There are lots of different kinds of financial aid available, some of which will be friendlier to your wallet than others. Here is a breakdown of the basic types of aid available and what you need to do to get them:
Scholarships and Grants
The creme de la creme of the financial aid world, scholarships and grants are free money that you will never have to pay back. Available in two varieties, need-based awards are handed out based in financial need and merit awards are passed out for a variety of reasons ranging from your stellar academic record to weird talents you may possess. Scholarships and grants do not require repayment like a student loan would, but may require you to fulfill specific obligations like maintaining a certain GPA while you are in school or staying on a sports team or club. Scholarships and grants are available through the federal government, your school of choice, and outside organizations. Before accepting a scholarship or grant, it is absolutely crucial that you understand what is required to keep the award (lest you lose it because you dropped lacrosse or slept through chem one too many times) and whether the award is a one-time offer or will be renewed for your entire college tenure.
Get ready to sweat. With this aid award, available exclusively through the federal government, Uncle Sam will not give you a check, but he will give you a job. Handed out based on financial need, work-study jobs provide students with a part-time position, usually on campus, where they can earn some extra cash. Work-study pay is low—typically at or just above minimum wage—but unlike other jobs, funds earned through work-study jobs will not count as income and subtract from your financial aid package next year.
The least sexy of the aid awards, student loans are just that—loans you can borrow for educational expenses but will be required to pay back with interest after you turn the tassel. The loan amount you can take out, interest rate and repayment options vary tremendously between lenders, but there is one golden rule of student loans: ALWAYS GO FEDERAL FIRST. ALWAYS. The US government allows all dependent undergrad students to borrow up to $31,000 in federal Stafford loans to get them through school. The neediest students can borrow additional funds through the federal Perkins loan program while all parents can borrow through the parent PLUS loan program. The benefit to maximizing federal loans before private ones is that federal loans come with a lower interest rate, the ability to defer payments until after you graduate, and repayment protections including the ability to have your monthly loan payments reduced or forgiven entirely. We will get into those provisions in the section on student loans. For now, when it comes to loans, think fed first and approach private lenders with caution.
Scholarships, work-study jobs, and student loans are the three most common types of financial aid, but there are tons of lesser-known programs out there that can subsidize or eliminate your college costs just as well. Unfortunately, alternative aid programs frequently go overlooked and are only open to smaller segments of students.