Navigating College Finances: Understanding Scholarships and Financial Aid
Paying for college can feel like a daunting task. Understanding the different types of financial assistance available is crucial for navigating this process successfully. When conversations about paying for college initially take place, terms like “scholarships” and “financial aid” are oftentimes used interchangeably. This article clarifies the relationship between scholarships and financial aid, exploring their differences, how they work, and how to maximize your opportunities for funding your education.
Financial Aid: The Umbrella Term
Financial aid is an umbrella term that includes any kind of money given to a student to pursue higher education, whether it is from the federal government, their college or university, or a private organization. In a financial aid package, students will receive a certain number of scholarships, grants, and student loan offers, depending on their financial situations. It is important to understand the different types of financial aid options in order to graduate college without worrying about tuition and fees.
Scholarships: A Key Component of Financial Aid
Scholarships are a vital part of a good financial aid package. While scholarships are a form of financial aid, there's a significant difference between scholarships and other forms of financial aid. Scholarships are just one kind of financial aid. Scholarships are a form of financial assistance that you do not have to repay, so it is free money that you can use to pay your college expenses.
How Scholarships Work
By applying for private scholarships or filling out the Free Application for Federal Student Aid (FAFSA), you can get scholarships to lessen your college costs. By applying for the FAFSA during your senior year, you can gain access to a designated amount of financial assistance.
Need-Based vs. Merit-Based Scholarships
Depending on your expected family contribution and the amount of money that your family is deemed able to pay for college, you can get need-based scholarships. These scholarships are just based on your financial need, though, so need-based financial aid may not be enough to cover all of your tuition fees. If need-based scholarships are not enough, merit scholarships can be a great source of additional financial aid. If you are an outstanding student or if you have a certain skill or experience, you can win a merit scholarship to help pay for your college education. Your merit scholarship amount will be determined by scholarship committees or a financial aid administrator, meaning that you may have to apply separately.
Read also: Camp Scholarships Guide
State and Private Scholarships
While the federal government contributes a lot of financial aid to students, states award financial aid to in-state students at public universities as well. Once you have discovered how much money your school's financial aid office is offering you, you can apply for private scholarships or loans to pay for the rest.
Appealing Your Financial Aid Package
Don't forget that you can appeal your financial aid package, which can potentially unlock additional resources to support your educational aspirations. Additionally, be aware that each college may have different policies on how financial aid and scholarships work together to pay your tuition. For example, Duke University has a specific policy on how multiple scholarships and aid packages can be used. Read our guide on stacking scholarships at Duke University or contact your school's financial aid office to find out if they have a similar policy.
Finding "Easy" Scholarships
Generally, the easiest scholarships to get are the scholarships with an easy application process. When you apply for scholarships in less time, you have the ability to apply for a larger number of scholarships. This can give you better odds of winning more scholarships, as it is often not guaranteed that you will win every scholarship you apply for. Additionally, you should find scholarships that have specific eligibility requirements, for example, only taking students of a certain identity, major, location, or another qualification. While these scholarships may take more time to apply for, these can be the easiest opportunities to actually win because the fewer applicants a scholarship has, the greater your chances of getting the scholarship.
GPA and Full Scholarships
In order to get a full scholarship, it can be helpful to have a higher GPA. However, full-ride scholarship requirements vary by school and provider, so a high GPA is not required for every full scholarship. For the scholarships that do require a GPA, though, most will ask students to have a GPA above 3.0 in order to apply. Even if a scholarship doesn't have a GPA requirement, having a competitive GPA may help you stand out from other applicants.
Grants: Another Form of Gift Aid
Grants are free aid (otherwise known as “gift aid”), meaning they don’t need to be paid back, making them the most sought-after options. The main difference between a grant and a scholarship is where the funds come from, eligibility criteria, and the application process. As mentioned above, college grants are given to students who have a financial-need, with funds coming mostly from federal and state government. Some of the major, government-funded grants include the Teach Education Assistance for College and Higher Education Grants (TEACH), Pell Grants, Federal Supplemental Educational Opportunity Grants (FSEOG), and Iraq and Afghanistan Service Grants. After filing a FAFSA, you’re automatically considered for many of the major federal grants.
Read also: Benefits of NSHSS Scholarships
Loans: Borrowing for Education
Loans are the more commonly-used type of financial assistance. The difference between loans and a grant or scholarship is that they’re not “free” and need to be repaid, with interest. Federal loans are more desirable because they have lower interest rates, allow for flexibility with payments, and provide other benefits such as loan consolidation and deferred payments. Private loans, the more common type of student loan, are provided by banks, credit unions, and other private organizations. Federal student loans aren’t due until you graduate, leave school, or change your status to less than half-time. For federal student loans, income-driven repayment plans set your monthly payment based on your income and family size. You can fill out an application to be on this kind of plan if you qualify for federal student loans. There are various reasons for student loan forgiveness (also called cancellation or discharge, depending on the reason), and it’s only possible with federal loans. Subsidized federal loans are available to students who have a financial-need for the assistance, which means the government will pay the interest while you’re in school and for a grace period after graduation. There are also PLUS and Perkins loans. PLUS loans are offered to parents of dependent undergraduate students, as well as graduate or professional students. For federal loans, the first step is submitting the FAFSA. Once reviewed, the data is used to award financial assistance depending on the financial-need. For private loans, the process can vary by lender.
Work-Study Programs
Work study is another form of financial aid that enables students to work a part-time job where earnings cover college-related expenses. Typically, the job market is limited to campus, but the Department of Education is overhauling this program to include jobs off-campus as well as apprenticeships, internships, and clinical rotations.
Scholarships vs. Loans: Key Differences
Federal and private student loans have to be paid back with interest. Scholarships, on the other hand, are free money and don't have to be repaid. While there are certain instances in which you might have to return scholarship funds, such as if you fail to meet the requirements or drop out of school, scholarships are generally a form of gift aid with no repayment obligations. Scholarships and loans also have different uses, as loans can often be used for additional expenses, such as room and board, while scholarships are generally more strict and must be used for tuition and fees alone. Student loans can be helpful for students who wouldn't be able to stay in school without them, but scholarships are preferable since they don't need to be repaid.
Do You Have to Pay Back Scholarships?
No, scholarships do not have to be repaid. Scholarships are free money, unlike private and federal student loans. However, it is important to know the terms and conditions of your scholarship, as some scholarships are awarded with the expectation that the winner will maintain a certain GPA, play a specific sport, pursue a certain major, or meet other requirements. If you accept a scholarship and end up failing to meet the requirements, you may have to return the funds if you're no longer eligible. Additionally, if you receive more scholarship aid than you need, you may need to give the leftover sum back to the donor. Scholarships are typically designated to be used to pay for tuition, course fees, and/or book expenses, so if you've covered all of these costs and still have scholarship money, it may have to go back to the donor.
How Scholarships Impact Financial Aid Packages
The short answer is that, in most cases, a scholarship won’t affect the financial aid offered by a college. Instead, it will help to cover costs not already paid for by financial aid, and is therefore of great benefit to the student. Though colleges and universities can offer their own scholarships, which appear within the financial aid package, there are numerous scholarships offered by other entities, such as companies, foundations, cities/towns, non-profits, and associations. Once your son or daughter receives a scholarship, let your child’s chosen school know of the prize. Note that the CSS Profile® asks for the amount of scholarships that the student has earned for the upcoming school year. Most financial aid offices will do their best to allow the student to keep all financial aid and scholarships that have been offered, so that a scholarship doesn’t negatively affect the financial aid package. A school first calculates a student’s eligibility for need-based financial aid, which is the total Cost of Attendance of the school minus the student’s Student Aid Index (SAI). If a student receives any need-based financial aid from the federal government, state government, or the school itself, the total of that aid, plus any private scholarships, must fit within the student’s eligibility for need-based financial aid. For example, if a student has $25,000 in eligibility for need-based financial aid, and receives $15,000 in need-based financial aid from the federal government and the college, the student has room to receive $10,000 in private scholarships. If a student receives a financial aid package that includes need-based aid and that equals the student’s financial aid eligibility (which is rare), and therefore leaves no room for private scholarships, the financial aid office will need to reduce certain elements of the financial aid package. Most financial aid offices will reduce a student’s subsidized loans or federal work-study first to make room for a private scholarship. If a college removes a student’s subsidized loans and federal work-study to make room for a private scholarship, and still needs more room within the financial aid eligibility, the college may need to reduce some college-specific grants or scholarships in order to make room for the private scholarship. The college will contact the student if this needs to occur. This is not a common occurrence, and it’s usually the last resort. This is the only instance when a scholarship could negatively affect any grants and scholarships already offered, and again, it doesn’t happen very often. If the financial aid package only includes merit-based aid (aid offered regardless of a student’s financial situation) and not any need-based aid, the student is eligible to receive private scholarships and merit-based aid that add up to the total Cost of Attendance of the school. Since policies may differ from college to college, this is a great topic to discuss with the financial aid office when visiting a campus.
Read also: Scholarship Guide
Applying for Financial Aid: Key Steps
Applying for financial aid is a bit simpler in that you just need a few forms in order to do so. The first, and most important, is the Free Application for Federal Student Aid, otherwise known as the FAFSA. Generally speaking, the FAFSA asks questions about your family’s financial circumstances in order to determine how much your family can contribute toward a college education. Colleges are notified of your EFC; and from there, they design a financial aid package that hopefully meets your needs. Some states and colleges may require a supplemental form in addition to the FAFSA. These supplemental forms tend to ask more questions than the FAFSA and give room for families to elaborate on financial circumstances that aren’t so black and white. The FAFSA is undoubtedly important, but so are these forms. Each year, the FAFSA becomes available on October 1. This is typically the kickstart to the financial aid application process. It is recommended that students complete the FAFSA as soon as possible after the release date. This is because most states award financial aid on a first-come, first-serve basis; meaning the sooner you apply, the greater your chances of getting the financial aid you need to pay for college. Though the FAFSA has a 20-month application cycle, which means the due date isn’t until June 30 the following year, it’s to your benefit to at least turn in the application before your state’s FAFSA deadline. Supplemental forms from states and colleges are also due as soon as possible - or in early spring. You will have to check with your financial aid administrator on the exact timing.
Tips for Maximizing Scholarship Opportunities
- Start Early: You can start applying for scholarships as early as your freshmen year of high school - and keep applying through your last year of school, whether that’s your senior year of college or your last year of graduate school.
- Search Widely: In addition to institutional scholarships, students can search for scholarships by their location, intended major, extracurricular activities, and more. The best place to search for these types of scholarships is Fastweb.
- Utilize Resources: Students can ask their high school counselor, teachers, or mentors about scholarship opportunities that are local to them.
- Read the Fine Print: Each scholarship is different, so it’s important to read the fine print. Don’t apply for every scholarship you come across; it may be a complete waste of time if you don’t meet the requirements.
- Apply for Everything You Qualify For: Apply for every scholarship that you come across that you do qualify for! Like we always say here at Fastweb, the more scholarships you apply to, the greater your chances of winning one.
- Maintain a Strong Profile: You can ensure that you qualify for many scholarships by working hard in your classes, increasing or maintaining a great GPA, and getting involved in a variety of extracurricular activities and community projects. Scholarship committees want to reward students who are hard-working, motivated, and interesting.
- Stay Updated: Check Fastweb frequently for new scholarship matches; we’re constantly updating our database. Also, it’s important that you update your profile frequently as well. The more we know about you, the better we’re able to match you to relevant scholarship opportunities.
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