Financial Aid And Scholarships
While the terms “scholarships” and “financial aid” are often used interchangeably, they are two very different things. Scholarships are free money that never needs to be paid back, whereas financial aid (which includes loans) is borrowed money that must be repaid with interest. It is important to understand the difference between these two types of financial aid so that you can make smart decisions about how to pay for college and graduate with minimal student loan debt.
What is financial aid?
Financial aid is a combination of grants (gift aid) from the federal government and/or state agencies, low-interest loans and/or work-study. The primary goal of financial aid is to help you pay for the cost of your education. This is why we encourage you to apply for as much aid as possible.
To determine your eligibility for financial aid, colleges use a formula called the expected family contribution (EFC). This figure is calculated by subtracting your EFC from your college’s cost of attendance (COA). The remaining amount, which is known as your financial need, is used to match you with need-based aid programs.
Scholarships are typically awarded based on merit, rather than financial need. These can be offered by many different sources, including universities, nonprofit organizations and private companies. You may have to submit an application and/or essay to be considered for a scholarship. The most common requirements for scholarships are a high GPA and good standardized test scores. Other common requirements include participation in extracurricular activities, community service or certain fields of study.
The process of applying for scholarships begins early in your senior year, and there are many online resources to help you find opportunities. Remember that it is important to research each scholarship carefully and only apply for those you are eligible for. Applying to too many scholarships will not give you the best chance of winning, and it can also be time consuming to manage.
If you do receive a scholarship, it will be applied toward any tuition and fees you still owe to your school, and any remaining amount can be disbursed to you in the form of a check or direct deposit. If your scholarship is a renewable award, it will continue to be disbursed each semester as long as you meet the criteria.
While the distinction between scholarships and financial aid may seem small, it can have a huge impact on your education. To help you navigate these differences, here is a brief overview of the most popular types of aid: