There is a vast amount of financial aid available, in various forms like scholarships, grants or loans. Your financial aid award will be based on the information you provide on your FAFSA. Remember, the federal government will consider your EFC (expected family contribution), as well as your tax information to determine how much “need" you may have.

Financial aid is either merit-based or need-based. Merit-based aid typically implies a prospective student's expertise or accomplishment in some area, usually academia, sports, music, etc. for which they will be rewarded aid according to merit. Need-based aid implies the fundamental need for monetary assistance to adequately pay for educational expenditures. Let's break down the specific types of aid, whether merit-based or need-based, for which a student may be eligible.

  • Scholarships

    You won't receive an athletic scholarship from an online school, but you may be eligible for other merit or need-based scholarships. Many scholarships are merit-based, awarded to students who have demonstrated excellence in academics or extracurricular activities. Other scholarships are need-based, evaluating the financial situation of a prospective student. Scholarships can be “student-specific" as well; there are a number of scholarships available for students of a certain gender, race, religion, as well as various other “student specific" features. Scholarships can also be “career specific," meaning, some students may be awarded scholarships for pursuing a specific area of study. There are some fields that have a high demand, such as nursing. If a student decides to pursue a nursing degree, he or she may be awarded a scholarship simply because there is an urgent need for nurses.

    Scholarships rarely need to be repaid. They are financial awards that are generally distributed through the student's specific institution to help cover some or all of the costs of a student's education. However, there are a multitude of scholarship opportunities and these scholarships can come from places other than a student's institution. Scholarships are awarded through a student's community, through a religious organization, a nonprofit organization, a labor union or another source. They key is to know where to look for this essentially “free money." Some great places to start looking for available scholarships are:

    Contact your specific institution's financial aid office. Ask specifically about available scholarship opportunities. “Where can I apply for these scholarships? Are there requirements to apply? If so, what are the requirements? Do you have any suggestions for scholarships that might be a good fit for me?" Again, financial aid offices can and will be one of your best resources.

    FAFSA has a great scholarship search link as well. On it “Financial Aid and Scholarship Wizard" page you'll find a few different links which allow you to search for financial aid opportunities.

  • Grants

    Grants are similar to scholarships because neither typically needs to be repaid. Because they award what is essentially “free money" towards your education, look into grants and scholarships before loans. Grants come in a few forms and may be automatically awarded to you in your financial aid package based on your financial need. You must directly apply for others. The FAFSA Web site offers some great information on specific types of grants, eligibility requirements, and how you can apply. A few federal grants it discusses are the Federal Pell Grant, a grant awarded to undergraduate students who have not yet earned a degree, and the Federal Supplemental Educational Opportunity Grant or the FSEOG, a grant for those who display exceptional financial need. Take a look at this link (on the FAFSA Web site) for more information on available federal grants.

    Grants are also available through your specific state or institution. For institutional grants, it's best to call the financial aid offices of the schools you're considering and ask exactly what kind of grants they offer, what grants you may be eligible for, and how you should apply. For state-based grants, FAFSA provides a useful link which will connect you to the aid Web site of your specific state. This Web site, through the U.S Department of Education, will give you a list of each state's higher education agency. By finding your state's Web site, you'll be able to search for grants (and scholarships) available to you. The FAFSA Web site also encourages students to visit other federal Web sites where you can search for other grants and scholarships that may be available. For even more funding resources, check out this link on the FAFSA Web site called “Other Sources of Student Aid."

  • Loans

    Loans, unlike scholarships and grants, require repayment with accrued interest and are usually the most common form of financial aid. When your school awards your personalized financial aid package, it will probably include loans. Because your credit history depends on your understanding of the education loans you take, you must understand the fundamental principles of loans. The four main types of loans are: Federal Perkins Loans, Stafford Loans, PLUS Loans (Direct or FFEL), and Consolidation Loans (Direct or FFEL).

    There are two U.S. Department of Education programs which are responsible for dispersing loans:

    1. William D. Ford Federal Direct Loan (Direct Loan) Program: Loans dispersed through this program are “direct loans" and are issued directly from the USDE to participating institutions and repaid directly to the USDE.
    2. Federal Family Education Loan (FFEL) Program: Loans dispersed through this program are funds provided by private lenders and insured by the federal government. Instead of repaying these loans directly back to the USDE, you'll repay these loans directly to the specific private lender.

    With loans, it's necessary to keep one very important thing in mind: repayment. When you sign your FAFSA with your PIN, you sign a binding contract in which you agree to repay the loans you take. With that in mind, if you feel that your institution has awarded you too much aid, there is always the possibility of reducing the amount of loans, which you can do easily through your financial aid office. Remember, you don't need to pay back scholarships and grants. It's only the loans you receive which require repayment. The principals of your loans will acquire interest over time, which you will also be legally responsible to repay.

    Interest rates depend largely on the “subsidized" or “unsubsidized" status of your loan. A subsidized loan is given to a student who demonstrates financial need. Because of that need, the federal government will pay the interest that gathers on the loan while the student is in school, during the student's “grace period," and during any periods of authorized deferment. On the other hand, students are solely responsible for the interest that accrues on an unsubsidized loan, regardless of loan type. Students won't have to repay this interest while they are enrolled in school, instead the interest will be added onto the principal amount of the loan and will be repaid at the end of the grace period. This “grace period" simply means the 6 to 9 months allotted to a student until they are required to begin repayment of their loans. This means that students are given either 6 or 9 months after graduation, when enrollment status drops below part-time status, or after withdrawing from an institution before they have to begin paying their loans back to the federal government, state, institution or private lender from which they received them. The “grace period" is also commonly referred to as “deferment," or the postponing of loan repayment until a later, specified period.