Key Takeaways:
- The only way to know how much financial aid you’ll receive is by completing the FAFSA, which determines eligibility for grants, scholarships, work-study, and federal loans.
- Your financial aid package is based on three main factors: Student Aid Index (SAI), Cost of Attendance (COA), and financial need.
- If federal aid and scholarships don’t cover all costs, private student loans—like those from College Ave—can help fill the funding gap for your education.
Paying for college can feel overwhelming, but financial aid can make a big difference. Whether you’re just starting your college journey or helping your child prepare, understanding how much financial aid you might qualify for is a smart first step. From scholarships and grants to student loans, there are several options that can help make higher education more affordable. In this guide, we’ll break down what types of aid are available, how eligibility is determined, and what you can do to maximize your financial aid package—so you can focus more on school and less on financial stress.
What is Financial Aid?
“Financial aid” is an umbrella term that encompasses all the money you’ll use to pay for college—other than your savings and income. It comes from a mix of government-funded programs and aid from your school. Here’s a quick breakdown of the different types of financial aid.
Scholarships and Grants
The best type of financial aid is free. Scholarships and grants do not need to be paid back, and they are typically awarded based on financial need or merit. So, if you demonstrate academic, artistic, or athletic talent, you may qualify for a sizable scholarship to help you pay for school.
Work-Study Programs
If you qualify for work-study, you’ll be able to work part-time on campus and be paid through government funding to help cover expenses. This money does not need to be repaid. Most jobs even let you get schoolwork done during work hours—bonus!
Federal Student Loans
As a student, you are responsible for paying back any loans you take out. Repayment may start while you’re still in school or after a student loan grace period following graduation. Student loans can come in the form of Stafford Loans (or Direct Loans), which are government-funded and offer flexible repayment plans and fixed interest rates.
Federal Parent Loans
After your direct financial aid is applied, parents have the option to take out loans designed specifically to help you pay for college. Parent PLUS loans are paid while the student is in school, and they include the option to apply for deferment.
Private Student Loans
Private student loans are not typically considered “financial aid” in the traditional sense used by colleges and financial aid offices, which is aid determined by the information submitted through your FAFSA. However, they are still a critical part of paying for school. Once you’ve maxed out scholarships, grants, and federal loans, private student loans—like those offered by College Ave—can help bridge the gap between what financial aid covers and your total cost of attendance. So, while private student loans aren’t part of your official financial aid package, they are still a valuable financial resource for students and families planning how to pay for college.
How to Qualify for Financial Aid
In order to qualify for any sort of federal aid, you need to complete the FAFSA (Free Application for Federal Student Aid) online. The FAFSA will evaluate your financial need and award aid accordingly. When applying for the FAFSA, it will ask for information like your social security number, family size, and your income as well as your family’s income if you are still a dependent. Once submitted, your eligibility will be determined based on your financial need, the school’s cost, and other factors.
How is Financial Aid Determined?
Once you submit your completed FAFSA, the information submitted is used to determine your eligibility for financial aid. Your financial aid package is calculated using three key components: Student Aid Index (SAI), Cost of Attendance (COA), and financial need.
- Student Aid Index – A number generated from your FAFSA that reflects your family’s financial strength. It replaced the previous term, Expected Family Contribution (EFC), and helps colleges understand how much your family can reasonably contribute toward your education. The lower your SAI, the more financial aid you may qualify for.
- Cost of Attendance – The total estimated cost to attend your specific school for one academic year. It is more than just tuition and will include costs like housing and meals, books and supplies, and reasonable personal and transportation costs. Each school calculates its own COA, so it will vary depending on where you apply
- Financial Need – Your financial need is the difference between your school’s COA and your SAI. This calculation determines how much need-based financial aid you’re eligible for, such as grants, subsidized loans, and work-study. You cannot receive more need-based aid than your financial need, but you may qualify for additional non-need-based aid, like unsubsidized loans or merit scholarships.
Tools to Estimate How Much Financial Aid You Can Get
Estimating how much financial aid you can receive can help you build a more accurate financial picture of the full cost of your degree and make informed decisions on where to apply and how to budget. To get a realistic idea of the amount of financial aid you’ll receive, use the following tools.
Net Price Calculator
A school’s net price typically includes tuition, room and board, books, and miscellaneous associated costs of college. Gone are the days of doing that math by hand. Many institutions offer their own net price calculators that show their specific costs. In fact, The College Board has an aggregated, filtered list of schools’ net price calculators. You can even browse by state or search for specific schools. Don’t see the school you want? Fill out the Information Request form.
Visit The College Board’s Net Price Calculator
Student Loan Calculator
If your financial aid will include any student loans, it’s important to factor in the amount of student loans you’ll need to take out. Use a student loan calculator, to see your estimated monthly payments and explore the best ways to save money in the long run.
Federal Student Loan Limits
When planning how to pay for college, it’s important to keep in mind that federal student loans come with both annual and lifetime borrowing limits. These limits cap how much you can borrow through federal aid programs—regardless of your actual college costs or financial need.
Dependent undergraduates can receive up to $5,500-$7,500 annually, with a $31,000 lifetime limit while independent undergraduates can receive up to $9,500-$12,500 annually, with a $57,500 lifetime limit. These limits for undergraduate students do vary by year, so be sure to verify what limits apply to you. Graduate or professional students are all considered independent students so there is only one type of loan limit that remains the same no matter what year of school. Graduate (non-professional) students can receive up to $20,500 annually in Direct Unsubsidized Loans, and up to $100,000 lifetime limit (including undergrad loans) Graduate (professional) students can receive up to $50,000 annually and up to $200,000 lifetime limit (including undergraduate loans).
This is a big deal because federal student loans are often seen as one of the most affordable ways to borrow, thanks to their fixed interest rates and flexible repayment options. But the reality is, they don’t always cover everything. If you’re attending a higher-cost school or managing expenses on your own as an independent student, federal loans alone may fall short of your total cost of attendance. That’s where private student loans, like those from College Ave, can help fill the gap
Getting Your Financial Aid Results
Once your financial aid is determined, you will receive an award letter from your college or university that outlines the amount of aid you’ve been awarded. Since many offers are tied directly to the schools you’ve been accepted to, the date you receive the offer will vary. Most offers are sent in the winter or spring before the start of the school year. Your financial aid award letter will likely include a combination of federal, state, and school-specific aid. Make sure you read it closely before you decide which aid to accept. If federal aid falls short, College Ave is here to help with flexible private loan options that can help make your college dreams a reality. Start your application today!
