Should I Apply for Financial Aid for College? Your Guide

Man placing coin in black piggy bank to save for college
February 15, 2024
7 min read
Expert Reviewed

Reviewed by:

Former Admissions Committee Member, Columbia University

Reviewed: 1/24/29

Financial aid is when you get monetary assistance to help pay for college. Any student going to college should consider whether they need financial help.

“Should I apply for financial aid?” stands as one of the most critical questions for college. Every prospective college student should make this decision carefully, considering their situation in life and where they want to be in the future. College tuition, board, and fees have been adding up for the past twenty years, on top of all the other fees students need to pay. 

Most people cannot afford the starting price of college every semester, so weighing whether or not to go in the first place may end up making your choice of needing financial aid. Regardless, consider applying. 

There are many factors that determine your eligibility to receive financial aid and how much you will receive overall. Once you know your eligibility and how much you’ll receive, you can talk with your parents and plan how to pay for costs not covered in your financial aid package.

8+ Things Students Need to Know about Financial Aid

Let's dive into eight essential things you need to know about financial aid for college – knowledge that can be a game-changer when it comes to financing your education.

1. Early FAFSA Submission

Submit the FAFSA as early as possible after it becomes available on October 1 each year. More aid is typically available at the beginning of the application season, so being prompt can increase your chances of receiving financial aid.

2. High Earners Can Still Qualify

Even if your family's income exceeds $100,000 per year, it's worth filling out the FAFSA. With proper planning, you may still be eligible for aid based on your child's attractiveness as a student.

3. Negotiate Your Aid Package

Colleges are businesses and may offer competitive grants and scholarships to attract high-performing students. Sending the FAFSA to multiple colleges and appealing your award letter can help you secure more financial aid.

4. Net Cost vs. Net Price

When evaluating college costs, focus on the "net price," which subtracts grants from the cost of attendance. Be cautious of "front-loading" by colleges, where they offer more grants in the first year and reduce them in subsequent years.

5. Prioritize Grants and Scholarships

Student loans should be considered a last resort. Grants and scholarships don't need to be repaid, while loans accrue interest and can lead to significant debt after graduation.

6. Federal Loans vs. Private Loans

Federal student loans usually offer more flexible payment terms and options for unemployed or underemployed graduates. Private loans may require co-signers and lack safety nets.

7. Beware of Loan Defaults

Defaulting on federal student loans can lead to wage garnishment and loss of tax refunds. It's crucial to stay on top of loan payments and consider income-driven repayment plans if necessary.

8. Stay on Top of Financial Aid Emails

Once you've submitted your FAFSA or any financial aid paperwork, keep a close eye on your email. If you get an email asking for more info, like tax returns, be sure to respond quickly. Ignoring these emails can stop the financial aid process and might mean missing deadlines or losing out on funds.

Remember, understanding the financial aid process and making informed decisions can significantly impact your college funding strategy and your financial well-being in the long run.

cash on top of envelope

Who Can Apply for Financial Aid?

The short answer to the question of who can apply is every American citizen and the people who are in the process of becoming a citizen. More specific factors determine who can apply for the FAFSA, but some of the more basic ones include green card holders, people with Arrival-Departure Record, battered immigrant status, or a T-Visa. 

In order to complete your FAFSA, you need the following: 

  • High school diploma or equivalent
  • An active application to college
  • U.S. Social Security number

Since immigration processes take enough time that it might make you miss deadlines, the U.S. government keeps people in mind through this. Regardless of who you are, it is vital to keep up with your grades to ensure your FAFSA and college applications are accepted.

Outside of the FAFSA, there are a few other forms of options for aid. Student Aid services offered by the government offer a parent plus loan program. A payment plan feature may be able to help your parents pay off your loans over time. 

Keep in mind that the parent loan has a different interest than the general FAFSA loans. The direct loans the student takes out will have a lower interest rate of about 5.50%, while the direct PLUS loan for parents has about an 8.05% interest rate. 

Besides direct government loans, there are many different loan companies that help you pay off the remainder of your loans, as the FAFSA usually doesn’t cover everything. However, expect interest rates on these to be higher, and try to pay them back quicker. These loans are considered private and owned by the company that offers them. Loans like this are much more likely to fluctuate with economic situations. 

The best way to pay off student loans is through scholarships. There are tons of opportunities for scholarships, and most colleges offer them. If your grades are good enough, your college of choice may offer you a full ride and cover all of your debt. However, there may be more specific named scholarships with specific criteria, such as:  

  • Writing an essay
  • Showing some sort of merit other than grades, like leadership skills or participating in an organization

Many financial institutions will offer these as well, with varying amounts of money awarded. Make sure to do research on these to learn what they offer. You may be able to take a sizable chunk out of your death by applying for a lot of scholarships.  

Should Wealthy Students Apply for Financial Aid?

From a general perspective, wealthy students may not have a need for financial aid for college. However, that may not take in the whole picture. Some students who come from “wealthy” families may still need financial assistance. 

There are a number of situations where students from wealthier backgrounds may need financial aid. A student can have a number of situations where despite that fact, they may need financial aid because they are not getting enough help from their parents. This is why financial aid is important, as it can bridge those gaps for students that need help. 

If your family has enough wealth that they could pay for college, consider doing so if possible. However, financial aid is an option depending on what needs to arise. 

When Should You Apply for Financial Aid? 5 Factors to Consider

When the time comes to apply for aid, be it government-provided, from outside parties, parents, or scholarships, several factors go into the process. Timing, your achievements, and finances available all factor into when you should apply.

1. Always Fill Out Your FAFSA

Everyone should at least plan on applying for the FAFSA every year. Regardless of your financial situation and the aid you’ve received, consider it as a necessity. The FAFSA only covers one year of tuition, so in order to receive aid money for the next year, you will need to fill it out again and include any updates. 

The FAFSA’s deadline every year is October 1st. Most incoming freshmen complete the FAFSA for the first time as a part of the process of applying to college. Once the FAFSA comes out, think about how much you receive in loans and how that affects your decision to take it or not. How much are you paying? Will that be affordable after you graduate?

2. Consider What Your Merit Can Get You

Remember, any loans that are part of your financial aid package are aid you have to pay back–with interest. The more funding you can get from other sources, the amount you will have to pay back later. 

If you’re planning on going to college, make sure to put as much effort into your grades as possible. Ultimately having a high GPA may give you better access to grants and scholarships. Merit can take you far in a college setting.

3. Apply All Your Scholarship Funding – It May Cover Everything

If you have a good GPA, the number one thing you can do is apply to as many scholarships as possible. Every bit of that money is free, whereas you have to pay student loans back. If you have good enough grades, some colleges may even offer you a full ride and cut off tuition and maybe even more of the fees you need. Not having debt can put you in a good position. 

Ultimately you may not need the loans if you can get enough scholarships. However, don’t expect to get there without putting in a lot of effort. 

4. What Kind of Fiances Do You Have? Can You Afford Everything?

If you are from a financially poorer household, applying for aid may end up being a necessity. However, keep in mind that what you can get out of aid may depend on the tax bracket you fall into. 

A student could get virtually nothing in some cases, even in the lowest tax brackets. Make sure to do your research and apply to colleges that would accept you. Keep in mind that they are a business and are looking for people with the capacity to pay them back. Having enough merit can take you far, as you may be able to break college barriers. 

5. View Your FAFSA – Can You Afford the Loan Interest Long Term?

Once you review your FAFSA, one of the more critical steps is to keep track of it and current interest rates. When taking out student loans, the timing in an economic sense can drastically change the rates you can get on your loan. In bad economic periods, you may not be able to get a loan. On top of that, interest rates may be a factor in what kind of loan you can get. 

Keep track of your loans closely and monitor when you should put larger payments into your loans.

Types of Financial Aid to Apply For

Financial aid comes in a few different packages. The types stand out by either being from a governmental or private organization and whether you need to pay the aid back or not. Each program helps people with their unique needs and life situations and awards those who have substantially more debt or cannot afford what they have. 


The first type of aid comes in the form of loans. Your student loans will come due after you’ve graduated college and cover some, if not all, of what you owe. Loans enable you to pay off what you owe at an affordable rate over the years. 

Government loans are the most widely available, but you may find personal loans. Either way, you will have to pay interest, which is essential when considering whether or not you want to take out the loan. If you can, prioritize the aid packages that are awarded to you rather than loaned.  


Scholarships are a type of financial aid that offers free money that you do not have to pay back. Most scholarships come from organizations or your college of internship to award the student for aspects or achievements they have made. Scholarships can be through sports, academics, leadership, extracurricular involvement, and much more. 

Scholarships can be both large and small. The more you apply for, the more likely you will be able to pay off your college debt. Every little bit helps, as college is expensive, so don’t discount smaller scholarship opportunities. 

Also, there are a ton of scholarships out there. You can find everything from unusual scholarships like the "Duck Calling Scholarship," which rewards students for their talent in imitating duck calls, to specialized scholarships for specific fields of study, such as the "Women in Healthcare Scholarship" for females pursuing a career in healthcare. 

You can find scholarships for Canadians studying in the USA, or scholarships offered by local community organizations and businesses, like the "Main Street Business Excellence Scholarship." Overall, there are plenty of scholarships out there for you to discover, each catering to different interests and goals.

These diverse scholarship options cater to a wide range of interests and abilities, making it possible for students to find financial support that aligns with their unique strengths and passions.

If you’re interested in merit-based scholarships, you can find an extensive list of merit scholarships here! These scholarships are awarded based on talent, skill, and notable achievements. 


Grants are government-awarded money that you do not have to repay. You apply for grants after filling out your FAFSA. Grants go to students with unique possessions like teaching majors, military service awards, or students who have no other way to attend college outside of a government grant. 

If you can’t find a way to pay off the last little bit of your student loans, a grant may help. Regardless of what type of grant you have, you must qualify for the FAFSA and reapply for it every year to keep receiving it. 


Work-study is another financial aid program that provides a job for a student to work while not attending classes. Work-study awards financial aid in exchange for the hours put into the job. Students can choose to work on-campus or off-campus for non-profit organizations. The program considers factors such as: 

  • The school 
  • Your needs
  • When in your college career, you applied to work out how much the government is willing to give in exchange

You can apply for work-study after the FAFSA as well. 

student on computer

FAQs: Financial Aid for College

Students typically do not know about financial aid when starting their college applications. Here are some common questions that may answer some of yours. 

1. In What Order Should I Apply for College or the FAFSA? 

The general guideline for college applicants should be to apply to your school first, then fill out your FAFSA. Since the FAFSA for the next year becomes available for the next school year only after October 1st, you may want to wait. 

The FAFSA gives you financial aid based on your need to go to your accepted college. College applications may open as early as August 1st, but you may not hear back on your application until November.

2. Can I Apply for Financial Aid Before My Application Is Accepted?

You can apply for the FAFSA before being accepted to college and even before applying. If you’re unsure what school you’ll be accepted into because you applied to multiple schools, you may want to apply for the FAFSA early. 

When your school makes application status public, this might be a better option for you. Regardless of when you fill out your FAFSA, you will need at least one school for the application to be based around. You can include up to 10 school options on your FAFSA.   

3. Will Applying Early for Financial Aid Hurt My Acceptance Chance?

Applying early may hurt how much money you receive from the FAFSA, but it likely will not hurt your application chances. Applying early to your school only makes it easier to be accepted. Applying early for your FAFSA may use old financial information, and you may not receive the proper amount of aid you’d get otherwise. 

4. Does My College View My FAFSA?  

Yes, your college views your FAFSA. The school gets to determine your eligibility for financial aid based on your acceptance status and the school’s tuition and fees. However, they also get this is not a guarantee that you will be awarded the loan. Make sure to stay in touch with your financial aid office to see if you qualify. 

5. What Money Do I Have to Pay Back?

The only money you will have to pay back is the amount you took out from the FAFSA via their loan. Any scholarship you receive or grant given likely will contribute to paying off college. 

6. Will the FAFSA Cover All of My Student Debt?

In most cases, students will not be able to cover the entire cost of college with just government-awarded loans. This means for students from poorer households, college, even with financial aid, may still be too expensive. If you want to go to college, make sure you know what your financial situation can afford. 

The consistent rise in tuition prices caused the average cost of college to jump from the equivalent of a car to that of a small house. College has become less about what the student wants to what the student can afford reasonably. Strategizing out a plan for college may save you money in the long run, so if you’re planning on going, make sure to start preparing early.

7. Do You Need to Apply for Financial Aid Every Year?

You need to apply for aid every year, but don't worry, it's a simple process. Simply complete the necessary forms and provide updated financial information to ensure you receive the financial assistance you need to support your education. 

Many students wonder if it’s necessary to reapply for financial aid annually since their financial situations can change. However, this annual renewal helps institutions assess your current needs accurately and ensure that you receive the appropriate financial support throughout your college journey.

Final Thoughts 

Everyone should apply for the FAFSA and other financial aid regardless of their financial status. Eligibility depends on your background, grades, and your family’s financial history. Applying can only help, and if anything, it shows you how much college will cost your family overall. 

The packages that the government lends will come due at some after college, so be prepared to pay your finances off at some point. If you use other forms of loans, make sure to prioritize them based on interest rates and how much you’re billed monthly if you’re doing that. 

If you can, scholarships are spectacular, and most universities offer them to students who show their merit through competitions and good grades. 

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