Whether you'd like to get your first college degree or you want to return for a new credential, taking advantage of sources of financial aid can help reduce your out-of-pocket college costs and make studying easier on your budget. Undergraduate students typically have the most options since they can qualify for a variety of grants. However, students of all levels can consider options such as loans, scholarships, work programs and employer tuition assistance. Take a look to learn more about the types of financial aid that might be available to you.
Federal Grant Programs
Available for those who complete the Free Application for Federal Student Aid (FAFSA) and meet requirements that usually include financial need, federal grants particularly appeal to students since you usually don't pay the money back unless you fail to comply with the rules. For example, withdrawing from a degree program, having access to scholarships, failing to meet the agreed-upon terms or dropping below half-time enrollment status can make a grant repayable. Otherwise, the money doesn't need to be repaid.
Here are the most popular federal grant programs available along with information on eligibility:
- Federal Supplemental Educational Opportunity Grant (FSEOG): Available only through participating schools, the FSEOG helps a school's financially neediest students get $100 to $4,000 annually in funding for their undergraduate courses. The program works on a first-come, first-serve basis, so availability can depend on which school you choose and when you apply for aid there. You can potentially continue to receive this grant until you finish your bachelor's degree.
- Federal Pell Grant: Known as the federal grant program with the widest availability, the Pell Grant goes to any financially eligible student who hasn't finished a bachelor's degree or higher and is available through any school participating in federal financial aid. While undergraduate students most often receive this aid, people in some postsecondary certificate programs for teachers can also get the funds. During the 2021-2022 school year, you can get as much as $6,495, and factors such as your student status, expected family contribution and cost of attendance play a role in what you get. There are limits to how long you can get this grant, and students with certain criminal histories don't qualify.
- Teacher Education Assistance for College and Higher Education Grant (TEACH): Available to both undergraduate and graduate students, the TEACH grant helps aspiring educators earn a certificate or degree and get as much as $4,000 annually ($3,772 for the 2020-2021 school year) toward their educational costs. The specific teaching program will need to qualify, and any student receiving this grant has to sign a service agreement promising to work at least four years teaching a high-need subject at a school with low-income families. There's an eight-year deadline after graduation to meet the service agreement or else end up paying the money back through an unsubsidized loan. Other requirements include the borrower completing a counseling program and maintaining good grades.
Read More: How to Get a Pell Grant for a Master's Degree
Federal Work-Study Program
Part- and full-time college students at any level can choose to work part-time jobs through the Federal Work-Study Program and earn money they can use for their tuition, room and board or other costs. Available through participating schools and to students who complete the FAFSA, this need-based program might involve an on-campus or off-campus job. Often, the role is either related to your area of study or provides a community service. For example, if you're studying mathematics, you might work as a math tutor through this program.
If you participate in the Federal Work-Study Program, you can expect to earn a pay rate (either hourly or a salary) at or exceeding the national minimum wage. The number of hours you work and the total amount of aid through work-study funds you can earn will depend on the aid you're awarded.
Read More: Federal Student Loans
Federal Student Loans
Whether you don't qualify for other federal financial aid options due to lack of financial need or you just need money beyond what you can get through grants and work-study opportunities, federal student loans are another popular choice for paying for college when you attend at least half-time. The money you receive through the federal student loan options must be repaid. However, the most common types don't have repayment start until six months past graduation and don't require a credit check like private loans would.
Based on financial need, direct subsidized loans help undergraduate students finance their studies and provide the advantage of having the interest covered while the loan is in deferment both during studies and after graduation. Direct unsubsidized loans don't offer help with interest but are available to any students of any level – and without financial need – as long as their program qualifies for federal aid. Yearly loan limits depend on the student's dependency status (dependent or independent) and the year and level of study. There's a lifetime loan limit too.
If you need additional funding and you or a parent has good enough credit to qualify, direct plus loans are another option and can particularly appeal to graduate students in high-cost programs in medicine and law. You can receive up to the difference between other funding received and your school's estimated cost of attendance. You or your parent can request a deferment for as long as you have half-time status, and you can get an additional six-month deferment right after graduation. Interest rates are higher than for the other direct loans.
Private Student Loans
Whether your higher education costs exceed the other forms of assistance offered or you need funds for a nontraditional program, private student loans through banks and credit unions can help fill the gap. These differ from federal student loans in several ways since they often require you to begin payments immediately or after a short deferral period, and you can expect not to get the benefits of a subsidized loan with this option.
You'll have to have good credit for one of these loans, and interest rates can be higher than federal programs. You also can't take advantage of the loan forgiveness or income-based repayment programs offered by the government with private loans. Therefore, you'll need to carefully decide whether you can afford the payments, pay close attention to terms and avoid overborrowing.
College Scholarship Programs
Similar to government grants you might receive through federal or state programs, college scholarships offer the potential to get free money to help pay for your education. You can find scholarships for both undergraduate and graduate students through colleges directly, community organizations, employers, state and local governments and private businesses, among others. The money awarded can vary from enough money to cover a few college books to enough for your whole tuition bill. Some common types include:
- Achievement-based scholarships for academic merit for students maintaining a high grade point average
- Need-based scholarships for low-income individuals entering or returning to a program
- Scholarships based on affiliation with a specific group of people or a profession
- Hobby-related scholarships in areas like sports, music and art
- Major-specific scholarships in areas like medicine, technology or English
- Scholarships for first-generation college students
- Scholarships for people with disabilities
- Scholarships for out-of-state or international students
Unlike with other forms of financial assistance, you can expect a more involved process when applying for scholarships since deadlines can vary alongside application requirements. For example, you might have to write an essay on a specific topic to submit with your application or send in documentation that backs up your grades or affiliation with a particular group. You'll also want to closely monitor any scholarships awarded since your school will need to adjust your financial aid package to take the extra funds into account and avoid rewarding too much aid.
Read More: How to Get Free Money to Go Back to School
Graduate-Level Fellowships and Assistantships
Students earning a master's degree or doctorate might seek fellowship or assistantship programs that either waive or reduce part or all of their tuition as well as provide additional financial relief during their studies. Fellowships usually waive tuition and involve doing research with other faculty in the program's field, and it's normal to get a stipend and health insurance as well. Assistantships offer similar benefits but involve more of a traditional job getting paid to teach classes or do research.
Both types of programs have requirements on the course load you'll need to take as well as a maximum number of terms for which you can participate. You can also expect minimum service requirements.
State-Specific Grant Programs
You'll also want to check with your state's department of education since you can find several grant-based programs that provide support to undergraduates alongside the federal grants. For example, your state may have grant funds that go to students with very low expected family contributions or to students who are veterans or plan to train in a high-need profession such as nursing. There are also state-based grants that may help out-of-state students pay the in-state tuition rate.
Read More: College Grants for Students Over 50 Years Old
Employer Tuition Assistance Programs
While companies have their own requirements for employees, many employers offer tuition assistance programs that reimburse employees for college classes toward a relevant degree program or even certain professional development classes. The company's management and human resources departments usually determine which types of training meet requirements and may set other rules like needing a certain grade to qualify.
While some companies provide eligibility to part-time workers, this benefit is most common for full-time employees. You may either get reimbursed later or have the employer send funds to your college. The IRS has set a $5,250 limit for this kind of assistance before you'd have to pay taxes on it, and you can easily combine it with other financial aid options.
Applying for Financial Aid
To learn about the financial aid programs for which you qualify, start by filling out the FAFSA since this will provide your expected family contribution. When you go to complete this form, you'll need to have information about your income and assets as well as details for your parents if you're a dependent student. As you fill in the FAFSA, you'll need your school's code and you'll get a request to pull your tax information as well as answer various questions about yourself and your family. The FAFSA will get processed and the data sent to your school.
Your school can use your FAFSA to help assess eligibility for programs from the federal government, state government and the institution itself. Usually, this means you'll get a financial aid award letter with the results. However, you'll also want to follow up with the school's financial aid office to learn more about aid awarded and get suggestions for other opportunities such as internal scholarships.
For other types of aid, you'll need to contact the organization directly to learn about requirements and the application process. For example, you can speak to your company's human resources department or your manager about tuition reimbursement, search online for scholarship pages to fill out or reach out to local banks about private student loans. Let your school's financial aid office know about external aid you're awarded since other aid may need to be adjusted.
Read More: How to Fill out Tax Information on a FAFSA
Other Options for Funding College
Whether your financial aid options fall short or you want to reduce your reliance on student loans, you can consider some other options to fund your college education along the way.
For example, working a part- or full-time job and possibly taking a smaller number of courses at once could help spread out your education expenses so that you can more easily afford them. However, this might not be the best option if the school charges per term regardless of credits enrolled. Your school might also have some ways to earn credits at a lower cost or test out of certain courses through exams.
You can also use some cash saved in a regular savings account or even withdraw funds from a retirement account for tuition, but you'll want to weigh the pros and cons of these options. You might borrow money from family so that you can negotiate a low interest rate, or you could seek alternatives to student loans like personal loans or even home equity loans if you're a homeowner.
- Federal Student Aid: Loans
- Federal Student Aid: Grants
- Federal Student Aid: Finding and Applying for Scholarships
- Federal Student Aid: Work-Study Jobs
- Federal Student Aid: Federal Versus Private Loans
- Oregon State University: How Are Fellowships Different from Assistantships?
- Harvard Extension School: How to Use—and Ask For—Employer Tuition Reimbursement Benefits
- Federal Student Aid: Apply for Financial Aid
- Ohio Department of Higher Education: State Grants & Scholarships
- Federal Student Aid: Federal Pell Grants
- Federal Student Aid: TEACH Grants
- Federal Student Aid: FSEOG (Grants)
- Federal Student Aid: Subsidized and Unsubsidized Loans
- Federal Student Aid: PLUS Loans
- Sallie Mae: Types of Scholarships
- Michigan.gov: Ways To Pay for College
Ashley Donohoe has written about business and technology topics since 2010. Having a Master of Business Administration degree, bookkeeping certification and experience running a small business and doing tax returns, she is knowledgeable about the tax issues individuals and businesses face. Other places featuring her business writing include Zacks, JobHero, LoveToKnow, Bizfluent, Chron and Study.com.