Many families are shocked by a college’s sticker price. While the cost of tuition can be overwhelming, financial aid can make higher education more affordable.
For a typical family with a college student, scholarships and grants — aid that doesn’t have to be repaid — covered 27% of college costs in 2024-2025, the same as the year prior, according to the 18th edition of the annual Sallie Mae/Ipsos survey, “How America Pays for College.”
Navigating the financial aid process to help pay for college can be challenging. Here are a few answers to common financial aid questions.
What Is Financial Aid?
Financial aid helps students and their families cover higher education expenses such as tuition and fees, housing and food, books and other coursework supplies, and transportation. There are several types of financial aid:
— Grants
— Scholarships
— Federal and private loans
— Work-study
“The reason that the process feels daunting is often because of what it represents and the uncertainty of the outcome of the information you are providing,” Varo L. Duffins, director of financial aid at Swarthmore College in Pennsylvania, wrote in a email. “But the process itself is not difficult. There’s no math to perform or essays to write or paintings to be judged. It’s just no fun to have to think about your finances and wonder how it may impact your college dreams.”
How Does Financial Aid Work?
Different types of aid are provided through sources such as federal and state agencies, colleges, high schools, foundations and corporations. The amount of aid a student receives depends on federal, state and institutional guidelines.
The type of aid determines whether it will have to be repaid, and students can accept or reject anything offered.
[Read: 19 Questions College Financial Aid Officers Wish Parents Would Ask]
How Do I Apply for Financial Aid?
The first step is to file the Free Application for Federal Student Aid, known as the FAFSA. This application is used by many state agencies and schools to determine college aid, which is usually based on household income reported on federal income taxes.
The FAFSA is available through the U.S. Department of Education’s Federal Student Aid website, StudentAid.gov. After two years of delayed releases, families can once again begin filling out the form Oct. 1 for the 2026-2027 cycle.
The deadline for filing the FAFSA is June 30 of each academic year. For instance, the 2026-2027 FAFSA is due June 2027. But that deadline is for federal financial aid only. Many schools and colleges that use the FAFSA to determine aid set earlier deadlines.
Some schools — mostly private colleges — use a supplemental form called the CSS Profile to determine how to give out their own funds. This form is more detailed than the FAFSA. For instance, it requests information about medical or additional educational expenses.
“?The CSS profile asks all of the FAFSA questions and more,” says Brian Lindeman, assistant vice president of admissions and financial aid at Macalester College in Minnesota. “The reason that we like to use it at Macalester, for example, is that we feel like the profile gives us a better idea of how to calculate need for financial aid and distribute our limited resources the best way we can.”
The initial submission fee for the CSS Profile is $25; each additional report is $16. But fee waivers are available. Undergraduate students considered an orphan or ward of the court, or with a family adjusted gross annual income of $100,000 or less, can file the form at no cost.
A list of schools that require the CSS Profile can be found on the website for the College Board, the organization that administers and maintains the application.
Sometimes, a student must complete additional applications to be considered for scholarships or private aid.
What Are the Different Types of Financial Aid?
There are two types of aid: need-based and merit-based.
Federal need-based aid, for instance, is determined by a family’s ability to pay for college as calculated by the FAFSA.
Merit aid, on the other hand, isn’t based on financial need. It can be awarded by an institution, college or private organization to a student for a specific talent or athletic or academic ability.
College students are potentially eligible for federal, state and/or institutional aid. Institutional aid is financial assistance provided by the college and varies by school, since each college uses its own policies and formulas to determine how to award its financial aid.
“We are often asked why the financial aid applications ask so many questions,” Duffins says. “The financial aid application can be completed by any student or family of varying incomes and wealth. The forms must capture the details of all applicants and their wide range of complexities for the financial aid office to consider.”
[Read: How to Avoid Scholarship Scams.]
For federal financial aid, there are three types of funds: loans, grants and work-study.
— Federal student loans. These are fixed-interest-rate loans from the government. The interest rate for each academic year is set on July 1, and that rate is secured for the life of the loan. The main program for federal student loans is the direct loan program, which allows qualified undergraduate students to borrow direct subsidized or unsubsidized loans up to $31,000 if they’re a dependent. An independent undergrad student can borrow up to $57,500.
— Federal grants. This federal money doesn’t need to be repaid. The most well-known higher education grant for college is the Pell Grant. Eligibility is based on a family’s Student Aid Index, or SAI — which replaced the expected family contribution — and is calculated on the FAFSA. The maximum Pell amount for the 2025-2026 school year is $7,395. A family with an SAI of negative 1,500, for example, will likely qualify for the full Pell amount.
— Work-study. This federal program provides part-time work, typically on campus, to help students cover college-related expenses. Not all students qualify for work-study. Students need to qualify through the FAFSA and demonstrate financial need. Work-study students earn at least $7.25 per hour, the federal minimum wage. The average amount of federal work-study earned in 2024-2025 was $2,122, per Sallie Mae’s report.
Most states limit their aid to in-state residents. Some states, like Vermont, offer portable grants, which allow residents to qualify for funding even if they attend an out-of-state college.
While the FAFSA should be on a student’s radar to qualify for federal and state need-based aid, a college-bound student should also maximize merit-based aid, experts say. That’s because merit aid is one way to close the gapbetween the cost of attendance and need-based financial aid.
But not all schools award merit aid. Some schools reserve it for only exceptional circumstances, while others require students to maintain a certain GPA.
Beyond federal, state and institutional aid, there are other aid programs that serve specific student groups, such as Peace Corps volunteer benefits and the Reserve Officers’ Training Corps program, known as ROTC. Students who participate in ROTC can learn and train at the same time, and some receive a scholarship that covers housing and food or tuition, fees and books.
There are also military benefits that help veterans, active-duty service members and their dependents pay for school, such as GI Bill benefits that cover all or some costs.
Experts advise high school students to start their search locally and connect with school counselors to discuss additional types of grants or scholarship options, like ones from private foundations.
“Those local scholarships are good ones to pursue because the competition is much more restricted,” says Shannon Vasconcelos, senior director of college finance at Bright Horizons College Coach, a college admissions consulting firm. “You’re only competing with students in your town or your high school. They tend to be easier to win than some big national scholarships that you find online.”
What Should I Know About Financial Aid Deadlines?
It’s important to meet college financial aid deadlines, which vary by institution.
Lindeman recommends making a spreadsheet or list of each college of interest — noting individual financial aid requirements and deadlines.
[Read: How Much Student Loan Debt Does the Average College Graduate Have?]
“They need to figure out what’s the earliest deadline of all the schools they’re considering and then that’s going to be the target date they should shoot for,” he says.
But it’s not just institutional deadlines that parents and students should note. There are also different state deadlines, which families can find on the Federal Student Aid website.
“Most of the time, colleges’ deadlines are going to come before any federal or state deadline,” Vasconcelos says. “So as long as you know you’re abiding by the colleges’ deadlines, you’re going to hit those state and federal aid deadlines.”
How Do Schools Award Aid?
While there are many similarities in how schools award aid, each has its own unique process. Some schools offer larger financial aid packages than others, just like some institutions charge higher tuition rates than others.
For example, although some schools claim to meet full financial need for the cost of attendance with aid, those packages may include loans. A handful of institutions, including Davidson College in North Carolina and Washington and Lee University in Virginia, package financial aid awards with no loans.
When Will I Receive a Financial Aid Award Letter?
Financial aid award letters typically go out in winter or early spring — usually after or at the same time as a college acceptance offer.
Should I Appeal a Financial Aid Award?
The process of appealing an award is known as a professional judgment review. Students need a legitimate reason for an appeal, including a change in their family’s financial circumstances after the FAFSA was submitted due to recent job loss, divorce, death in the family, out-of-pocket medical expenses or care costs needed for an elderly parent, experts say.
“The best way to appeal the decision is by scheduling a meeting with a financial aid counselor,” Ana E. Williams, director of financial aid at Boyce College and The Southern Baptist Theological Seminary in Kentucky, wrote in an email. “A live conversation allows a student to explain the particulars of their situation and receive more personalized advice on how to navigate the scholarship process.”
Families can also sometimes negotiate for additional merit funding, Vasconcelos says.
“If one school gave you a better offer than another, but you prefer to go to the school that gave you less, you can email the admissions office,” she says. “Explain that while you’d really love to attend their school, this other school is luring you away with additional funding. (Ask about) any additional funding opportunities available from their school. Families are often surprised at how often schools say yes and will throw an extra couple thousand dollars their way to try to entice them to enroll.”
Trying to fund your education? Get tips and more in the U.S. News Paying for College center.
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Understanding Financial Aid for College: A Guide originally appeared on usnews.com
Update 09/04/25: This story was published at an earlier date and has been updated with new information.
