What Is Financial Aid?
College costs may feel out of reach, but financial aid exists to help close the gap between what school costs and what you can afford. From free grants and scholarships to federal loans and work-study programs, understanding your options may make higher education more achievable.
What Is Financial Aid?
Financial aid is money that helps students pay for higher education, like college, career school or trade school. It could cover part or all of your annual cost of attendance, including:
- Tuition and fees
- Housing and meals
- Books and supplies
- Transportation
- Other education-related expenses
Financial aid can come from the federal government, state governments, schools and private organizations. Depending on the type of aid, you may or may not need to repay it. Either way, financial aid helps make higher education more affordable.
What Are the Types of Financial Aid?
The most common types of financial aid are:
- Grants: Grants provide money for education expenses that you typically don't need to repay.
- Scholarships: Scholarships award money based on factors like academic achievement, talents, athletics or other qualifications.
- Federal work-study: This program offers part-time jobs that allow eligible students to earn money while attending school.
- Federal student loans: These provide borrowed funds that you repay over time. Common options include Direct Subsidized Loans (the government covers certain interest costs while you're in school), Direct Unsubsidized Loans (interest builds while you're in school), and Direct Parent PLUS Loans (available to eligible parents).
- Private student loans: Banks and other lenders provide these loans to fund education costs that other aid may not cover.
How Do I Apply for Financial Aid?
Applying for financial aid usually starts with completing the FAFSA (Free Application for Federal Student Aid). Schools, states and the federal government use the information from your FAFSA to determine what types of aid you may qualify for.
Depending on where you plan to attend, you may also need to complete additional financial aid forms or applications required by your school. You can also apply for scholarships to cover any remaining costs.
Schools and financial aid providers can clarify any requirements in your application process and answer questions about your aid offer.
How Is Financial Aid Calculated?
Schools use several factors to determine how much financial aid you may receive. Here’s how it’s calculated:
- Cost of attendance: Schools estimate your yearly education costs, including tuition, housing, meals, books, supplies and other common expenses.
- Student Aid Index (SAI): The SAI is a number calculated from your FAFSA information that helps schools assess your financial need.
- Need-based aid eligibility: Schools use the cost of attendance, your SAI and other program requirements to determine your eligibility for need-based aid like grants, work-study programs and certain federal loans.
The exact amount and types of aid you receive will vary based on your financial situation, the school you attend, your enrollment status and the aid programs available.
How Do I Find Out What’s Still Owed After I Get Financial Aid?
To estimate what you still need to pay, start with your school's cost of attendance. Then, subtract any financial aid you receive (including grants, scholarships and loans), as well as any personal savings or family contributions.
The amount left over is called a funding gap. This is the portion of your education that still needs to be covered through other resources, like additional savings, work-study income or other financing options.
For example, if your annual cost of attendance is $30,000 and you receive $18,000 in financial aid, your funding gap would be $12,000.
How can I cover remaining college costs?
If financial aid doesn't cover all of your education expenses, you may need to combine multiple resources to fill the gap. Many students and families find themselves in this situation, and there are several options worth exploring, like:
- Considering additional federal student loans, if available
- Comparing private student loan options
- Applying for scholarships
- Getting a part-time job
- Requesting an aid adjustment if your circumstances have changed
If you need to borrow from more than one source, take time to compare costs, repayment terms, and available protections so you understand how each option may affect your finances after graduation.
Can KeyBank Help Me Review My Financial Aid Options?
Yes. If you have questions about your financial aid offer, student loans or the costs that remain after financial aid, KeyBank has resources to help you better understand your options.
If you'd like to talk through your situation, you can schedule a free Key Student Loan Consultation1. A specialist can answer questions, review your situation and explain available choices so you can make informed decisions about funding school and managing repayment.