College application season creates many questions in students’ minds about the different stages of the application process, particularly when it comes to funding for tuition. The main goal of this article – is to show you the main differences between financial aid and scholarships.
The problem is that students can easily mistake these two concepts, so we will give you a clear view of their differences so you can make informed financial decisions as a result.
Generally speaking, a student can pay for his education using either financial aid or scholarships. Commonly, students may find these two definitions being used interchangeably. However, it isn’t like that in reality. We need to underline their differences regarding what is the purpose of the financial program and who can obtain it.
1. Financial aid
Financial aid is an umbrella term, which describes the financial help offered by private institutions, federal organizations, and state-level corporations to help you pay for college or career school.
At the same time, financial aid owns its classification: need-based and merit-based financial aid. From this point, these overlapping terms for financial assistance come into the game.
What is need-based aid?
Need-based financial aid means that it doesn’t discriminate by any factor apart from specific financial needs. Eligibility for obtaining this type of help is based solely on the assets and earnings of the future student and his or her family. For example, the term FAFSA® (Free Application for Federal Student Aid) or CSS profile can determine the amount of financial help you can qualify for based on your family circumstances.
Eligibility for a potential need-based financial assistance can be obtained by completing both/either FAFSA® and/or CSS profiles. Hence, we need to distinguish between FAFSA® and CSS Profile. The first one mostly provides federal funding, loans and any other kind of government financial help, while the second one, in turn, is mainly providing universities with non-federal financial aid for students’ needs. Another important difference between FAFSA® and CSS Profile is the eligibility criteria. FAFSA® provides financial assistance only for US citizens. At the same time, CSS Profile accepts applications from students worldwide.
Need-based financial assets from the federal government can be given under grants, scholarships, work-study and loans. Moreover, governmental financial assistance can also cover the needs of military families and international students. There is also plenty of unique governmental assistance programs, which are focused on sharing education awards: for community service, like AmeriCorps, on education and training practices for current and former foster care youth and loan repayment programs, like the Department of Health and Human Services’ Indian Health Service, National Institute of Health and National Health Service Corps.
If you wish to participate in state government financial need-based programs, you should check the official website of the state where they live for more information.
Also, there is an opportunity to get financial aid from the school under grants or scholarship funds. You should visit the school’s financial aid website or contact its office to get more information about step-by-step instructions.
This information generally characterizes need-based financial aid, but there also exists a very similar definition – need-based federal financial aid. Let’s discuss it in detail.
So, we have four main types of support under this category: grants, work-study, loans and scholarships. We will consider it in order.
What is a college grant?
A college grant is a form of financial assistance granted or gifted. The most important criterion while deciding who obtains it is the student’s financial need. Grants are designed to help with tuition fees; typically, there is no need to pay them back.
There are various sources of college grants, such as the federal government, state governments, and many other organizations. Additionally, the amount granted depends on each student’s expected financial privations and the expenses of attending an educational institution. Prime examples of grants may be Pell Grants, Iraq and Afghanistan Service Grants, Teacher Education Assistance for College and Higher Education (TEACH) and Federal Supplemental Educational Grants (FSEOG).
What is a work-study?
College work-study programs are a great way to combine your study process with a part-time job on- or off campus to help yourself with education payments. Work-study lets you get supplementary help beyond grants or scholarships. If you have a desire to minimize student loans – don’t be afraid to involve yourself in this kind of activity. Moreover, it gives you a perfect opportunity to earn money to pay for day-to-day expenses, such as books, food or transportation. As we mentioned, work-study jobs can be on- or off-campus. If you decide to choose off-campus, you must work in some kind of private non-profit organization or public agency, and in addition, your work has to be performed in the public interest. These jobs can include roles in the administrative office, library, bookstore, cafeteria or labs. Every college is interested in the improvement of your life, so they created a department that can provide space for students in the work-study programs.
What is a student loan?
In case you need additional financial support, student loans are another option. Receiving a student loan money can be used for attending your dream school, but you will still have an obligation to repay them. Anyway, securing a student loan with fair interest rates and borrower-friendly loan repayment terms gives you an incredible chance to make a good investment in your future, knowing that you will not be saddled with unreasonable debts after graduation.
Student loans can be divided into 2 main groups: private and federal. Obviously, federal loans are the way better choice because they usually offer lower fixed interest rates rather than private ones, so always borrow federal student loans before private loans.
Scholarship, or as it can also be called, merit-based financial aid is an amazing chance to cover the part or even the entire cost of your tuition. Sometimes it can also be a one-time reward, but it is anyway a perfect chance to reduce your education costs. Most students can achieve getting a scholarship through the college they attend, but they also can use offers made by non-profit organizations.
Unlike need-based financial aid, a scholarship doesn’t consider your family’s income or any other specific circumstances like this. Even though scholarships are gift aid, you might have to meet certain requirements when you’re in school to save them. This may include reaching a certain minimum GPA, playing on a sports team, serving as a teacher’s assistant, working an exact number of hours, or demonstrating your ambitions and personal skills to be fairly awarded.
Also, you should pay attention because many scholarships are being renewed every academic year, and you will have to reapply again.
There are also some preferences that students will be given scholarships, such as:
- Race or ethnic identity
- Major or minor program
As we have already mentioned, merit-based financial support can be awarded through grants, scholarships or tuition discounts. The application process, in turn, is quite simple: you can apply by yourself, or your educational institution will automatically qualify you to enter the scholarship program considering academic success.
To conclude, Financial aid in the context of education is a term to describe any type of financial assistance to students and researchers to cover necessary costs of education such as the tuition fee, living costs and accommodation costs. Financial aid may be of different types, and depending on the type, it may be a gift or a debt that should be returned within a certain number of years. The scholarship is a division of financial aid. It only describes financial assistance as a gift with no obligation to return the received money to the scholarship provider.
We hope our article was useful for you and could create a picture of the differences between the terms Financial aid and Scholarship in your mind. Both of them play a huge role in helping students pay for their college education. For everyone preparing their college applications – we wish you all the best with everything you will face, and don’t forget all of it will work the way out!