Financial aid is any money that helps a student pay for postsecondary expenses, such as tuition and fees, room and board, books and supplies, and transportation. It makes up the difference between college costs and what a family can afford to pay. There are four main sources for financial aid: the federal government, state governments, postsecondary institutions, and private organizations.
There are three main types of financial aid:
Grants and scholarships are monetary gifts that do not have to be repaid. The U.S. Department of Education offers a variety of federal grants to students attending four or two-year colleges or universities, community colleges, and career schools. They include the Pell Grant, Federal Supplemental Educational Opportunity Grant (FSEOG), the Teacher Education Assistance for College and Higher Education Grant (TEACH), and the Iraq and Afghanistan Service Grant.
The Maryland Higher Education Commission also offers a variety of grants and scholarship programs to Maryland residents to use at Maryland state schools. Institutional grants and scholarships are awarded directly from colleges or universities and can be based on financial need, academic merit, or both.
Scholarship money can come from a variety of other sources, including community groups, schools, nonprofits, religious groups, employers, individuals, and professional and social organizations. Each scholarship has its own set of qualifying procedures, rules, and deadlines.
Loans must be repaid, usually with interest, after the student graduates or stops going to school. Federal student loans are fixed-interest-rate loans and include benefits not typically offered with private loans offered by banks, credit unions, and state-based organizations. Students may be eligible to receive federal subsidized and unsubsidized loans based on their financial need. For more information, see the Federal Student Loans: Basics for Students Guide.
Work-study programs enable students to earn money by working part-time while attending school. The federal work-student program emphasizes employment in civic education and work related to the student's major.
Financial aid can be further broken down into two categories: need-based aid, which is based on a student's financial need, and merit aid, which is based on a student's academic, extracurricular, athletic, musical, or artistic talents.
All students should apply for financial aid. There is a broad variety of financial aid available for all kinds of students. Many students mistakenly think they may not qualify for aid based on their family income and assets. When students choose not to apply for financial aid, they may be preemptively limiting potential opportunities to help pay for college. By filing the FAFSA, students have access to federal student loans and other resources to help cover costs if needed in the future.
Students can get an early estimate of their eligibility for student financial aid from these two tools: the FAFSA4caster and net price calculators. The FAFSA4caster is a planning tool from the office of Federal Student Aid to help students estimate their eligibility for federal financial aid, such as Pell Grants, work-study and direct loans. This tool helps students understand how much financial aid they might receive and the financial options available to them. The net price calculator is another financial planning tool. The calculator estimates what a student will pay to attend a selected college for one-year after subtracting the estimated grants and scholarships the college is likely to award the student. The federal government now requires most colleges and universities to have a net price calculator on their websites.
Students may also find it helpful to look at the net price statistics available on the U.S. Department of Education’s CollegeNavigator. The College Navigator provides information about college costs, financial aid and net price for all colleges. It uses the same methodology for calculating each college’s net price, yielding comparable figures. It also shows how the college’s average net price has changed over a three-year period and provides the average net price for five typical family income ranges.
The first step to applying for financial aid is to complete the Free Application for Federal Student Aid (FAFSA). The FAFSA website is also available in Spanish. The federal government, the Maryland state government, and the majority of colleges use the FAFSA to determine the student’s eligibility for financial aid. Many private scholarship programs also require the FAFSA.
Each year, the FAFSA becomes available on October 1. Students must submit the FAFSA each academic year to qualify. For students planning to attend college in the fall semester, the deadline to submit the FAFSA is June 30 to apply for federal financial aid and March 1 for Maryland financial aid programs. Many colleges have their own deadlines and many grants and scholarships have separate applications and deadlines. Students are encouraged to file the FAFSA early in order to meet earlier deadlines of other financial aid sources that use the form to determine eligibility. Additionally, most colleges require that you complete supplemental financial aid applications, such as the CSS/Financial Aid PROFILE for non-federal financial aid eligibility. Students should check with each institution for their specific requirements. In all cases, it is best to apply early in order to maximize the amount of aid awarded. For more information on how aid is calculated, visit Federal Student Aid.
There are several ways to file the FAFSA form. The easiest and fastest way to complete the application is to visit FAFSA.gov and submit it online. The form can also be completed on the new myStudentAid mobile app for IOS and Android. Alternatively, a mail-in application is available in English or Spanish. Students can download the FAFSA in PDF format or a paper copy can be requested by calling 800-433-3243 or 334-523-2691 (TTY: 800-730-8913). The processing time is longer for mailed applications.
The FAFSA information is processed by the office of Federal Student Aid and the is shared with the colleges or career schools listed on the form, as well as the state educational agencies where the schools are located. The financial aid department at each school uses the information to calculate the amount and type of financial aid a student is eligible to receive.
To learn more, listen to the "After the FAFSA: What Happens Next" video published by the office of Federal Student Aid