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Financial Aid: Your Guide to Paying for College

Financial Aid: Your Guide to Paying for College

This comprehensive guide answers your biggest questions about applying for financial aid and filling out the FAFSA, whether you are attending college in person or online.

College tuition has increased over 136% since 2000, reaching a price that few people can pay out of pocket. Luckily, many students have another option to pay for their degree: financial aid. In fact, over 82% of students use financial aid when attending undergraduate and graduate programs. But while most students tap into financial aid, there’s still a lot of confusion over what types of financial aid are best, if you need to fill out the FAFSA, and if it’s possible to pay for your college education with loans and scholarships alone.

This page serves as the ultimate guide to navigating financial aid. After reading it, you’ll be ready to tackle the first step of the financial aid process—filling out the FAFSA application—and will understand the ins and outs of each type of financial aid. We’ll also clear up the most frequently asked questions. With all that knowledge, you’ll be able to focus on excelling in the classroom instead of worrying about finances.

Financial Aid Types for On-Campus and Online Students

Financial aid usually consists of scholarships, grants, and loans that can be used for online and on-campus programs at accredited universities. The different types of financial aid vary greatly, and certain types work better for some students than others. While aid comes from different sources, most have a shared first step: to fill out the FAFSA. Even some merit-based scholarships require applicants to complete the FAFSA. After that first step, the process varies for each type of financial aid. Let’s explore the requirements–and the pros and cons–of the six most common types of financial aid.

Federal Aid

The U.S. Department of Education has funds set aside for college grants. For all federal grants, the only step is filling out the FAFSA. Federal aid includes:

  • Pell Grants: These grants are reserved for students pursuing their first undergraduate degree who demonstrate outstanding financial need. The amount awarded depends on an applicant’s demonstrated need, with $6,895 the maximum annual amount.
  • Teacher Education Assistance for College and Higher Education (TEACH) Grants: Education undergraduate and graduate students who fill out the FAFSA are eligible for this grant. Unlike the Pell Grant, TEACH grantees must agree to fulfill a teaching service obligation after they graduate. The maximum amount awarded is $4,000 per year, up to $16,000 for undergrads and $8,000 for graduate students.
  • Federal Supplemental Educational Opportunity Grants (FSEOGs): Students at participating institutions receive $100 to $4,000 a year based on the need determined from their FAFSA application. Not all schools participate; the Department of Education recommends checking with your college to see if this is an option.

Student Loans

Along with grants, students can apply for student loans, which often have a lower interest rate than private loans. Types of student loans include:

  • Direct Subsidized Loans: This loan not only has low interest, but the federal government also pays the interest while you’re enrolled in college and during a predetermined postgraduate period.
  • Direct Unsubsidized Loans: This type has the same low interest rates as a direct subsidized loan. However, students are responsible for paying interest the entire time they have this loan, including when enrolled in college. 
  • Grad Direct PLUS Loans: With a PLUS loan, the Department of Education is your lender instead of a bank. These loans have fixed interest rates. PLUS loans are for the student.
  • Parent Direct PLUS Loans: Similar to a Grad Direct PLUS Loan, the Department of Education is the lender for these fixed interest rate loans. Unlike the grad option, this loan is for parents. 
  • Private loans: If federal loans don’t cover enough, students can apply for private loans. Often, these are through a bank or financial institution and have a higher interest rate than other types of student loans. 

State Aid

Along with federal aid, some states provide additional financial aid to students. The qualifications for this type of aid vary greatly; check with your state for specifics. To give you an idea of what may be available, take a look at these examples of state aid:

  • Grants based on financial need, such as the Ohio College Opportunity Grant. This grant is given to students who graduate from an Ohio high school and attend a university in Ohio. Grant eligibility is determined by the FAFSA. 
  • State aid based on occupation, such as the Golden State Teacher Grant Program. This grant is for Californians who are pursuing an undergraduate or graduate degree in education in California. Eligibility is determined by the FAFSA. 
  • Grants for military members pursuing their degrees, such as the Texas State Tuition Assistance Program for members of the Texas Army National Guard, Texas Air National Guard, and Texas State Guard.


Unlike a loan, a scholarship doesn’t need to be paid back. There’s not one set standard for who receives a scholarship–or how much a scholarship is for. Scholarship award amounts can range from $50 to covering the entire cost of tuition. Some scholarships must be applied to tuition costs, while others can be used for any expense a student incurs, such as rent or books. For most scholarships, a committee from a private organization, university, or nonprofit decides which candidate is the best. These committees create their own application and criteria, which can include:

  • Academic achievement
  • Religious affiliation and devotion of an applicant
  • Achievement in sports or other extracurriculars 
  • The applicant’s gender, race, or cultural background
  • Where the applicant went to high school or where they’re going to college

See our Scholarships Hub page for a list of scholarships you can apply for now.

Employer Assistance

Some employers offer assistance to current employees enrolled in graduate and undergraduate degrees. The terms and how much the company covers vary; check with your employer’s HR department about what’s covered. For example, some companies cover college only if your major is applicable to your role at the company. Often you must sign a contract agreeing to stay with a company for a set amount of time in exchange for tuition assistance. If you leave that company before the time is up, you might have to pay back your tuition assistance. 


All accredited universities in the United States work with the Department of Education to provide students with work-study positions. A work-study program is for students who demonstrate financial need on the FAFSA. These part-time jobs are available to graduate and undergraduate students and are often community-service oriented. Since the program is administered by each individual school, the number of hours and positions vary. Usually, students work no more than 20 hours. Positions can include, but aren’t limited to, working in the library, assisting as a technician in a lab, and working in the admissions office. Some universities also have separate teaching and research assistantship programs for graduate students. Unlike the work-study program, these assistantships are usually funded through the university, not the federal government, and are merit-based awards. In these roles, assistants either help professors with their teaching duties or work with professors on their research projects. 

FAFSA Quick Guide

We’ve already mentioned the FAFSA multiple times throughout this guide, so you might be wondering exactly what it is. The Free Application for Federal Student Aid (FAFSA) is how you apply for most types of financial aid and figure out if you qualify for federally funded student loans. If you plan to apply for any loans or scholarships at all, including merit-based scholarships, it’s recommended that you fill out the FAFSA. While the application is long, there are a couple things you can do to set yourself up for success when filling it out.


Before you fill out the FAFSA (which opens on October 1 for the next school year and must be completed each year), there are some key preparation steps. The most important is to gather all the forms or information you’ll need to submit your application. These include:

  • Your Social Security number or your Alien Registration number if you’re not a U.S. citizen
  • Your military ID if you’re a member or a veteran 
  • Your federal income tax returns, W-2s, and other records of money earned 
  • Your parents’ federal income tax returns, W-2s, and other records of money earned

After you’ve gathered all the forms you need, go ahead and fill out the FAFSA even if you don’t know which schools you’re applying to. List any school you’re considering. You can add or remove schools later.

Starting the Form

To get started on your application, head to the Federal Student Aid webpage. From there you will be prompted to create a new account or login. When you start a new account, you must create your FAFSA ID. Keep this ID handy because you’ll need it to fill out a FAFSA for each academic year you are a student. 

Once you have your ID, you should be able to fill out the application. You can save your work and come back later if needed. The webpage prompts you through each step, however we’ll discuss it in more detail below. When starting your FAFSA, it’s important to know the federal, state, and university deadlines for each academic year. The Federal Student Aid webpage has a nifty tool where you can enter your state and university to determine these deadlines.


Just because you filled out the FAFSA doesn’t mean you’re automatically eligible for federal financial aid. The basic eligibility requirements are being a U.S. citizen, enrolling in an accredited higher education institution, being enrolled as a regular student, and having a social security number. For Direct PLUS Loans, you must be registered at least part-time.Beyond these basic eligibility requirements, you also need to demonstrate financial need. FAFSA considers your income and savings as well as your parents’ income and savings. It also considers how many college students are in your household and if you have a high school diploma or GED. Students who aren’t U.S. citizens, students with disabilities, and students convicted of a crime have additional eligibility requirements, which you can read more about on the Federal Student Aid eligibility webpage.

Application Process

Once you’ve created your FAFSA ID and selected the right form, there are five main steps to the application process:

  • Step 1: Fill out the student demographic information. This information includes how many are in your household, your race and/or ethnicity, and where you live, but some years it covers additional information. 
  • Step 2: List all the schools you applied to or will apply to. Each of these schools will be sent your FAFSA. If you end up going to a school you didn’t send your information to, you’ll need to add that school or risk not getting the financial aid you were awarded from the FAFSA.
  • Step 3: Answer the questions on your dependency status. Even if you live on your own, you’re considered a dependent on the FAFSA if your parents are helping pay for your college and you are under the age of 24.
  • Step 4: Fill out your parents’ demographic information. This section is like the student demographic section.
  • Step 5: Provide financial information. This is where those W-2s, proof of income documents, and tax returns will be needed.


When filling out the FAFSA, there are three deadlines to remember:

  • The federal deadline: For the 2022-2023 school year the deadline was June 30. Usually, the deadline is the last day in June. 
  • Your state’s deadline: This deadline is usually before the federal one and, if you meet it, you’re eligible for additional state aid.
  • Your university’s deadline: This deadline is usually the earliest—and by early, we’re talking extremely early. You’ll want to make sure you get your application in well before this deadline to get as much financial aid as possible. 

If you fill out the FAFSA before all three deadlines, you’ll be eligible for financial aid from your state and/or university and from the federal government. If you miss the state and university ones, you are still eligible for federal aid. If you miss the federal end-of-June deadline, you aren’t eligible for financial aid during the upcoming school year.


Once you’ve completed your form, it’s time to sign and submit. Remember, you can save your work and come back. Only hit submit when you’re sure you are ready. 

After you hit submit, the waiting begins. Luckily, the waiting period isn’t too long; you’ll receive your Student Aid Report (SAR) in three working days to three weeks. The SAR is just an estimate; you have the option to resubmit your FAFSA if you don’t like your financial aid package and think additional information might get you more grants or increase the amount you can take out in student loans. 

The final amount will include federal, state, and university financial aid and is usually delivered in an award letter, either electronically or physically. The date you get the final award letter will vary from school to school. Schools can send out your award letter as early as late winter or as late as August, right before you start classes.

Understanding the FAFSA Guide

Financial Aid for Online College Students

Many online students wonder if all financial aid options are available to them. If your program is accredited, the answer is yes for most types of aid. Some private or university scholarships might require students to take their courses on campus, but any financial aid option that uses the FAFSA still applies. That means you’re still eligible for federal grants, student loans, and state aid. To break it down further, check out the answers below to some of the most commonly asked questions about financial aid for online students. 

Does the school I want to attend offer financial aid? 

Online programs must be part of the Department of Education’s Title IV program and meet certain criteria for attending students to be eligible for federal aid. Make sure you check that your program is accredited by the Department of Education and any other regional boards, such the Higher Learning Commission or the Northwest Commission on Colleges and Universities, or program-specific boards, such as the Commission on Collegiate Nursing Education for nursing programs. Additionally, some online programs might have less funding for university-provided financial aid. If financial aid is a pressing concern, ask schools about their typical financial aid packages for online learners.

How do I search for FAFSA-approved online schools? 

If an online program has the right accreditation and is part of the Title IV program by the Department of Education, it should be a FAFSA-approved school. If you’re unsure, a quick Google search will provide the answer for a specific online school or you can check directly at the source: the Federal Student Aid website. Once you create your FAFSA account, you can search all applicable schools as part of your application. You can even create your account and search what schools are FAFSA-approved long before you submit your application; remember, you can save your progress on the application and come back later. 

Is the application process the same for online college? 

The application process is generally the same for online colleges as ones that offer on-campus or hybrid programs. It’s a good idea to check with any school—online or otherwise—to see if the process is different from the usual on-campus application process. Any program or college may also require additional information to determine your financial aid need beyond the FAFSA.

What other financial aid options are available for online college students? 

For the most part, all financial aid options that are available to on-campus or hybrid students are available to online students. Plus, there are scholarships just for online students. These include privately funded scholarships, such as the Get Educated Online College Scholarship Program, and university-funded scholarships set aside for the school’s online learners. For example, Columbia College in Missouri offers an eScholarship but also offers scholarships for in-person students only. If you’re attending a university with both on-campus and online courses, make sure you understand which scholarships you’re eligible for. 

Can I get a work-study grant as an online student? 

Just because you aren’t on campus doesn’t mean you can’t get a campus job. The work-study program is available to all online learners who demonstrate financial need and attend an accredited university. Some schools offer remote jobs. If your program doesn’t, you could still go to campus to work an in-person job. When it comes to assistantships that aren’t part of the work-study program, check if you’re eligible with your specific university and program.

10 Financial Aid FAQs 

Financial aid is a broad, yet nuanced topic and, most likely, you still have questions. You’re in luck, because we have answers. Our team gathered some of the most frequently asked questions, such as “Does my family make too much to qualify for aid?” and “How do I apply for financial aid as a veteran?” We researched these questions and are including comprehensive answers to clear the confusion and help you navigate your most pressing financial aid concerns.

  • Q1: Does my family make too much money to qualify for financial aid?

    There are no specific income cut-offs for federal aid. Sources of federal aid, such as Pell Grants, are determined based on the expected family contribution, which is a much more nuanced metric and considers more factors than income. How many students your parents have to put through college, your family’s savings, and more also influence your eligibility for financial aid. If in doubt, it’s best to fill out the FAFSA and see what types of aid–and how much aid–you get. There are also merit-based scholarships and grants that don’t take financial need into consideration. Anyone, no matter their family income, can apply to merit-based options.

  • Q2: Does applying for financial aid impact my ability to get accepted?

    The chances of your financial aid impacting your ability to get accepted are slim to none. That’s because most schools run on a need-based agenda. With this agenda, they don’t look at how much money applicants need when choosing whom to accept. Instead, they make those decisions based on academic achievement, standardized tests scores, extracurricular involvement, applicants’ essays, and any other criteria the admissions office has set. In fact, at most universities the admissions committee never sees the family or applicant’s financial information. 

  • Q3. Do I qualify for financial aid if I’m an undocumented student, refugee, or asylee student?

    Your eligibility as a undocumented student, a refugee, or an asylee depends on the type of financial aid. Unless you have U.S. citizenship, you aren’t eligible for federal student aid, even if you’re a Deferred Action for Childhood Arrivals (commonly known as DACA) recipient. State aid and universities are a different story and can vary on a case-by-case basis. Some states, such as California, provide aid to certain non-U.S. aliens, while other states, such as Alabama, follow the federal guidelines. Each university determines if it will give financial aid to undocumented students, refugees, and asylees. If you have this status, you are eligible for many private scholarships.

  • Q4. How do I apply for financial aid if I am in the foster system or an emancipated minor?

    If you’re currently in the foster system, your foster parent or legal guardian is required to take the role of the parental guardian in the FAFSA process. All dependent students need a parental guardian’s approval and information to fill out the FAFSA. While the IRS considers anyone under the age of 18 to be a dependent, the Department of Education considers anyone under the age of 24 to be a dependent student. If you’re under 24 but have emancipated minor status, you need to provide documents that prove your status to fill out the FAFSA without your parents’ signature and financial information.

  • Q5: How do I apply for financial aid as a veteran or military member?

    Thanks to legislation such as the GI Bill, all active military personnel, those in the reserves, and veterans are eligible for financial aid. Often, this aid covers the cost of attending an accredited university. To qualify, you must fill out the FAFSA. Be sure to indicate your military status on the FAFSA and provide your military ID number.

  • Q6: Can I afford a private college?

    Whether or not you can afford a private college depends on your personal financial situation and the aid the college offers. How much a private college has available for need-based and merit-based scholarships and grants depends on how much donors give each year. But that doesn’t mean it’s impossible to afford a private college. In fact, many private colleges have more financial aid available than public schools and, once financial aid is applied, private colleges can be as affordable as state options. 

  • Q7: What if my parents have more than one student in college?

    If your parents have more than one student in college, your financial aid package will most likely increase because the FAFSA considers the expected contribution, not just your parents’ income. Let’s say there are two students, Madison and Matthew, and their parents make $80,000 a year. Matthew is an only child while Madison has two other siblings in college. Since Matthew is an only child, the federal government determines his parents can provide more of their $80,000 income to education than Madison’s parents, so Matthew’s financial aid will likely be lower than Madison’s. 

  • Q8: How can I make college more affordable?

    • See if you qualify for tax credits. 
    • Take college-level classes or AP classes in high school to increase your chances of merit-based financial aid.
    • Start at a community college for your 100- & 200-level courses while in high school or after graduating.
    • Apply for as many scholarships as possible, including ones from your high school, local community organizations, the universities you applied to, and national organizations.
  • Q9: Do I need to reapply for financial aid every year?

    To make online and in-person college more affordable, check out our best tips (many students overlook these): 

    This depends on the type of financial aid you receive. Most universities automatically reevaluate your aid based on your GPA and conduct on campus. Since federal and state aid is dependent on your current financial situation, you’ll need to resubmit your FAFSA each year. When you resubmit, make sure you have the most up-to-date tax returns, W-2s, and other proof of income documents. For private scholarships, the protocol on reapplication differs from organization to organization. 

  • Q10: What if I don’t receive enough aid to cover the cost of college?

    If you don’t receive enough financial aid from the federal government, your university, and your state, there are other options to cover the cost of college. Taking on a part-time job or looking into your university’s payment plans can make the cost more manageable. There are also additional scholarships out there and many accept applicants on a rolling basis or have deadlines other than the traditional end-of-June deadline for federal funding. If you can’t afford college because of an unforeseen circumstance, such as a death in the family or change in employment status, you can also redo the FAFSA for a special circumstance reevaluation.

Two Financial Aid Experts Weigh In

To get additional insight on the financial aid process, we interviewed Denise Thomas, a college financial aid expert, and Kaitlyn Myers, a student who went through the financial aid process for their undergraduate degree. Get ready to jot down notes as Denise and Kaitlyn provide insight you won’t want to miss.

A portrait of a smiling woman with shoulder-length curly gray hair, wearing a light beige top. She appears outdoors with a soft-focus background.

Denise Thomas

Denise Thomas is a TEDx speaker, international best-selling author, and coach to parents of college-bound teens. Thomas inspires, educates, and equips parents to take an active role in supporting their children to live a life of financial freedom. Using her strategy, her two teens attended their first-choice college on 17 scholarships exceeding $199,000, walking out of college with cash in hand. Her mission is to “flip” the student debt statistic in the U.S. Learn more about Denise at www.getaheadoftheclass.com.
  • Q: What aspect of financial aid are prospective students most likely to overlook?

    A: The most overlooked aspect of financial aid is that families believe they have too high of an income to get anything other than student loans. While that may be true with regard to the Pell Grant, many college and state merit scholarships are tied to having filed the FAFSA.

  • Q: What do you wish more people understood about how financial aid works?

    A: Financial aid works differently for every college and university. Every college has its own formula for determining financial aid. That formula is not disclosed, and it can change from one year to the next. In most cases the student won’t know how much the financial aid offer will be until they apply. Out-of-state private colleges can become just as affordable as the in-state flagship university.

  • Q: How do universities evaluate financial need?

    A: Colleges evaluate financial need based on the family and student income and assets. Most colleges use the FAFSA, while a smaller percentage use the CSS profile (a more extensive financial questionnaire), and some have their own financial forms. 

  • Q: What is one piece of advice you always give to students and prospective students filling out the FAFSA?

    A: One of the most common mistakes made is that the parent fills out the FAFSA not realizing that all the questions on the FAFSA are from the student’s perspective. This is a massive error as parent and student assets and income are evaluated very differently. Place the student in front of the computer, with the parent looking over their shoulder as the questions are answered.

  • Q: Should students stop applying for financial aid once they have started or keep applying throughout their time as a student?

    A: Students should not stop applying for financial aid until the last degree is earned. Their family finances and circumstances can change every year, impacting the financial outcome. If the last few years have shown us anything, it’s that family finances can change in an instant. Should sudden medical or employment changes occur, the federal student loan offered to every student filing the FAFSA may be the difference between affording that term or not.

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Kaitlyn Myers

Kaitlyn Myers is a recent graduate of Southern New Hampshire University with a bachelor’s degree in creative writing. She is an aspiring author whose passion for writing is rooted in a love of reading.
  • Q: What is your number-one tip for filling out the FAFSA?

    Honestly, the process is pretty straightforward and the website guides you through. If I had any advice, it would be not to procrastinate and to have your tax information ready. There’s nothing that can be done if you miss the deadline because you put it off; that’s money that you’re missing out on. Also, if you use TurboTax, the FAFSA website can pull in your tax info, all you need is your login information. Super easy! 

  • Q: How did you deal with any stress around finances before getting your financial aid package from the government/your school?

    The biggest stress for me was knowing when the application needed to be done and making sure I had everything submitted on time. If you’re like me and relied on financial aid to fund your education, then just make sure you have everything completed on time. I talked to a financial advisor at my school to make sure I had met all the deadlines and they answered all questions I had surrounding financial aid. 

  • Q: What do you wish someone told you about financial aid before you started college?

    I made a lot of assumptions about financial aid that were not accurate. One thing I assumed was that since I was using my GI bill benefits I couldn’t or shouldn’t ask for any handouts or that they wouldn’t grant me any money. This is far from the truth. Not only did I receive money through the Pell Grant to pay for the remainder of my tuition, but I also had leftover money I got to keep. I wish someone had told me how easy it was and that, no matter what your circumstances are, it doesn’t hurt to apply. 

    Also, you don’t have to take a loan out. I think a lot of people assume FAFSA is only for loans (at least I did) and that’s not the case. You can receive the Pell Grant and never touch the loan they offer you. The grant is not a debt, it’s just free money you could potentially qualify for. All you have to do is apply. 

  • Q: You applied for financial aid as an online student and a veteran. How did this affect filling out the FAFSA?

    As I said, the entire process is straightforward and the website walks you through the application. If anything, I think I just needed to have some important dates related to my service handy for the application, and that’s about it. In terms of being an online student, I probably qualified for less money because my education was cheaper than an on-campus student. 

  • Q: What was the most difficult part about getting financial aid?

    Through FAFSA, I wouldn’t say any part of it is difficult. The only hurdle between you and financial aid is an application.