What Is Financial Aid and Why Is It So Important?

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This information is current as of April 21, 2022.

When it comes to studying, you might have heard about financial aid. But what is financial aid, and why is it so important?

Financial aid is money given to help you pay for college or career school. You can get financial aid from the federal U.S. government, your state, the school itself, or private donors or organizations. Some financial aid is given to low-income students. In contrast, other aid could be gifted depending on the student’s grades, abilities, or personal application.

You shouldn’t fear the price tag if you’re trying to pay for education for yourself or a loved one. Financial aid is available to help you get through school. This article will break down exactly how you can take advantage of it.

Why Financial Aid Is So Important

For many Americans, college seems to be out of reach financially. The average cost for one year at a 4-year university is around $26,290 – way more than what many people make in a year of work.

Don’t let these prices scare you away from learning. Financial aid has helped thousands of students without college tuition’s financial stress and burden.

Types of Financial Aid

Federal student aid can cover thousands of dollars in tuition, usually through grants. There is also a work-study program, a paid part-time position for students who want to earn money while studying.
State financial aid can also give out grants.
There are thousands of opportunities to get financial aid scholarships from schools or private organizations.
If you’re filing taxes as a student or are the parent of a student, you could also receive some tax breaks come tax season.

How to Get Financial Aid

If the government or scholarship agencies don’t have your information, they will never be able to give you financial aid. You’ll need to complete a few applications if you want to be considered for financial assistance.

You’ll need to fill out a FAFSA form for government and state grants. For private scholarships, you’ll have to complete individual applications.

Getting Financial Aid From the Government

The first and most important thing to do to get financial aid is complete the Free Application for Federal Student Aid (FAFSA).

The FAFSA will take your financial information and determine if you are eligible for need-based aid. This is given to lower-income students who do not have the financial means to pay for school. However, neither the government nor your school knows about your financial need without a completed FAFSA.

FAFSAs are available every year starting on October 1 for the following school year. For example, if you plan to start studying in September of 2023, you could submit your FAFSA as early as October 2022. For every year you attend, a FAFSA needs to be submitted.

Schools typically determine the deadlines. Therefore, the earlier you submit your FAFSA, the better.

FAFSAs can be filled out on a computer, through the mobile app called myStudentAid, or by mail. Completing it online is easy, and the website has plenty of help for first-time applicants. Plus, if you apply online, you can always revisit your account to adjust or reapply the following year.

What You Need for Your FAFSA

When you apply online, you’ll need to create an FSA ID. This is the username and password you will use to complete your FAFSA, check on your offered aid, and reapply in the following years.

The online application will require you to enter:

Your Social Security Number or Alien Registration Number
Your parents’ Social Security Numbers if you are a dependent
- If this is the case, your parents will have to sign your application to confirm that the details are correct
Your driver’s license number, if you have one
Federal tax information such as the information on your latest tax return and W-2 information for you and your parents
- Include information on untaxed income such as child support, benefits, savings accounts, etc.
The name of the schools you plan to apply to or the school you know you will be attending.

When your FAFSA is complete, this information will be sent to the schools you listed. If accepted by the school and eligible, you will be able to receive need-based aid from the federal government, state government, and school.

Be sure to check the email address associated with your FSA ID account. This is where you’ll receive notifications about your financial aid award amounts.

Getting Financial Aid Scholarships

Scholarships are additional money given to fund education. They can be given out based on need or merit. Merit scholarships are usually offered to students who have excellent grades, have completed extracurriculars, or have excelled in some department or area.

If you weren’t an A- or B-student in high school, don’t worry. There are plenty of scholarships available that aren’t based on academic performance. Some are based on income, others for students from low-income neighborhoods, children in the foster care system, or some based on race. No matter your situation, you can find at least a handful of scholarships you are eligible to apply for.

Some scholarships are given straight to your school, while others may be mailed to you as a check.

There are thousands of scholarships available throughout the school year. Some open a year before studying, while others can be applied for when you’re already in school.

Applications for private scholarships vary greatly, but most of them ask for basic information such as your:

High school grades
Any income you earned
Extracurricular or volunteer activities
Personal essays

Use search engines like The College Board, Fastweb, or your school’s financial aid page to find scholarships.

Tips for Applying for Scholarships

From your guidance counselor to your local library, there are plenty of resources to help you while applying for financial aid. Even the internet is filled with things like video tips on completing your FAFSA or scholarship application or blogs listing out new scholarships you can apply for. Find these resources and use them to make the application process more manageable.

The important thing is that you put the effort in and apply. You never know who will be reading your application or the circumstances – all you may lose is some time. But, on the other hand, you might be gaining thousands of dollars!

Financial Aid Loans

Loans for college are also financial aid, but these should be a last resort. Loans are often given through banks, Sallie Mae, and even the government.

Some loans accumulate interest while studying and do not have to be repaid until graduation. Others are paid for in installments while you’re still in school. Unfortunately, almost every loan will charge you interest, making it easy to accumulate thousands of dollars in debt by the time you graduate.

Free money is better than loan money, so stick to financial aid wherever possible and only look to loans if there is no alternative.

Final Thoughts

College doesn’t have to be a financial weight on your shoulders. With federal, state, and private financial aid, you can find the resources you need to study without accumulating debt.

Be sure to fill out your FAFSA and apply for private scholarships in your free time the year before you start school. It may seem like a lot of work, but it will be well worth it when you hold your degree and start a new career journey!

When Should I Apply for Financial Aid?

You can start applying for financial aid one year before starting your program. The FAFSA opens up on October 1 of each year. You can also continue applying for financial aid scholarships once you have already started school.

What Types of Financial Aid Are There?

The federal and state governments give financial aid grants to students who show financial need. There are also merit-based (based on your achievements) and need-based scholarships offered by schools and private organizations.

Am I Eligible for Financial Aid?

Almost everyone is eligible for some financial aid. For example, you qualify for need-based aid if you already receive government assistance like food stamps or subsidized housing. There are also scholarships given based on your grades, where you live, your race, or even what you plan to study.

Save Money on Your Wireless Phone Service

If you qualify for federal college student loans or grants, you may be eligible for Lifeline or the Affordable Connectivity Program (ACP). This federal benefits program gives low-income consumers free or heavily discounted communication services.

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