Types of Student Financial Aid for U.S. Students: A Complete Guide

Financial aid is money to help pay for college or career school. Grants, work-study, loans, and scholarships help make college or career school affordable. A variety of financial aid sources are available to help you pay for college or career school. These types of student financial aid can come from federal, state, school, and private sources to help you pay for college or career school.

Types of Student Financial Aid
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Aid and Other Resources from the Federal Government

Besides aid from the U.S. Department of Education (ED), the federal government offers several other financial aid programs. These programs include:

  • tax benefits for education;
  • education awards for community service with AmeriCorps;
  • educational and training vouchers for current and former foster care youth; and/or
  • scholarships and loan repayment programs through the Department of Health and Human Services’ Indian Health Service, National Institutes of Health, and National Health Service Corps.

Federal student aid from ED covers such expenses as tuition and fees, room and board, books and supplies, and transportation. Aid can also help pay for other related expenses, such as a computer and dependent care. Thousands of schools across the country participate in the federal student aid programs; ask the schools you’re interested in whether they do.

Aid for International Study

Federal student aid may be available for studying at a school outside the United States, whether you’re studying abroad or getting your degree from an international school.

Whether you plan to study abroad for a semester or get your entire degree outside the United States, you may be able to use federal student aid to pay your expenses. The type of aid you can get—and the process you must follow—will depend on the type of program (study-abroad or full degree) you plan to enter. Your status as an undergraduate or graduate student also affects the type of aid for which you’re eligible, just as it does at schools in the U.S.

Aid for Military Families

There are special aid programs or additional aid eligibility for serving in the military or for being the spouse or child of a veteran. Both the federal government and nonprofit organizations offer money for college to veterans, future military personnel, active-duty personnel, or those related to veterans or active-duty personnel.

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Below are a few sources of financial aid that you might want to consider:

  • Department of Veterans Affairs (VA) Education Benefits
  • Iraq and Afghanistan Service Grant or Additional Federal Pell Grant Funds
  • Limited Interest Rates, No Accrual of Interest, and Deferment of Student Loans
  • Reserve Officers’ Training Corps (ROTC) Scholarships

The following major national organizations offer scholarships primarily to active duty military, veterans, and/or their families:

  • American Legion
  • Paralyzed Veterans of America
  • Veterans of Foreign Wars

Many smaller veterans service organizations around the country might offer scholarships. Check with your local organization.

Aid from Your College or Career School

Many schools offer financial aid from their own grant and/or scholarship funds. Find out what might be available to you:

  • Visit your school’s financial aid page on its website, or contact the financial aid office.
  • Ask at the department that offers your course of study; they might have a scholarship for students in your major.
  • Fill out any applications your school requires for its own aid programs, and meet your school’s deadlines.

Aid from Your State Government

Other than federal aid, you might be eligible for financial assistance from your state. Contact your state grant agency for more information.


The federal government provides grants for students attending college or career school. Most types of grants, unlike loans, are sources of free money that generally do not have to be repaid. Grants can come from the federal government, your state government, your college or career school, or a private or nonprofit organization.

Certain scenarios may require that a portion or all of the grant funds be repaid: for example, if you withdraw from school before finishing an enrollment period such as a semester, or if you receive a TEACH Grant and do not complete your service obligation.

However, sometimes there are cases where grants recipients are required to pay back the financial aid they have received. Here are some examples of why you might have to repay all or part of a federal grant:

  • You withdrew early from the program for which the grant was given to you.
  • Your enrollment status changed in a way that reduced your eligibility for your grant (for instance, if you switch from full-time enrollment to part-time, your grant amount will be reduced).
  • You received outside scholarships or grants that reduced your need for federal student aid.
  • You received a TEACH Grant, but you did not meet the requirements of your TEACH Grant service obligation.
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In this case, your school will notify you if you must repay part of your grant. From that point, you will have 45 days to either pay that portion of the grant back in full or enter into a satisfactory repayment arrangement.

If you enter into a satisfactory repayment arrangement, the school may assign the debt to ED for collection or may keep the debt and allow you to make payments directly to the school. If you do not carry out one of the options described above, you will lose your eligibility for further federal student aid.


When you receive a student loan, you are borrowing money to attend a college or career school. You must repay the loan as well as the interest that accrues. It is important to understand your repayment options so you can successfully repay your loan.

Federal student loans are an investment in the future. You should not be afraid to take out federal student loans, but you should be smart about it. Federal student loans offer many benefits compared to other options you may consider when paying for college:

  • Federal student loans offer flexible repayment plans and options to postpone your loan payments if you’re having trouble making payments.
  • If you demonstrate financial need, the government pays the interest on some loan types while you are in school and during some periods after school.
  • If you work in certain jobs, you may be eligible to have a portion of your federal student loans forgiven if you meet certain conditions.
  • The interest rate on federal student loans is fixed and usually lower than that on private loans—and much lower than that on a credit card.
  • You don’t have to begin repaying your federal student loans until after you leave college or drop below half-time.
  • You don’t need a credit check or a cosigner to get most federal student loans.

To apply for a federal student loan, you must first complete and submit a Free Application for Federal Student Aid (FAFSA) form. Based on the results of your FAFSA form, your college or career school will send you a financial aid offer, which may include federal student loans. Your school will tell you how to accept all or a part of the loan.

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Many nonprofit and private organizations offer scholarships to help students pay for college or career school. These types of student financial aid, which is sometimes based on academic merit, talent, or a particular area of study, can make a real difference in helping you manage your education expenses.

Some college scholarships are merit-based. You earn them by meeting or exceeding certain standards set by the scholarship-giver. Merit scholarships might be awarded based on academic achievement or on a combination of academics and a special talent, trait, or interest. Other scholarships are based on financial need.

Many scholarships are geared toward particular groups of people; for instance, there are scholarships for women or graduate students. And some are available because of where you or your parent work, or because you come from a certain background (for instance, there are scholarships for military families).

A scholarship might cover the entire cost of your tuition, or it might be a one-time award of a few hundred dollars. Either way, it’s worth applying for, because it’ll help reduce the cost of your education.

Work-Study Jobs

The Federal Work-Study Program allows you to earn money to pay for school by working part-time. Undergraduate and graduate students with work-study jobs will work part-time on or off-campus while enrolled.

These types of student financial aid provide part-time jobs for undergraduate and graduate students with financial need, allowing them to earn money to help pay education expenses. The program encourages community service work and work related to the student’s course of study.

You’ll earn at least the current federal minimum wage. However, you may earn more depending on the type of work you do and the skills required for the position. Your total work-study award depends on when you apply, your level of financial need, and your school’s funding level.

An important thing to take note of is that the amount you earn can’t exceed your total Federal Work-Study award. When assigning work hours, your employer, or your school’s financial aid office will consider your class schedule and your academic progress.

Final thoughts

Besides applying for any of those types of student financial aid, you should also think about what you can do to lower your costs when you go to college. College or career school costs can vary significantly and there are many schools with affordable tuition and generous financial assistance. Make sure to research all schools that may meet your academic and financial needs.

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