The Free Application for Federal Student Aid, or FAFSA as it is commonly known, is an application form that is used to apply for financial aid to pay for college. It is not the financial aid itself.
However, the FAFSA enables the student to qualify for many types of financial aid from several sources.
Some of this money is free money, some must be earned through work, and some must be repaid.
There are three main types of financial aid.
- Gift Aid. Gift aid is free money. It includes grants and scholarships. Grants are typically awarded based on financial need, while scholarships are awarded based on merit.
- Student Employment. Student employment is money you earn through working a part-time job during the academic term. It includes employment through the Federal Work-Study program and College Work-Study programs. Work-study jobs are typically awarded based on financial need. Read our Complete Guide to Work Study.
- Student Loans. Student loans must be repaid, usually with interest. Some student loans are subsidized, where the interest during the in-school and grace periods is paid by the federal government, and some are unsubsidized. Eligibility for subsidized loans depends on financial need, while even wealthy students can qualify for unsubsidized loans.
There are also education tax benefits, college savings plans, employer tuition assistance and loan forgiveness programs.
Financial aid can come from many sources.
- Federal government
- State government
- Colleges and universities
- Employers and unions
- Foundations, philanthropists and other private scholarship providers
- Fraternal organizations
- Education lenders
The college financial aid office will assemble the financial aid for which you are eligible into a financial aid package. You may receive a financial aid award letter or notification that summarizes all of the types and sources of financial aid in your financial aid package.
