How Student Federal Aid Works
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Section 1: How Student Federal Aid Works
You can receive $150 billion annually from the U.S. Department of Education’s Office of Federal Student Aid, which helps 15 million students each year through grants, scholarships, loans, and work-study funds. Federal aid can be used for school expenses, including tuition, room and board, books, supplies, transportation, and more. This section explains how to apply for federal aid, the types of aid available, and the benefits of federal loans compared to private loans.
Apply by filling out the FAFSA form: Federal Student Aid
Award letters are then sent out from each school listed on FAFSA.
Award letters explain the financial aid options each school is offering you.
Federal grants/scholarships offered do not have to be repaid.
Federal loans offered must be repaid, with interest after graduation.
Federal loans have lower fixed interest rates and benefits that private loans do not offer.
Federal loan repayment plans will be determined upon graduation based on individual needs.
Federal loan repayment plans may be adjusted based on post-graduation incomes.
Federal loans may be deferred (postponed), consolidated (combined), or tax deductible.
Federal loans may be forgiven (canceled/reduced) based on certain types of employment.
Work-study programs provide jobs to undergraduate and graduate students.
Additional money can be applied for at colleges, nonprofit, and private organizations.
Section 2: Financial Aid Terms
Understanding key financial aid terms is crucial for navigating the financial aid application process. This section defines these essential financial aid terms to help you better understand your options.
Award Letter – A letter from a college that states what kinds and amounts of financial aid they are offering you. Award letters are sent by the colleges you listed on your FAFSA form.
Expected Family Contribution (EFC) – Number calculated from the information provided on the FAFSA to determine federal student aid eligibility. EFC considers all family income, assets, and benefits.
FAFSA (Free Applications for Federal Student Aid) – Federal form used to determine how much money the student/family will be expected to pay for college. FAFSA is used by most colleges to determine eligibility for grants, scholarships, loans, and work-study.
Federal Student Aid – Money from the federal government that is available to help students pay for college through grants, scholarships, loans, and work-study. Most students qualify for some type of aid.
Federal Student Loan – Money borrowed from the federal government for a college education that must be repaid with interest. Federal student loans offer lower interest rates than private loans.
Loan Forgiveness – Federal programs that allow you to pay back a smaller portion of the amount borrowed. These programs must be applied for to determine eligibility and payment schedule.
Grants – Free money that is available to students who have a financial need. Grants can come from the federal government, state government, individual colleges, or private organizations.
Scholarships – Free money that is available to students based on academic merit, athletic ability, or other achievements. Scholarships must be applied for, and most students qualify for multiple awards.
Tuition Reimbursement – Money that employers may pay you for education. Some may require that you continue working there for a set period of post-graduation time, or you will owe the money back.
Work Study – A federal program that provides part-time employment for eligible employers while you are enrolled in classes. Most jobs are available at the college or federal, state, and local organizations.
Section 3: How to Find Scholarships
Finding scholarships can be a daunting task, but this section guides you on where to start your search. Scholarships are only offered if you take the time to apply for them. It is up to you to find scholarships that you may be eligible for and to provide the correct information needed to qualify.
Contact the financial aid office at the college you plan to attend.
Visit your local library and ask for the latest scholarship directories.
Ask your high school counselor, coach, or teacher about your desired major.
Check with local foundations, religious institutions, community organizations, local businesses, ethnicity-based groups, military and civic groups.
Check with organizations and professional associations of the major you are pursuing.
Ask your employer or your parent’s employer.
Search the local newspapers.
Ask your classmates, friends, and neighbors.
Best Online Government Scholarship Sites
Federal Student Aid Office: www.studentaid.ed.gov
U.S. Department of Education: www.ed.gov
U.S. Department of Labor: www.careerinfonet.org
Department of Veterans Affairs: www.benefits.va.gov
Top Online Scholarship Search Services
BigFuture.com
Cappex.com
Chegg.com
Fastweb.com
FindTuition.com
Niche.com
Petersons.com
ScholarshipAmerica.org
Scholarships.com
SimpleTuition.com
Section 4: Tips to Applying for Scholarships
Applying for scholarships requires careful planning and attention to detail. This section offers practical tips such as starting early, applying for all eligible scholarships, and avoiding common mistakes.
Start searching for scholarships as early as possible (as early as 9th grade).
Continue applying for scholarships even after you start college.
Answer every question on scholarship search sites, including optional ones, for more results.
Apply to every scholarship you are eligible for.
Apply for less competitive scholarships because fewer people apply, so your odds are better.
Apply for scholarships that award less money because fewer people apply.
Apply for scholarships that have long applications because fewer people apply.
Never miss deadlines and apply at the start of the acceptance period.
Scholarships are available year-round, so don’t wait until spring to apply.
Read and follow the instructions carefully before filling out the application.
Answer every single question on the application and never leave information out.
Tailor your application to what you think the scholarship sponsor is looking for.
Personalize your essay and be passionate about the topic you are writing on to stand out.
Have several people read your essay for grammar, logic, context, and focus errors.
Use a professional email address, preferably with just your name (john.smith@gmail.com).
Remove inappropriate, immature, and unprofessional content from social media accounts.
Google your name and make sure no embarrassing pictures or information show up.
Have someone proofread your application to check for errors or missing information.
Make a copy of all applications/essays and keep them organized.
Send applications via certified mail, return receipt, or delivery confirmation.
Common Mistakes on Scholarship Applications
Missing the deadline.
Not meeting the minimum requirements.
Failing to follow directions on the application.
Failing to follow essay length or topic.
Leaving out or not providing enough required information.
Leaving in mistakes by not proofreading it first.
Exaggerating or lying on the application.
Writing an essay that is boring, offensive, off-topic, or not original.
Section 5: Financial Aid Facts and Figures
Consider the following statistics on scholarship awards, federal aid recipients, and student loan default rates. These insights will help you better understand how financial aid is distributed among different institution types and demographics.
Scholarship Facts
Scholarships come from governments, colleges, and private organizations.
$46 billion in scholarships awarded by the U.S. Department of Education and colleges annually.
$35 million in scholarships awarded by private companies, foundations, and civic groups.
$3 billion in athletic scholarships awarded to varsity athletes.
2% of high school athletes win sports scholarships to NCAA institutions.
97% of the free money (grants/scholarships) available each year is collected by students.
Competitive scholarships offering the most money have a selection ratio of 1 in 400+.
Less competitive scholarships offering less money have a selection ratio of 1 in 10.
STEM (science, technology, engineering, mathematics) majors receive more scholarships and typically offer higher amounts than other majors.
Federal Aid Statistics (2012-2013)
First-time, full-time, degree-seeking undergraduate students receiving any type of financial aid:
Private nonprofit 4-year institutions: 89%
Private for-profit 4-year institutions: 89%
Public 4-year institutions: 83%
Private nonprofit 2-year institutions: 90%
Private for-profit 2-year institutions: 87%
Public 2-year institutions: 76%
First-time, full-time, degree-seeking undergraduate students receiving federal grants/scholarships:
Private nonprofit 4-year institutions: 33%
Private for-profit 4-year institutions: 74%
Public 4-year institutions: 38%
Private nonprofit 2-year institutions: 67%
Private for-profit 2-year institutions: 71%
Public 2-year institutions: 56%
First-time, full-time, degree-seeking undergraduate students receiving state/local grants:
Private nonprofit 4-year institutions: 26%
Private for-profit 4-year institutions: 10%
Public 4-year institutions: 37%
Private nonprofit 2-year institutions: 30%
Private for-profit 2-year institutions: 7%
Public 2-year institutions: 34%
First-time, full-time, degree-seeking undergraduate students receiving institutional (college) grants:
Private nonprofit 4-year institutions: 81%
Private for-profit 4-year institutions: 27%
Public 4-year institutions: 44%
Private nonprofit 2-year institutions: 38%
Private for-profit 2-year institutions: 13%
Public 2-year institutions: 11%
First-time, full-time, degree-seeking undergraduate students receiving student loans:
Private nonprofit 4-year institutions: 62%
Private for-profit 4-year institutions: 79%
Public 4-year institutions: 51%
Private nonprofit 2-year institutions: 61%
Private for-profit 2-year institutions: 76%
Public 2-year institutions: 27%
Student Loan Default Rates (Students who did not pay back their loans)
In 2014, the total national student loan default rates fell from 14.7% to 13.7%
Private non-profit institutions fell from 8.2% to 7.2%
For-profit institutions fell from 21.8% to 19.1%
Public institutions fell from 13% to 12.9%
650,000 federal loan borrowers who entered repayment in 2011 are now in default
44% (288,000) of these defaults are from for-profit institutions (even though they only enroll 12% of students nationally)
Section 6: Scholarship Scams
Avoiding scholarship scams is essential for protecting your personal information and finances. This section educates you on identifying and avoiding scams by listing warning signs such as money-back guarantees, requests for sensitive information, and unsolicited scholarship offers.
Scholarship service promises a money-back guarantee if you do not get a scholarship.
Scholarship service asks for a credit card, bank, or SSN information.
Beware of fees (especially large amounts). Some legitimate scholarships charge a small fee to defer costs, but most do not. Scholarship providers want to give students money, not take it.
Service claims to know of secret scholarships or is the only one with access to information. Scholarship directories are widely available in public libraries, bookstores, high school guidance offices, and online at no charge.
You receive notice of winning a scholarship that you never applied for or heard of. Scholarships do not seek out recipients; you must apply for them. Only scam artists will seek you out.
Scholarship service offers to fill out applications, write essays, and supply references for you.
Legitimate scholarship awards will notify you in writing through the mail, never by phone. If someone calls you about a scholarship, they are most likely a scam artist out to get your money.
Don’t be fooled by official-sounding names. Do your research to verify their legitimacy.
Be wary of an award letter that has a return address of a P.O. Box or residential address.
Beware of 900 area code telephone numbers. By calling these, they may charge you several dollars per minute to listen to a long message that provides outdated/useless information.
Be wary of scholarships that claim to be first-come, first-serve and pressure you to apply. While legitimate scholarships may give preference to early applicants, they usually award money based on merit/need, not a time limit.
Beware of services claiming endorsements from the Better Business Bureau or government agencies. The BBB and U.S. government NEVER offer endorsements.
Section 7: Notable Scholarships and Their History
Scholarship programs have been helping students achieve their higher education goals for as long as college institutions have existed. Here are a few examples of notable scholarship recipients and their education's impact on the world.
Lady Anne Radcliffe Mowlson (1643) - The first college scholarship money was given to Harvard University by Lady Mowlson. The widow of a former Lord Mayor of London, she inherited half of his large estate in 1638. Massachusetts sent three ministers to England to raise money for the colony and its new university (Harvard est. 1636). On May 9, 1643, one of the ministers collected £100 from Lady Mowlson to be used for “the maintenance of some poor scholar.” In 1894, the women’s annex of Harvard became a full college and was named Radcliffe after its first benefactor.
Cecil John Rhodes (1902) – British businessman, imperialist, and philanthropist founded the Rhodes Scholarships upon his death in 1902. He left nearly £6 million to Oxford University to provide scholarships to international postgraduate students from the U.S., the British colonies, and Germany who wanted to attend Oxford. In his will, he stated that the purpose of the scholarship was to “render war impossible” by promoting understanding between nations. Approximately 90 scholarships are awarded annually, with more than 7,000 in total, including:
Edwin Hubble (1910): Astronomer/discoverer of galaxies beyond the Milky Way, law degree
David Souter (1963): Supreme Court justice (1990-2009), jurisprudence degree
Bill Clinton (1968): Former president of the United States (1993-2001), law degree
Susan Rice (1990): First African American female ambassador to the U.N., philosophy degree
Bobby Jindal (1994): Louisiana Governor (R), 2015 presidential candidate, public health degree
Rachel Maddow (2001): TV host, the first openly gay American to win a Rhodes scholarship, political science degree
United Negro College Fund (1944): Founded on April 25, 1944, by Frederick Patterson and Mary McLeod Bethune. The purpose was to provide a constant stream of students to 27 financially struggling historically black colleges and universities (HBCUs) in the South.
1959: John F. Kennedy (Mass. Senator at the time) donated the proceeds from his Pulitzer Prize-winning book, Profiles in Courage, to the UNCF.
President FDR and business magnate John D. Rockefeller were strong supporters of UNCF, with Rockefeller serving as a board member until he died in 1960.
The first annual fundraiser collected $760,000.
1970: Vernon Jordan became the UNCF director and raised $10,000,000 in his first year.
1972: Forest Long, an advertising executive at Young and Rubicam, created the UNCF slogan, “A mind is a terrible thing to waste.” It is one of the most recognized slogans in advertising history.
1980-2006: Singer Lou Rawls hosted an annual telethon (Lou Rawls Parade of Stars) to raise money for UNCF scholarships. He raised $200 million until he died in 2006.
UNCF also funds Native American, Latino, and Asian American student scholars.
Famous UNCF recipients: Civil rights leader Dr. Martin Luther King, Jr. (Morehouse), actor Samuel L. Jackson (Morehouse), singer Little Richard (Oakwood Univ.), singer Lionel Richie (Tuskegee Univ.), comedian/actress Kym Whitley (Fisk Univ.), Baltimore Ravens wide receiver Jacoby Jones (Lane College), radio host Tom Joyner (Tuskegee Univ.), Ebony Magazine founder Eunice Johnson (Talladega College), journalist/suffragist Ida B. Wells (Rust College), and former U.S. Surgeon General Joycelyn Elders (Philander-Smith College).
Section 8: Scholarships that Offer the Most Money
Some scholarships provide substantial financial support, allowing a full ride to obtain a degree or the opportunity to enroll in the most prestigious universities, which may not have been an option otherwise. If you qualify for these scholarships, they can significantly impact your educational goals.
Miss America Scholarship
Provides millions of dollars in scholarships to 15,000 women annually (the exact amount is not publically published).
The first scholarship was awarded to Bess Meyerson, Miss America 1945. She used the $5,000 to pay for graduate studies at Julliard and Columbia University.
In 2015, Miss America Kira Kazantsev was awarded a Miss America scholarship of $50,000 plus the Charles and Theresa Brown scholarship of $2,500.
$140,000 was awarded in total to the rest of the top ten Miss America finalists.
The United Negro College Fund
Provides $100 million to 60,000 scholars annually at 37 HBCU institutions.
Awards 10,000 scholarships and internships in 400 programs to low/moderate-income students.
Since 1944, it has raised $4.5 billion to help 400,000 students get college degrees.
Gates Millennium Scholars
Provides annual scholarships to 1,000 recipients per year for high-performing, low-income students.
Students must be African-American, American Indian/Alaska Native, Asian American/Pacific Islander, or Hispanic American U.S. citizens.
Established in 1999 to develop “Leaders for America’s Future.”
Funded by a $1.6 billion grant from Bill and Melinda Gates Foundation.
Awarded $845 million to 17,000 students since 2000.
Future Farmers of America
More than $2 million in scholarships are awarded annually to over 1,000 students.
Awarded $2.7 million in scholarships in 2015.
1 in 5 students who apply will be awarded a scholarship.
Davidson Fellows Scholarship
Awarded $6.2 million to 266 top students 18 and under since 2001.
Each student is awarded $50,000, $25,000, or $10,000 scholarships.
Coca-Cola Foundation
Awarded $63 million to more than 5,500 students since 1989.
150 scholarships of $20,000 awarded each year, totaling $3 million annually.
56% female and 44% male ratio of scholarship awardees.
The top five colleges students attend with the money are Harvard, Stanford, Duke, Yale, and Princeton.
Buick Achievers Scholarship
Awards 50 scholarships of $25,000 per year (up to $125,000) per student.
In addition, 1,000 students receive one-time scholarships of $2,000 each year who are majoring in engineering, design, and business.
Since 2011, nearly 3,400 students have received scholarships in excess of $27 million.
Dell Scholars Program
300 scholarships of $20,000 are awarded annually, a total of $6 million annually.
Section 9: Fast Food Scholarships
Many companies that hire teen workers, such as fast-food businesses, also offer scholarships to their employees. Choosing to work at one of these businesses throughout high school may have the added benefit of providing you with money to attend college.
McDonald’s: Ronald McDonald House Charities awarded $56 million in scholarships since 1985.
Pizza Hut: The Yum! Andy Pearson Scholarship Program offers employees $2500 scholarships.
Taco Bell: Glen Bell Scholarship offers employees $2,000 scholarships. Since 2002, they have awarded $1 million to 500 students.
Chick-fil-A: Provides $1.6 million annually to employees, resulting in over $30 million awarded to 30,000 team members who attended 500 different colleges/universities.
Burger King: Jim McLamore Burger King Scholars has awarded $22.6 million in scholarships since 2005 to employees, families, and students in the U.S., Puerto Rico, and Canada.
Wendy’s: High School Heisman Program awards scholarships to high-achieving student-athletes in various sports, school, and community activities.
Section 10: Start Applying for Scholarships Today
Understanding and navigating the world of college scholarships and federal aid is crucial for students seeking financial support for their education. By familiarizing yourself with the various types of federal aid, key financial aid terms, and practical strategies for finding and applying for scholarships, you can maximize your opportunities for receiving financial assistance. Additionally, being aware of scholarship scams and identifying legitimate scholarship offers will protect you from potential fraud. With the proper knowledge and resources, you can successfully secure the financial aid needed to pursue your higher education dreams.
Start your search for scholarships and federal aid today and take the first step towards a brighter future!
