What is financial aid?
In general, financial aid is money you use to pay for college that doesn’t come out of your or your family’s savings. However, the phrase “financial aid” can be confusing, because it covers several different types of financial assistance. For example, financial aid can refer to:
- Scholarships or grants from the Federal government or your state government
- Scholarships or grants offered by the colleges you applied to
- Work-study programs at your college
- Student loans
- Parent PLUS loans
Student loans and Parent PLUS loans are included under financial aid
Many people are surprised to find out that loans are included under financial aid, since loans are money you have to pay back, plus interest. In addition, loans offered through the US Government can be called by different names, such as Direct Student Loans, Stafford Loans, and subsidized and unsubsidized.
What are subsidized and unsubsidized loans?
A subsidized loan is when the Federal government pays the interest during the time you’re in school. These loans are available to students from lower income families. An unsubsidized loan is where the student is responsible for paying the interest. The government uses the information from your FAFSA to decide whether your student loan is subsidized or unsubsidized – you do not have to apply separately for one or the other.
What is not included in your financial aid letter?
The only scholarships and grants that will appear in your financial aid letter are those given by your college or the government. Money you get from outside scholarship providers or as a gift from someone are not included, even though they will certainly help you pay for college.
RELATED TOPICS:
FAFSA: what it is, how it works
Your financial aid timeline
Helpful sites for financial aid