Types of College Aid Available To You If You Qualify

With the changes that were made to simplify the process, the application window for completing the Free Application for Federal Student Aid (FAFSA) for the 2025-2026 college year officially begins a couple of months later than usual and will be available for students and families by December 1, 2024.  For those of you who will be completing your FAFSA form, I wanted to provide you with a refresher on the types of aid you can expect to receive if you qualify for student aid.

Fill out the FAFSA Form as soon as possible

While the FAFSA deadline for the 2025-2026 school year is June 30, 2026, the key to maximizing your financial aid package is to complete it as early as possible.  This is because you are competing for a limited amount of financial aid sources that are distributed on a first-come, first-served basis.  The potential aid you could receive include federal grants, loans, work-study programs, as well as state and institutional aid. Completing the FAFSA forms early provides you more time to plan and prepare financially for the upcoming school year.  Plus, it helps to answer the most important question you have which is how much aid can you expect to receive?  The answer to that question depends on several factors, including your financial need, the cost of attendance at your chosen school, and the types of aid available which I illustrate below.

Federal College Grants: Most Attractive Aid

Grants are one of the most attractive types of financial aid because they do not need to be repaid. If you qualify, you could receive substantial help with your college costs through federal grant programs.

Pell Grant

The Federal Pell Grant is one of the most well-known and widely awarded grants.  For the 2025-2026 academic year, the maximum Pell Grant award is expected to be around $7,395,  though this figure could change slightly due to inflation adjustments or other policy changes.

The amount you will receive depends on your Student Aid Index (SAI), which replaces the Expected Family Contribution (EFC) as of 2024. The SAI is calculated based on your family's income, assets, and other factors. Generally, the lower your SAI, the more Pell Grant money you will be eligible for. Your grant amount will also depend on your enrollment status (full-time or part-time) and the cost of attendance at your school.

Federal Supplemental Educational Opportunity Grant (FSEOG)

In addition to the Pell Grant, you may also qualify for the Federal Supplemental Educational Opportunity Grant (FSEOG), which provides between $100 and $4,000  per year, depending on your financial need and the availability of funds at your school. The FSEOG is based on exceptional financial need and is awarded on a first-come, first-served basis, so applying early through FAFSA is critical if you hope to receive this additional grant money.

Federal Loans: A Key Component of Financial Aid

Federal student loans are another significant part of the financial aid package for many students. Unlike grants, loans must be repaid with interest. However, federal loans generally offer lower interest rates and more flexible repayment options than private loans, making them a better choice if borrowing is necessary to cover your education costs.

Direct Subsidized Loans 

Direct Subsidized Loans are need-based loans where the government pays the interest while you are in school at least half-time, during the grace period, and during deferment. For first-year undergraduate students, the maximum amount you can borrow through subsidized loans is $3,500.

The total amount you can borrow increases as you progress through college—second-year students can borrow up to $4,500, and third-year students and beyond can borrow up to $5,500 per year. These loans are a good option because they don't accrue interest during school, helping you keep debt under control.

Direct Unsubsidized Loans

Unlike subsidized loans, Direct Unsubsidized Loans are available to all students, regardless of financial need. The primary difference is that interest starts accruing from the moment the loan is disbursed. For first-year undergraduate students, the total unsubsidized loan limit (combined with subsidized loans) is $5,500 for dependent students and $9,500 for independent students.

If you are concerned about the interest accumulating while you are in school, one strategy is to make interest-only payments while studying to prevent the loan from growing larger over time.

Direct PLUS Loans

For students whose costs are not fully covered by other types of aid, Direct PLUS Loans are available to parents of dependent students (Parent PLUS Loans) or to graduate students. These loans require a credit check and generally come with higher interest rates than other federal loans. However, they allow families to borrow up to the full cost of attendance minus other aid received.

Federal Work-Study: Earning Money While Attending School

If you are eligible, the Federal Work-Study Program can provide part-time employment while you're enrolled in school. Work-study jobs are often related to your course of study or community service, giving you valuable work experience as well as a paycheck.

The amount you can earn through work-study varies, but you will earn at least the current federal minimum wage.  How much you actually earn depends on the work you do and skills required for the position. Work-study funds are limited, so it is important to submit your FAFSA early if you want to be considered for this program.

State and Institutional Aid: Additional Sources of Funding

Many states and colleges use FAFSA data to determine eligibility for their own grants, scholarships, and other forms of financial aid. In fact, some states have financial aid programs that are more generous than federal programs, making it important to understand the deadlines and requirements in your state.

State Grants 

For example, states like California, New York, and Texas offer robust need-based grants through programs like the Cal Grant, Tuition Assistance Program (TAP), and Tuition Equalization Grant Program (TEG). The amount of these grants varies, but they can range from a few hundred dollars to several thousand, depending on your state’s program and your financial need.

Institutional Scholarships and Grants

In addition to state aid, colleges and universities often award their own grants and scholarships to students based on financial need, academic merit, or both. These institutional awards can significantly reduce the cost of attendance, particularly at private colleges, where tuition is typically higher but more institutional aid is often available.

Many schools automatically consider students for institutional aid based on the FAFSA, but some may have additional applications or requirements, so it is important to check with each school’s financial aid office.

Factors That  Influence the Amount of Aid You Receive

While understanding the types of aid available is important, knowing what factors influence how much aid you will actually receive is key to planning for college costs. Here are the major factors that determine your aid package:

•    Student Aid Index (SAI): As mentioned earlier, your SAI is calculated based on your family's financial information. A lower SAI generally means more need-based aid.

•    Cost of Attendance (COA): Your financial aid eligibility is also influenced by the total cost of attending your school, which includes tuition, fees, room and board, books, and other expenses. Schools with higher costs of attendance often provide more financial aid to meet those costs.

•    Enrollment Status: Full-time students typically receive more aid than part-time students. However, if you are attending part-time, you may still be eligible for some types of aid, but the amounts will be prorated.

•    State and School Deadlines: Many state and institutional aid programs have their own deadlines that may be earlier than the federal deadline. Missing these deadlines could limit the amount of aid you are eligible to receive, so it’s important to apply early.

Conclusion

The amount of college aid you can receive if you qualify for FAFSA for the 2025-2026 school year depends on your financial need, the cost of attendance at your chosen school, and the types of aid available. By completing the FAFSA, you will be considered for federal grants, loans, and work-study opportunities, as well as state and institutional aid. The key to maximizing your financial aid package is to submit your FAFSA early, stay aware of state and institutional deadlines, and explore all potential funding sources.

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