Many families are stunned when they see a college’s sticker price. Though tuition costs can feel overwhelming, financial aid can make higher education more within reach.
According to the annual Sallie Mae/Ipsos survey, How America Pays for College, many families rely on income and savings to cover college expenses. The 2024 survey found that scholarships and grants—aid that doesn’t need to be repaid—covered 27% of college costs for the average family in 2023-2024, down from 29% the previous year.
At the same time, those families spent an average of $28,409 on college in 2023-2024, up from $28,026 in 2022-2023, per Sallie Mae’s report.
Figuring out financial aid can be tricky, so here are answers to some common questions.
What Is Financial Aid?
Financial aid helps students and families pay for higher education expenses like tuition, housing, meals, books, supplies, and transportation. It comes in several forms:
- Grants
- Scholarships
- Federal and private loans
- Work-study programs
For many students and families, financial aid is “the most confusing part of the college process, and I hate that for them,” says Kerr C. Ramsay III, senior vice president for enrollment at High Point University in North Carolina. “But we’re here to help. We know there will be questions. Financial aid offices are the experts—this is what they do every day—so students shouldn’t hesitate to reach out.”
How Does Financial Aid Work?
Aid comes from sources like federal and state agencies, colleges, high schools, foundations, and corporations. How much a student gets depends on federal, state, and school guidelines.
The type of aid determines whether it must be repaid, and students can accept or decline any offer.
“We always encourage students to prioritize gift aid first,” says Janet Turner, director of financial aid at the University of Portland in Oregon. “Gift aid is free money—you don’t have to pay it back. So it’s crucial to secure as much as possible to help cover costs.”
How Do I Apply for Financial Aid?
The first step is filling out the Free Application for Federal Student Aid (FAFSA). Many states and schools use this to determine aid, usually based on household income from federal tax returns.
The FAFSA is available on the U.S. Department of Education’s Federal Student Aid website (StudentAid.gov). Normally, families can start applying October 1 for the next academic year. But due to changes from the FAFSA Simplification Act, the 2025-2026 form opened in November 2024—the second straight year of delays.
The federal deadline is June 30 each year (e.g., June 2026 for the 2025-2026 FAFSA). But many schools set earlier deadlines.
Some private colleges also use the CSS Profile, a more detailed form that asks about medical or extra education costs. The initial fee is $25, with additional reports at $16, but fee waivers are available for eligible students (e.g., those from families earning $100,000 or less).
“The CSS Profile gives us deeper insight into a family’s finances, helping us distribute institutional funds more effectively,” says Taryn Anderson of Baylor University. “We still use the FAFSA but add the Profile to maximize aid.”
Some scholarships or private aid may require separate applications.
What Are the Different Types of Financial Aid?
Aid falls into two categories:
- Need-based – Determined by a family’s ability to pay (calculated via FAFSA).
- Merit-based – Awarded for talents, athletics, or academics, regardless of financial need.
Students may qualify for federal, state, or institutional aid (which varies by school). Federal aid includes:
- Loans – Fixed-rate government loans. Dependent undergrads can borrow up to $31,000; independents up to $57,500.
- Grants – Free money, like the Pell Grant (max $7,395 for 2024-2025).
- Work-study – Part-time campus jobs paying at least $7.25/hour. The average earnings in 2023-2024 were $1,615.
Some states offer portable grants (e.g., Vermont) for out-of-state schools.
Experts recommend maximizing merit aid to bridge gaps after need-based aid. But not all schools offer it—some require a certain GPA.
Other aid programs serve specific groups, like ROTC (covering tuition or housing) or GI Bill benefits for military families.
“Never pay to search for scholarships,” Ramsay advises. “The best resources are free—and you shouldn’t pay to apply, either.”
What Should I Know About Deadlines?
Deadlines vary by school and state. For example:
- University of Iowa – Priority deadline February 1 (first come, first served).
- University of Michigan – Suggested FAFSA filing by December 15 for early aid estimates.
State deadlines are listed on the Federal Student Aid website.
“Apply early,” Turner says. “State aid often has limited funds.”
How Do Schools Award Aid?
Each school has its own process. Some meet full need with aid (sometimes including loans), while a few (like Davidson College or Washington and Lee University) offer no-loan packages.
When Will I Get My Award Letter?
Most arrive in winter or early spring, alongside acceptance letters. This year’s timeline may shift due to FAFSA delays.
Can I Appeal My Award?
Yes, via a professional judgment review—but only for valid reasons, like a job loss, divorce, or medical crisis.
“Many families hope for more aid,” Ramsay says. “Colleges want to help if circumstances change.”
Schools typically request a letter explaining the situation. However, Anderson notes: “We award aid based on income and assets, not just stories. But we’ll help students maximize merit aid if needed.”