The Student’s Guide to Financial Aid and the FAFSA

What is financial aid? Do you have to pay back financial aid? And how can you ensure you get enough aid for college?

The Free Application for Federal Student Aid, or FAFSA as it’s more commonly known, is an application that allows new and returning students to access various sources — including grants, federal work-study, and loans — to fund their college experience.

This guide covers everything you need to know about paying for higher education, with step-by-step instructions on how to get financial aid using the FAFSA.

The FAFSA is used by national, state, and local government agencies, as well as by universities and private organizations, to award both federal and nonfederal aid to students. This aid includes loans, grants, scholarships, and federal work-study funds.

Over the years, the cost of college has risen significantly. In the 2022-23 academic year, four-year public universities charged $10,490 per year, on average, in tuition and fees for in-state residents. The average cost was approximately $24,000 annually for out-of-state students.

You can potentially offset some or all of these costs and avoid graduating with hefty amounts of debt by filing your FAFSA. What’s more, the FAFSA comes with zero risk: You don’t need to pay a fee to apply and don’t have to accept any aid you’re awarded if you don’t want to.

College financial aid falls into three main categories: federal, state, and private. Within these categories are five types of awards students can receive.

Unlike loans, grants do not need to be repaid. These awards are typically need-based rather than merit-based and are allocated by federal and state governments. Some of the most common grants are the Pell Grant and TEACH Grant.

Similar to grants, scholarships do not need to be repaid. These monetary gifts can be need-based, merit-based, or a combination of the two.

Whereas grants tend to offer long-term (often recurring) financial support, scholarships are typically a single amount awarded in one lump sum.

Beyond the scholarships offered by colleges, some are given out by corporations, private entities or individuals, nonprofits, and professional associations and societies. Each scholarship maintains its own eligibility requirements, award amount, and application deadline.

BestColleges offers a yearly Black Women in STEM scholarship.

Loans are financial awards that need to be repaid, usually with interest. Some students take advantage of both federal and private loans to help offset the cost of college, but financial aid experts typically encourage students to prioritize federal loans.

While all loans serve the same general purpose, student loans differ from personal loans in that they must be used for education-related expenses, such as tuition and school supplies.

There are two main types of student loans:

Federal work-study helps students who demonstrate financial need earn extra cash through a part-time (generally on-campus) job. Examples include working at the campus library, as a research assistant for a professor, and as a tutor.

The money a student earns from federal work-study can be used to pay for an array of educational expenses, including tuition and fees, room and board, transportation, computers and technology, and childcare.

Primarily geared toward graduate and postgraduate students, fellowships and assistantships provide a stipend or salary to participants while they work and/or continue their education.

Many fellowships and assistantships are awarded to doctoral students working on their dissertations in exchange for providing research assistance and/or teaching services for the college or university.

Fellowships are one of the few financial aid options available to undocumented college students.

The main purpose of the FAFSA is to award federal aid to students who demonstrate financial need. To qualify for federal FAFSA money, you must meet the following requirements:

Both undocumented students and international students are ineligible to apply for federal aid with the FAFSA. Instead, these students may apply for scholarships through their schools, their employers, and/or private organizations. They may also be eligible for some fellowships.

While FAFSA income limits don’t exist, your or your family’s income may affect your award package since aid is allocated based on financial need. However, since the FAFSA is free to fill out, all students should make an effort to submit the FAFSA each year regardless of income level.

Typically, the FAFSA opens each year on Oct. 1. Try to submit your application on this date or as soon as possible after it. Students must file the FAFSA each year they are in school in order to stay eligible for federal aid.

The 2025-26 FAFSA will launch to some students on Oct. 1. It will be rolled out in phases over the following two months, with full access planned for all students by Dec. 1, 2024.

Each FAFSA is available for about a year and a half. For example, next year’s FAFSA (for aid during the 2025-26 academic year) will open Oct. 1, 2024, and will remain available until June 30, 2026.

Many schools and states, however, maintain far earlier deadlines. So the sooner you get in your application, the better. If you wait too long, funds may be depleted, and you may not receive any aid.

Below, we explain how to submit a FAFSA every year so you can get aid for college.