College Planning: Exploring Other Funding Options

March 8, 2023

Interpreting a college financial aid award letter can feel like reading a foreign language. Different types of loans, oddly named grants or scholarships, and work-study—all terms you may be encountering for the first time in your life. Don’t worry: we’re translating the different types of aid you may see in your letter so you can better compare financial aid packages and confidently determine which school is the best financial fit!

What’s Inside Your Financial Aid Award Letter

Generally, most financial aid will come from the federal government or the college you’ll attend; however, there are also state programs and private organizations that can help with additional funding. Knowing the source of your aid is key because some aid might not apply to all of the schools you’re considering. For example, if you receive a grant from your home state but select an out-of-state college, you may no longer qualify for that grant. 

Now, let’s dive into the main categories of aid: grants, scholarships, work-study, and loans. 

Grants typically do not need to be repaid. The most common grant you’ll hear about is the Pell Grant, which is a federal grant for low-income students. Other grants may be offered by state governments, colleges, or other private organizations. While grants tend to be need-based, there are also career-centric grants to incentivize students to pursue specific fields. As with all aid, it’s important to understand the requirements as some career-oriented grants may require working in a specific field for a certain amount of time. 

Similar to grants, scholarships also do not need to be repaid. Scholarships are often merit-based and given to awardees based on prior achievements, which may be academic, athletic, artistic, or service-oriented. Most scholarships will require additional applications so it’s important to research opportunities early on and monitor deadlines. To find scholarship opportunities, we recommend checking college websites, professional associations, local organizations, and our partner College Aid Pro. 

When you receive a scholarship, find out if it’s a recurring or one-time award. If it’s a one-time scholarship, consider how your cost of attendance will change after your freshman year. If it’s a recurring scholarship, make sure to ask about any requirements to maintain your eligibility, this may include remaining involved in a specific extracurricular or maintaining a certain GPA. 

Another form of aid that you may be less familiar with is work-study. This is a part-time job that’s generally on campus; specific jobs will vary from school to school but common placements include the library, student center, or dining hall. Eligibility for a work-study position is need-based and will be determined by the FAFSA and your school. When offered a work-study, you will be told the maximum amount you can make through the program, which is then paid to you directly like a regular paycheck based on the number of hours in a pay period. 

The final type of aid typically included in a financial aid package is loans. To learn more, read our articles about when to consider loans and the difference between federal and private loans. 

In the end, the most crucial part of reviewing your financial aid packages is identifying which aid will need to be repaid. Not all financial aid packages are the same. If you have any questions about the aid in your letter, don’t hesitate to reach out to your school’s financial aid office for help.

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