This article is from the Financial Aid, Scholarships, and Fellowships FAQ, by Mark Kantrowitz with numerous contributions by others.
The major sources of money for college are the federal government, the
state government, the private sector, and colleges and universities.
Most financial aid programs are "need-based". This means that the
amount of aid you receive depends on your financial situation. Most
government sources of aid are need-based. Other sources of financial
aid are "merit-based", which usually depend on academic, artistic, or
athletic talent, and may use your grades, test scores, hobbies, and
special talents as awarding criteria.
There are two basic types of financial aid: GIFT AID and SELF-HELP
AID. Gift aid is money that does not need to be paid back, and
includes GRANTS based on financial need, SCHOLARSHIPS based on
academic, artistic, or athletic merit, and FELLOWSHIPS for graduate
students based on academic merit. Self-help aid includes LOANS and
Although scholarships are awarded primarily based on merit, the amount
of the award may depend on financial need. Scholarships provide funds
toward tuition, fees, and other required educational expenses. Most
scholarships do not provide funds for living expenses.
Most fellowships provide a stipend for living expenses in addition to
funds for tuition, fees, and other required educational expenses.
Residential fellowships provide support for a student to use an
institution's facilities, such as special library or museum
collections. Dissertation fellowships support students while writing
Some forms of gift aid, such as ROTC scholarships and certain medical
fellowships, require a few years of service in exchange for the
financial aid. If one fails to complete the service requirement, then
one must pay back the award. But most forms of gift aid do not need to
be repaid and do not include a service requirement.
Loans are normally repaid with interest, and may be either a student
loan or a parent loan. Some loans do not need to be repaid until the
student has graduated or otherwise left school. Some loans include
forgiveness provisions for students entering particular professions or
serving in national need areas. Loans represent more than half of all
financial aid. Most students graduate with $10,000 to $20,000 in debt.
Student employment includes federal and state work-study programs,
assistantships, and regular part-type employment during the academic
year and summer vacation. Numerous studies have found that students
who work 10 hours a week do better in school, presumably because the
work obligation forces the student to learn time-management skills.
Work-study programs provide employment during the academic year that
should be "career oriented", although some students receive
gopher-type jobs. The work is typically limited to 10 hours a week,
with part of the salary subsidized by the government. Most students
who receive work-study jobs are undergraduate students, but graduate
students sometimes meet the eligibility requirements.
Teaching Assistantships and Research Assistantships normally provide
graduate students with a full or partial tuition waiver and a small
stipend and require them to perform teaching and/or research duties.
Most sources of financial aid require that you be enrolled at least
half-time, though some awards are restricted to full-time students.
There may be other restrictions as well. For example, most federal aid
programs are restricted to US citizens, permanent residents, or
eligible non-citizens. If you are a US citizen, male, and have reached
age 18, you must be registered with Selective Service to receive