to put towards your tuition fees. There are four categories of grants you might qualify for:

• Pell Grants: Directed specifically towards undergraduate students, Pell grants are the most substantial aid the federal government offers. For the 2019-2020 year, students could receive up to $6,195.
• Federal Supplemental Education Opportunity Grant (FSEOG): It may be a mouthful, but if you demonstrate exceptional need beyond that which qualifies for Pell Grants, you could receive up to $4,000 in additional support a year.
• TEACH Grant: The acronym stands for Teacher Education Assistance for College and Higher Education, and the clue is in the name here, folks—this grant is aimed at those studying to become teachers. If you receive this grant, you must spend four years within eight years of graduating teaching in a high-need field at the elementary or secondary level, or you’ll pay (literally, your grant will become a loan and you will be responsible for paying it back).
• Iraq and Afghanistan Service Grant: again, this one’s in the name—it’s designed for students who have lost a parent in military service in Iraq or Afghanistan who are ineligible for a Pell Grant. If you qualify in this category, you can receive up to $5,829.50.

Loans

If you exceed the maximum income level to qualify you for a grant, you may still qualify to receive a federal student loan. Yes, that means you’ll have to pay it back, however, these loans come at a low, fixed interest rate, and you aren’t going to get a better deal elsewhere. If you qualify, you will be receiving what is known as a Direct Subsidized Loan, which means that the U.S. Department of Education will pay the interest on your loan while you are in school, for six months after you graduate (a grace period), and if you are in a deferment period.

If you don’t qualify for a grant or a subsidized loan based on your income level, you can still access a Federal Direct Unsubsidized Loan, available to any undergraduate or graduate student. The main difference here is that you won’t receive the same kind of help from the Department of Education as those who demonstrate financial need will—you will be responsible for paying the interest on your loan during your schooling and after, and during any deferment you make on the loan, the interest will accrue and be added to the total amount you owe. 

Work-study

The final avenue through which the U.S. government might help with your college fees is through the Federal Work-Study program. This program offers part-time jobs while you are enrolled in school, allowing you to earn a wage to cover some of your costs while gaining your education. This program is available to undergraduate or graduate students, and to full- or part-time students. Your job may be on- or off-campus, for the school, or for a local non-profit, public agency or corporation, and what you earn will depend on your qualifications. Typically, an undergraduate student will be paid by the hour, and a graduate student may be paid by the hour or salaried, depending on the work and their qualifications. The catch here is that you cannot earn more than the amount granted by the Federal work-study program—so you can’t take on additional hours to make some dough for that trip to Vegas with your buddies. However, this is a great program to help you earn while you study, and gain work experience simultaneously.

What About Scholarships?

The Federal government doesn’t dispense scholarships strictly speaking, though the “grants” we discussed above act exactly like need-based scholarships. Schools may offer additional need-based scholarships, or scholarships that are based on merit, or scholarships based on other factors. The Department of Education does provide resources to help you find and apply for scholarships, though, and these are well worth looking into on the DoE website. This is a great resource to discover and apply for scholarships through your school, your state, or other agencies that you may not otherwise have been exposed to.

It All Starts With the FAFSA

There is one all-important starting point that every student who hopes to gain access to student aid in one form or another must go through: the FAFSA. That is, the Free Application for Federal Student Aid. To start, you will need to create an account with the Federal Student Aid (FSA) site of the Department of Education—make sure you remember the FSA ID you create or have it jotted down somewhere, as you will need this to continue the application process for aid.

Once you start on the FAFSA form, you’ll need to make sure you have access to some basic identification and financial information, and that of your parents if you are a dependent student. Most students are considered dependent, even if their parents are not able to provide financial support to them for their college education. Students who are considered independent are those whose parents are deceased, who have been in foster care since the age of 13, are married, have dependents of their own, or have served in the armed forces. That excludes most undergraduate applicants.

To complete your FAFSA form, you’ll need information like your social security number or alien registration number if you are not a U.S. citizen, as well as financial information for you and your parents, like tax returns, bank statements, and records of untaxed money. This may take some time to gather, and you will certainly need your parents’ help accessing much of this information, so make sure you get started on this early and involve your parents in the process. The FAFSA is typically released in early October for applications for financial aid for the following academic year. Don’t wait to get started on this, even though you are working on other aspects of your college applications at the same time!

What Happens Next?

The FAFSA is your one-stop-shop for all forms of financial aid—aid from the universities or colleges you wish to attend, aid from your state government and aid from federal programs. On your FAFSA form, you will list the colleges you are applying to, and once you’ve filled out the FAFSA forms, the information on that form is submitted both to your state’s higher education department and to those schools, and both will work to determine what kind of aid you qualify for. Your individual schools may require more information from you for university scholarships, so make sure you are also checking in with the financial aid offices at the schools you wish to attend. Then, you wait, and continue working to complete and submit the best possible applications to your schools of interest, if you haven’t done so already.

Application Timeline

You can check the status of your FAFSA application using your online login, but keep in mind that the process of determining whether you qualify for aid and for how much will take time. The first feedback you’ll receive is a Student Aid Report—essentially a summary of the information you submitted on your FAFSA form—anywhere from three days to three weeks after you submit. This is not a decision, simply a record; make sure you check the accuracy of the information that form, and correct any mistakes or misrepresentations. 

You may then be informed that you’ve been selected for “verification,” and while this might sound like an accusation, many schools select student FAFSAs to verify at random, or simply verify all the FAFSAs they receive. This will mean that you need to gather additional documentation to support what you have reported on your FAFSA.

Finally, you will receive an award letter from college admissions, informing you of how much aid you qualify for, and in what form. The timing of this information varies widely and is difficult to predict, putting many students in a frustrating predicament of needing to confirm their spot at a school before they are sure how much aid they will receive at that institution. Some schools send award letters in the winter, only a few months after FAFSA has been released for the following academic year, and some wait as long as right before term starts. Your decision about where to attend school will likely have to be based on some combination of incomplete information—make sure you understand your own priorities when it comes to your preferred college and the amount of financial aid you will receive.

Alternative Options 

If going through the FAFSA process doesn’t yield the results you’d hoped for, there are countless other ways to pay for college. As mentioned above, the U.S. Department of Education does make student loans available to all undergraduate or graduate students regardless of need under standard terms. This money can be had at some of the lowest interest rates around, so consider it seriously. Of course, there are plenty of private market options as well—from banks to specialized lenders, but be careful with private loans, make sure you understand the terms and have read the fine print. This is where your parents or some other adult with a lifetime’s worth of financial acumen should be consulted.

Finally, there are scholarships that range from pocket change (on the scale of college tuition) to a full free ride. Make sure you do your research (the above-mentioned federal student aid website is a great place to start) into what scholarships are on offer from your school, your state, or even your local municipality. There are often specialized scholarships based on your identity, background or career interests that can make a huge difference when it comes to paying your education bills.

Financial aid can seem like a daunting hurdle at the outset, but in reality it is a relatively straightforward process that millions of students navigate every year. Start early, involve your parents, and make sure you research and explore every avenue—you will be glad you did when you get your first tuition bill!

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