What are the Different Types of Financial Aid for College Students?

Education savingsCollege is a worthwhile endeavor, but figuring out how to pay for it can feel overwhelming. The cost of a college education includes tuition and fees, room and board, books and supplies, transportation, and other expenses. Fortunately, there are many types of financial aid available to help people pay for college. However, navigating the financial aid process can often be confusing for students and their families. A good starting point is to first learn about the different types of financial aid that is available,  as well as how that aid is funded.

Where Does Financial Aid Come From?

The four main sources for financial aid are the federal government, the state government, postsecondary institutions, and private organizations.

Federal Aid

The federal government is the largest financial aid provider in the nation. Types of financial aid for college that the federal government offers include loans, grants, and work-study funds. Anyone who wants to apply for federal financial aid must file the Free Application for Federal Student Aid (FAFSA).

State Aid

State governments offer grants, scholarships, work-study funds, state loans, and tuition assistance. You can learn more about the financial aid for your particular state by contacting your state’s financial aid agency. The financial aid counselor at your school may also have information about state programs.

Institutional Aid

Institutional financial aid consists of aid that individual colleges and universities provide to their students. Colleges and universities typically offer scholarships, grants, and work-study programs. Talk to the financial aid officers at the colleges and universities you are interested in attending to determine what type of aid is available through the institution.

Private Aid

Typically in the form of loans and scholarships, private financial aid comes from corporations, religious organizations, cultural organizations, professional and service organizations, and more. To find out about the types of financial aid available from private sources, get in touch with college financial aid offices, a high school counselor or someone at a public library or school. There are also a number of websites, which provide search tools that can help you identify potential scholarships.

Four Types of Financial Aid

There are four main types of financial aid for college students including grants, scholarships, loans, and work-study funds.


Grants are a type of financial aid that does not have to be repaid. Offered by the federal and state government, as well as by some institutions, grants may be merit-based, need-based or student-specific. Examples of student-specific grants might include grants for minorities, women, and students with disabilities. The competition for grants is usually fierce since no repayment is required. The federal government offers the following grants:

  • Pell Grants– Pell grants are usually awarded to undergraduate students who have not earned a bachelor’s degree or professional degree. The amount of aid you receive depends on your financial need, the school’s cost of attendance, and other factors.
  • Federal Supplemental Educational Opportunity Grants (FSEOG)– FSEOG are grants for undergraduate students with exceptional financial need. FSEOG are administered directly by the financial aid offices of participating schools.
  • Teacher Education Assistance for College and Higher Education (TEACH) Grants– TEACH grants can help you pay for school if you plan to become a teacher and teach in high-need fields in low-income areas. In order to qualify for a TEACH grant, you must commit to teaching for a certain length of time.
  • Iraq and Afghanistan Service Grants– Iraq and Afghanistan service grants provide money to students whose parent or guardian died during military service in Iraq or Afghanistan.


Like grants, scholarships do not require repayment. They are typically offered by individual institutions and private organizations and can be awarded based on a number of factors, such as academic performance, athletic ability, religious affiliation, and race, among others. In order to apply for a scholarship, you will often be asked to write an essay.


Offered by both the federal government and private institutions, loans are money that you borrow to attend college. You must repay your loans with interest. Loans provide students and families with immediate access to funds to help cover the cost of college.

Federal Loans

The two main types of federal loans available for college students include:

  • Subsidized Loans– Subsidized student loans are available for students who have demonstrated financial need. They have slightly better terms than unsubsidized student loans, because the US Department of Education pays your interest while you are in school and for a six month grace period after you graduate.
  • Unsubsidized Loans– Unsubsidized loans are available to students regardless of financial need. Students are responsible for repaying interest during all periods.

There are also specialized student loans available, such as PLUS loans and Perkins Loans:

  • PLUS Loans – PLUS loans are loans made to graduate or professional students and parents of dependent undergraduate students to help pay for expenses not covered by other financial aid options.
  • Perkins Loans– Perkins loans are school-based loans for undergraduate and graduate students with exceptional financial need.

Private Loans

Private loans are granted by private banks and may help to bridge the gap between the cost of your education and the amount of financial aid you receive from the government. Eligibility for private loans often depends on your credit score, and private loans tend to have higher interest rates than loans that the government offers. Students are encouraged to pursue all options for federal student aid before entering into a private loan.

Work Study

A work-study program is a work program where you can earn money that helps you pay for school. Work-study programs provide students with federally funded jobs on campus or at other approved locations. The campus facilities at many colleges and universities, including the student center, career center, athletic department, and residence halls, employ work-study students. However, the positions available and the pay offered vary widely.

Exploring Your Financial Aid Options

The financial aid you receive could make a big difference in the school you attend and the amount of debt you have after graduation. It is important to be resourceful and explore all of your options if you want to maximize the amount of financial aid that you are able to receive. The sooner you start researching your options for financial aid, the better. Now that you know a little more about the types of financial aid available, start checking out your financial aid opportunities, so that you can capitalize on all of the available resources for funding your college education.