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College financial aid includes grants, scholarships, work-study and federal student loans. Scholarships and grants are forms of aid that generally don’t need to be repaid. Students who qualify for work-study are able to find part-time employment that can help them pay for college costs. Federal student loans are also considered financial aid, but unlike scholarships or grants, generally need to be repaid, typically with interest. Because you’ll be responsible for repaying student loans, it’s essential that you fully understand the terms of borrowing.

After applying for federal aid by filling out the Free Application for Federal Student Aid (FAFSA®), students can expect to receive a financial aid award that details the type and amount of aid for which they qualify. Financial aid can be incredibly helpful when trying to finance your college education, but it’s possible that you may not receive enough to fully foot your tuition bill. If that’s the case, there are other options available to help you pay for your education. Continue reading for more information on understanding your financial aid package and the options to consider should you find yourself in need of additional funding.

The Steps to Getting a Financial Aid Package

In order to get any financial aid package for college, the first step is generally to fill out a Free Application for Federal Student Aid , commonly known as FAFSA^®.

The FAFSA for the 2023-24 school year became available Oct. 1, 2022, and the application cycle ends on June 30, 2024. Some states and colleges have separate deadlines for the FAFSA to determine aid. Consider contacting your school’s financial aid office for questions on the deadline required by your state or school.

Filling out the FAFSA requires some basic financial and income information. If you’re a dependent student, then you’ll need your parents’ financial info as well. For higher income families or those in unique financial situations, this can be a little tricky.

All federal loans, both subsidized and unsubsidized, require a FAFSA in order to determine eligibility. Colleges may also use the FAFSA to determine their own financial aid awards and packages, based on things like expected family contribution and financial need.

After you fill out the FAFSA, the Office of Federal Student Aid at the U.S. Department of Education will process your FAFSA and send you a Student Aid Report (SAR), which is essentially a summary of your information. It’s usually worth reviewing this information in detail to confirm that all of the information is accurate. If you find a mistake after reviewing your SAR, you’ll likely need to update or correct your FAFSA .

The SAR will include the calculated Expected Family Contribution (EFC), which is how much you and/or your family can be expected to contribute personally towards your education. (Next year, the EFC will be replaced by the Student Aid Index.)

Then, colleges use this information to determine eligibility for university, local, state, and federal financial aid. Sometimes schools may also ask for additional information, particularly if you are applying for school-specific scholarships.

The schools will then assemble a financial aid package that could be made up of grants, loans, work-study, and other waivers, and send you an “award letter.” Reviewing your award letter carefully can help you choose the financial aid mix that is right for you. Often these financial aid award letters come shortly after admissions decisions, though this may vary. Students typically have a deadline (often May 1, which is National College Decision Day) to make their decisions by.

It’s important to understand and compare the financial aid packages you’ve gotten from different colleges — even if that can be a little confusing. The key is to break down the jargon in order to help make an informed decision.

Understanding What’s in the Average Financial Aid Package

The format of an award letter can vary from college to college. That, in combination with financial aid jargon can make it difficult to decipher, but at its heart a financial aid package is a list of different amounts of money in different forms of loans, grants, work-study, or other tuition waivers that should add up to cover the cost of the college, minus your expected family contribution.

Yet, you may have to decode the language and research each of the line items. Sometimes, for example, instead of clearly identifying loans as such, they might be simply denoted with abbreviations like “L” or “LN” in the award letter. Here are the different types of financial aid you may see in your financial aid package:

Grants and Scholarships

These don’t have to be repaid, so they are sometimes referred to as “gift aid.” These could be school, state, or federal scholarships and grants you qualified for and were awarded.

Work-Study

This is part-time work you will do and be paid for. You’ll be paid at least the federal minimum wage, but depending on the job, you could earn more. Being granted work-study in your aid package does not always guarantee a job. Depending on the school you attend, you may be matched with a job or you may have to apply for and secure your own job.

Federal Student Loans

Federal loans can be either subsidized or unsubsidized, and usually have lower interest rates than private loans. There is also typically a cap on how much you can borrow.

Subsidized loans are for undergrads and are awarded based on financial need; additionally, the government pays the interest on them while you’re in school at least half-time, during your grace period, or during periods of deferment.

Unsubsidized loans are available to undergraduate and graduate students and are not awarded based on financial need. This type of loan accrues interest while a student is enrolled at least half-time, during the loan’s grace period, or during other periods of deferment.

Borrowers have the option to make interest-only payments during this time, but are not required to do so. If the interest on the student loan accrues, at the end of the deferment period it will be capitalized or added to the principal value of the loan.

There are also PLUS loans for parents and graduate students, which are also unsubsidized.

Beyond Federal Financial Aid: Private Student Loans

Private student loans are not part of a federal financial aid package. Private student loans can be borrowed from a private lender, which typically have more stringent financial qualifications and, like federal loans, must be paid back with interest. Typically, that interest also accrues while you’re in school.

Check the terms of any private student loans you’re considering and the interest rate being offered to get a sense of how they stack up to federal loans. Federal loans also offer benefits that private student loans do not, such as income-driven repayment plans, deferment options, or the

In order to make the decision that’s best for you, you’ll want to compare the total cost of attendance, how much gift aid is being awarded, and the loans you’ve received and their terms. This should give you a better idea of how much any federal loans will cost you, and whether there is a gap in funding.

The total cost of college may change over a student’s enrollment, so it generally needs to be calculated each year. Consider things like fluctuation in tuition rates, federal interest rates, and your financial aid award which, among other factors, have the potential to change.

Tips on How to Compare Financial Aid Packages

One of the most important things to look at when comparing financial aid packages for college is the net price. What that means is the actual cost to you, minus all awards. To find the net price you need to figure out the total cost for each college and then subtract the amount of grants and gift aid (e.g., not loans).

Factor in how much you can borrow in loans, and carefully consider the loan terms. And then you can calculate how much each college will cost you additionally out-of-pocket.

Just because one school is giving you more in financial aid doesn’t mean it’s necessarily the best financial option. For example, if it will ultimately cost you more because the college is more expensive and, perhaps, you’re going to need to borrow a private student loan with a comparatively high interest rate to cover what your federal aid doesn’t cover.

However, a financial aid package won’t always list the net price and many of the financial aid award letters don’t even necessarily tell you how much a specific college costs in total.

Some letters only outline the direct cost to the school — e.g., tuition and fees — but don’t include room and board or other expenses.

It can be helpful to make your own spreadsheet to ensure you’re comparing apples-to-apples. Figure out the total cost of attendance for each school you’re considering. Include tuition, fees, room and board, and you can even estimate expenses like books, supplies, and living expenses.

Note how much is being awarded in gift aid (grants and scholarships), how much you’re offered federal student loans, and how much it’ll cost you out-of-pocket. If needed, consider private student loans, carefully evaluating their loan terms.

Also understand whether the scholarships or grants in your aid package are a recurring award that will be given to you each year, or whether they are a one-time award.

It’s also worth noting that you are not required to accept all of the loans offered in your financial aid package. You can choose to borrow a lesser amount, which could help save you money in the long run by reducing the money you owe in interest.

The Consumer Financial Protection Bureau and the College Board both have tools to more accurately compare financial aid packages and the costs of college.

If Your Financial Aid Package for College Isn’t Enough

Sometimes you do the math, compare all the costs, and feel like your financial aid package for college just isn’t adding up.

Appeal the Financial Aid Decision

It is possible to appeal a financial aid package, particularly if you’ve had changed circumstances or if there was a gap between the cost and the award. While writing an appeal letter might be a first step if your financial aid package isn’t enough to cover the cost of college, it doesn’t guarantee your award will change.

It also might be the case that circumstances change and you lose your financial aid or portions of your award package. In these situations, there are options in addition to or besides appealing.

Apply for Private Scholarships

You can look into private scholarships, of course. These are different from the scholarships and grants awarded by the state or school. However, private scholarships are considered non-need-based aid and will factor into the cost of attendance — and each school deals with that differently.

Get a Part-Time Job

Even if you don’t qualify for the work-study program, you could look for a part-time job. There may be on-campus jobs available, like working as a teaching assistant, or tour guide. Another option is to look off-campus for a job. There may be local restaurants, coffee shops, or stores that are looking for part-time associates.

Consider a Private Student Loan

Private student loans are another tool that could help students fill in financial gaps. Keep in mind, that, as mentioned, private student loans may lack borrower benefits afforded to federal student loan borrowers. If you think a private student loan is something that could work for you, get quotes from a few different lenders to compare the terms and conditions, so you can find the best loan for you. Some student borrowers may also consider applying with a cosigner, who could potentially help them qualify for more competitive loan terms.

The Takeaway

Your financial aid package will state the amount and types of aid you receive. Financial aid includes scholarships, grants, work-study, and federal student loans. Carefully compare your financial aid awards at each college when you are making your college decision.

If you don’t get enough financial aid, you might consider getting a part-time job, applying for private scholarships, or borrowing a private student loan. Keep in mind that, as mentioned, private student loans are generally only considered an option after all other financing has been exhausted. If you’re interested in a private student loan, consider SoFi. SoFi offers private student loans with no origination fees and no late fees.

Find out what rate and terms you may prequalify for in just a few minutes. 

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SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs. SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility-criteria for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.

Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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Editor’s Note: The new, simplified FAFSA form for the 2024-2025 academic year is available, although applicants are reporting a number of glitches. Try not to worry, take your time, and aim to submit your application as soon as possible.

This year, Federal Student Aid (FSA) estimates that filling out the Free Application for Federal Student Aid (FAFSA^®) takes less than one hour. Read on for the information you’ll need, the step to take before going to the FAFSA site, and what to expect when filling out the application online.

Completing the FAFSA Application for Academic Year 2023-2024

If this is your first time submitting the FAFSA, you’ll be glad to know that it usually takes less time after the first time (yes, FAFSA is submitted annually.) Last year, renewing the FAFSA application took an average 35 minutes, compared to submitting for the first time, which took an average 54 minutes, according to the Department of Education.

Not quite ready to submit your FAFSA, but want an estimate of your student aid package? You can fill out an abridged Federal Student Aid Estimator .

Recommended: 6 Reasons to Go to College

Docs You’ll Need to Fill Out FAFSA

Before you start the online FAFSA form, it’s useful to have the info you’ll need handy. That includes:

•   Your Social Security or alien registration ID

•   Driver’s license or state ID

•   Federal income tax returns for 2021, W-2s and other financial documents for yourself (and your parents if you’re a dependent)

•   Most recent bank statements

•   Any untaxed income amounts

12 Steps to Filling Out the FAFSA

FAFSA opened Oct. 1, 2021, and closes June 30, 2023, for the 2022-2023 academic year. FAFSA opened Oct. 1, 2022, and closes June 30, 2024, for the 2023-2024 academic year. That said, schools and state and scholarship programs have varying deadlines, so it’s a good idea to check and double-check the FAFSA deadlines for everything you are applying to.

Here are the steps to completing the online FAFSA form.

1. Creating Your FSA ID

The first step is creating a Federal Student Aid ID . This is simply the username and password you’ll use to log into FAFSA. Note that if your parents’ financial info is required to complete the application, a parent will also need to create a FSA ID.

2. Logging in

Now that you have a FSA ID, you’re ready to log into the online FAFSA form . But before you log in, the site will ask if you are a student, parent, or preparer helping a student fill out the FAFSA. Select which one you are.

Once you’re in, you will be asked to accept or decline the disclaimer, which details how the site will use and monitor your data. You should then be prompted to start a FAFSA application for 2023-2024.

You’ll also be asked to create a save key, which is a temporary code in case you leave the site before you submit your application. In other words, if you don’t finish FAFSA in one sitting, you can enter your save key and pick up where you left off.

3. Filling in Your Personal Information

You (the student) will be asked to fill in the following info (you’ll be prompted to hit “Continue” several times):

•   Your Social Security number

•   Full name

•   Date of birth

•   Email address

•   Phone number

•   Mailing address

You’ll then need to answer questions about:

•   How long you’ve lived in your state

•   Whether you are a citizen

4. Filling in Your Student Information

Next, you’ll need to answer questions about your education and future plans. Specifically, you’ll be asked about:

•   Your high school completion status at the beginning of the 2023-2024 academic year

•   The college degree or certificate you will be seeking to earn

•   Your college grade level

•   Whether you’d like to be considered for work-study

Additionally, you’ll be asked to provide (you’ll be prompted to hit “Continue” several times):

•   Your driver’s license number (if you have a license)

•   Your driver’s license state

•   Whether you’ve ever been in the foster care system

•   The highest level of school each of your parents completed

•   Your high school name and city (optional) and state

5. Filling in the College Search Section

To send your FAFSA information to schools you’re applying to, you’ll need to add the federal school code for each school. Doing so allows colleges to receive your FAFSA information and so use it to provide you a financial aid package. The online form will help you find the codes; you just input the school name, city, and state. You can add up to 10 colleges at a time.

Next, for each school, you’ll need to select your housing plan (on campus, with parent, or off campus).

Recommended: SoFi’s College Search Tool

6. Filling in Info That Helps Determine Your Dependency Status

Your answers in this section will determine whether you are an independent or dependent student— and so determine the financial information you and your parents will need to provide. Specifically, you’ll be asked about:

•   Your marital status

•   Whether you have children that you support

•   Whether you have other dependents who live with you and you support

•   Whether you are on active duty or a veteran of the U.S. armed forces, are an emancipated minor, whether someone other than a parent or stepparent has legal guardianship, and whether you have ever been in foster care or a ward of the court or both parents have died since you were 13.

•   Whether you were homeless or self-supporting and at risk of being homeless on or after July 1, 2022

7. Learning Your Dependency Status

At this point, the smart technology of the online FAFSA form determines whether you’re a dependent or not. If you are single, have no children or other dependents, and answered “none of the above” and “no” on the previous two screens, you are likely a dependent. As a result, your parents’ financial information will be needed in addition to yours to complete the form and calculate your expected family contribution (which will soon be replaced with the student aid index).

Please note that the rest of these steps assume you’re filing as a dependent. While the process of filing as an independent will be similar, you won’t be asked to provide information about your parents.

8. Filling in Your Parents’ Personal Information

You (the student) can answer the following questions about your parents:

•   Their marital status and when they married or remarried

•   Date of parent’s marriage

•   Each parent’s name, Social Security number, date of birth, and email

•   If your parents have lived in your state of residency for at least 5 years

•   Number of other dependent children and other dependents your parents have

9. Providing Your Parents’ Financials

You will need info about your parents’ tax return for 2021 or 2022 to answer the following questions about:

•   Their tax return status

•   The type of tax return they filed (i.e., 1040 or something else)

•   Their tax filing status (e.g, married-filed joint return)

At this point, you can either use the IRS Data Retrieval Tool (DRT) that pulls their tax return information into the FAFSA form or enter their info manually. In addition to being more convenient, using DRT means you may not have to later provide IRS documentation. (As mentioned earlier, one of your parents will need to create and provide an FSA ID and password to use DRT.)

If you are manually entering your parents financial info, you will need to answer questions about:

•   Their adjusted gross income

•   Amount each parent earned

•   Amount they paid in federal taxes

•   Amounts of other income (such as college grants and tax-exempt interest income)

•   Amounts of child support paid, earnings from work under a Cooperative Education Program, and taxable earnings from need-based employment programs

•   Amounts of untaxed income (such as child support or payments to tax-deferred retirement savings plans)

•   Their assets (including the value of cash and bank accounts, investments, and owned businesses and investment farms)

10. Providing Your Financials

Now it’s time to provide your financial information. Basically, you will be asked for the same info about yourself that you provided in the previous step about your parents’ income and assets.

11. Checking for Errors

Once you’ve reached the end of the application, you’ll see a summary to review. Checking that all the information is accurate may help avoid having to file a FAFSA correction later.

You’ll next need to answer a few more questions that the federal government collects about gender, ethnicity, and race. This info has no impact on whether you will receive financial aid.

Recommended: How Much FAFSA Money Can I Expect?

12. Signing and Submitting

FAFSA requires you to accept or reject its agreement of terms. If your parent or parents provided information because you filed as a dependent, one of them will also need to accept these terms in order for you to submit the application. Both you and your parent will e-sign using your FSA ID. Once you’ve signed and submitted your application, your FAFSA is complete.

Downloadable FAFSA Form for 2023-2024

Here’s the FAFSA form for 2023-24 if you want to see it before logging in to fill it out — or if you want to print it, fill it out, and mail it in. There’s also a FAFSA worksheet available for download.

What’s Different About the 2023-24 FAFSA

If you heard there was a FAFSA app and wondering where to find it, unfortunately, the myStudent Aid app is no longer in use. This application cycle, the only online access is via the Federal Student Aid site .

Additionally, the 2023-24 form does not ask about Selective Service registration status or drug convictions.

A Few Extra Tips

Completing FAFSA can be an overwhelming process. It can also be tempting to skip it altogether, especially if you’re from a middle- or high-income family and you believe you aren’t eligible for aid. However, that’s an assumption that could mean leaving aid on the table. Here are three more helpful tips:

2.    Schools, states, and scholarships have varying deadlines. As stated earlier, FAFSA opened Oct. 1, 2022, and closes June 30, 2024, for the 2023-2024 academic year. However, the schools and scholarships you’re applying to may require you to fill out your FAFSA before June 30 of next year, so it’s best to check each school’s and program’s FAFSA deadlines to avoid losing out on aid.

3.    The IRS Data Retrieval Tool can help you avoid making mistakes. This tool auto-fills your (and your parents’) latest tax information from the IRS database. So instead of having to figure out what the adjusted or non-taxed income was on your parents’ tax return, you can let the tool do it for you.

4.    It doesn’t pay to guess. Not sure how to fill out a section or what the answer is? FAFSA offers helpful tips and clarifications throughout each section of the FAFSA form, so be sure to read all the boxes that appear. Inaccurate answers can result in receiving less financial aid than you’re eligible for as well as needing to file corrections and send in supporting documentation.

Recommended: Navigating Your Financial Aid Package

The Takeaway

Filling out the FAFSA is a great first step to pay for your dream school. This is one of the best ways of getting scholarships and grants you won’t have to pay back or government-backed loans to help you pay for college-related costs. By learning how to properly fill out the FAFSA (and then actually doing so!), you can increase your odds of getting a bigger financial aid package.

However, if your financial aid package doesn’t cover all your college expenses, you may want to consider a private student loan. It’s important to note that private student loans don’t offer the same protections as federal student loans, like income-driven repayment plans or deferment options. For this reason, private student loans are generally considered only after other sources of funding have been considered.

SoFi’s private student loans are available for undergraduate and graduate students, as well as parents. In just a few minutes, you can apply online for student loans and be well on your way to financing your education.

Find out more about SoFi Private Student Loan options.

Header photo credit: iStock/Vladimir Sukhachev

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SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs. SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility-criteria for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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When applying for financial aid to fund their college educations, students and their parents are often introduced to words they’d never heard of before. To help you learn the lingo, here are definitions of 14 important financial aid terms, plus information about different ways to pay for college.

Financial Aid Terminology for Parents

1. College Grants

Grants are used to help fund a qualifying student’s college education, and unlike loans, they typically don’t need to be paid back. They are often based on financial need and are available from private and public organizations. Some grants have criteria that a student must meet, such as maintaining a certain grade point average. Here is information about college grants from the U.S. Department of Education .

2. Cost of Attendance (COA)

A student’s cost of attendance (COA) is the total of all costs to attend college in a given year. This includes tuition, room and board, book and supplies, loan fees, costs associated with studying abroad or managing a disability, and more.

A COA is different from an invoice a college may send a student, which is more comprehensive. The COA figure is used to determine how much financial aid a student may be eligible to receive. Anyone who receives a form of financial assistance is not responsible for paying the full COA.

3. Expected Family Contribution (EFC)

The expected family contribution (EFC) is a number colleges use to determine a student’s eligibility for financial aid. It’s calculated using a formula that considers a family’s income, savings, investments, benefits, family size, and more.

Starting with the 2024-2025 school year, the EFC will be replaced by the Student Aid Index, or SAI. Both serve a similar function, but there are key differences in how they work and how students receive financial assistance. Here’s where you can find more information about the SAI.

Recommended: How the Middle Class Affords College

4. Free Application for Federal Student Aid (FAFSA)

FAFSA is the official government form that students must fill out to be eligible for federal student loans and grants. Filling the FAFSA out does not guarantee that a student will receive aid, but it must be completed annually in order to be considered for the upcoming academic year. The information provided will be used to calculate a student’s expected family contribution (see that definition above). Here’s more information about completing a FAFSA application.

5. Financial Aid Award Letter

A financial aid award letter goes by a few different names: merit letter, award letter, a financial aid offer or a financial aid package. But no matter what you call it, once a student fills out a FAFSA, they’ll receive one of these letters from each college that accepts them. A typical letter will list a student’s cost of attendance, expected family contribution, awarded grants and scholarships, work-study details, and federal student loans. Many schools now provide this information electronically.

6. Merit-Based Assistance

Merit-based assistance is based upon a student’s abilities and accomplishments. This can include their grade point average, athletic achievements, or another skill. Financial need is not typically taken into account. Students generally receive merit-based aid directly from the college.

7. Need-Based Assistance

Need-based assistance is provided to students based on their financial needs, and is commonly offered by federal and state governments, colleges, and other organizations. There are three types of federally granted need-based financial aid: Pell Grants, work-study programs, and Subsidized Direct Student Loans. Each of these is defined in this post.

To qualify for federal need-based aid, a student must fill out the FAFSA. Colleges may require additional information for non-federal aid. Simply applying for need-based aid does not mean a student will receive it, though applying early may potentially improve their chances.

8. Parent Loans/Direct PLUS Loans

Parents can borrow funds to help their children pay their college expenses, including through federal loans called Direct PLUS Loans. When this type of loan is provided to a parent borrower, it’s often called a Parent PLUS Loan. Not all schools participate in the Direct Loan Program, so students should check with their colleges of choice to see if this type of funding is an option. Private parent loans are also available through lenders, including SoFi.

Note that graduate or professional students are also eligible to borrow Direct PLUS Loans.

9. Pell Grants

A Pell Grant is a federal form of aid based solely on need. It’s the biggest source of federal grants. To receive these funds, a student must fill out the FAFSA and meet eligibility requirements. Because this is a grant and not a loan, it typically does not need to be repaid.

10. Scholarships

A scholarship is a type of funding awarded to students to help them pay for a college education. They are available through federal and state government sources, colleges, private and public organizations, and more.

Unlike loans, scholarships typically don’t need to be repaid. They can be based on need or merit, or a combination of the two. There is a wide range of scholarship possibilities, so it can be worthwhile for the student to research their options and apply for ones that seem to be a good match.

Recommended: Scholarship Search Tool

11. Student Aid Report (SAR)

After a student completes their FAFSA, they’ll receive a student aid report (SAR). This report provides basic information about the student’s federal student loan eligibility and includes the answers they provided on the FAFSA application. The SAR also contains the Expected Family Contribution (EFC) and a four-digit Data Release Number (DRN), which students may need to provide when changing information on their FAFSA. It’s important to review the entire report and address any errors, as colleges use that information to determine aid eligibility.

12. Subsidized vs Unsubsidized Assistance

Federal student aid can include both Direct Subsidized Loans and Direct Unsubsidized Loans, which are also referred to as Stafford Loans or Stafford Direct Loans. There are notable differences between the two.

Subsidized loans are reserved for undergraduate students with demonstrated financial need. The school determines the amount available for each qualifying student. The government will pay the interest on a subsidized loan as long as the student is enrolled in school at least half time (generally 6 credit hours per semester), for six months after the student leaves school (called the “grace period”), and during deferment periods.

With unsubsidized loans, students do not need to demonstrate financial need to qualify, and both undergraduate and graduate students are eligible. Loan limits are higher than with subsidized loans, but interest rates are generally higher, too. The borrower is responsible for interest that accrues from the day their funds are made available. If a student chooses not to pay the interest while they’re in school, it will continue to accumulate.

13. Work-Study

The federal government’s work-study program provides college students who have demonstrable financial need with part-time jobs to help them earn money for their college education. The program attempts to match a student with work in their area of study or in jobs that benefit the community. Students who are interested in this program should check with their colleges of choice to see if they participate.

Here is additional college financial aid glossary , plus financial aid secrets that may help students more effectively fund their education.

Overall College Financial Aid Plan

When it comes to planning how to pay for college, it helps to understand all the available options and how they may be combined. Students and their parents may have money to contribute to help cover the expenses. Scholarships and grants can reduce the bill and typically don’t need to be paid back, while work-study opportunities allow students to earn money to cover some expenses while in college.

Subsidized loans give qualifying students some time to establish themselves financially before the debt starts accruing interest they’ll have to pay. Meanwhile, unsubsidized or private student loans can help borrowers cover remaining costs.

Recommended: Guide to Private Student Loans

Private Student Loans at SoFi

Private student loans, including those from SoFi, can come in handy once you’ve exhausted your other loan options. Borrowers can use the funds to cover all school-certified costs, including tuition, books, room and board, transportation, and more.

SoFi offers fee-free private student loans for undergraduates, graduate students and their parents. These loans don’t have any fees, and borrowers can choose between four different repayment plans. When applying for a SoFi loan, students can quickly and easily find out if they prequalify and at what rates. Adding a cosigner is also simple — just a few clicks away.

SoFi private student loans offer competitive interest rates for qualifying borrowers, flexible repayment plans, and no fees.

FAQ

What is a cosigner?

A cosigner helps assure lenders that someone will pay back the loan. Their income and financial history are factored into the loan decision, and their positive credit standing can benefit the student’s loan application.

What’s the difference between a student loan lender and a student loan servicer?

Lenders lend borrowers money to help cover school-related costs. Servicers send borrowers their monthly bill, process payments, field customer service requests, and handle other administrative tasks.

How do I calculate my college costs?

There are several online tools to help students estimate the potential cost of attending college. Net price calculators, for instance, are available on a school’s website and give cost estimates based on basic personal and financial information provided by the student.

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SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs. SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility-criteria for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

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Community colleges offer a more affordable path to a Bachelor’s degree for students who are interested in transferring to a four-year institution. Students at community college can fulfill general education requirements on a flexible schedule while earning their associates degree. However, community colleges don’t offer a Bachelor’s degree option and can lack student life and extracurricular opportunities.

Community colleges can be a great fit for some students while others may prefer to start out at a four-year college or university. As you explore your choices, review the differences between community colleges and four-year universities. See how they stack up with what you’re looking to get out of a college career.

What Is a Community College?

Community colleges are one type of post secondary institution. Sometimes called junior colleges, these are educational institutions that offer two-year degrees and a path to transferring to a four-year college or university.

Community College vs University: How They Compare

Community colleges, as mentioned generally offer two-year associates degrees. In comparison, colleges and universities often offer four-year degrees such as a Bachelor of Arts or Sciences.

Similarities

Both types of colleges have some similarities, including the types of aid that you may receive to attend.

Financial Aid

It’s possible to get student loans for community colleges. Students at both community colleges and four-year schools may qualify for the same types of federal financial aid. These options may include scholarships, grants, and federal student loans.

Prerequisite Courses

Community colleges will offer some of the same prerequisite courses as universities. Classes like General Chemistry 101 or Microbiology 101 are similar at community colleges and students may be able to transfer these prerequisite courses toward a four-year degree if they choose to transfer.

Academic Challenge

It’s easy to think of community college classes as a breeze to complete — but, in many cases, community colleges offer academically rigorous classes that cover material comparable to those offered at four-year institutions. Additionally, community college professors do not conduct research, so there may be more of a focus on in-classroom instruction at community colleges than at four-year colleges or universities.

Differences

There are also plenty of differences between attending a community college vs. university. In addition to the estimated time to earn a degree and the type of degree available, these include things like the cost of attendance, class size, and the application process.

Cost

Attending a community college can be significantly cheaper than going to a four-year university. For example, at schools that are part of the California Community College system, the cost of classes is $46 per credit unit. According to the Education Data Initiative, the average cost per credit at a four-year university with in-state tuition is $390.

Class Size

The average class size can vary dramatically depending on the school you attend. Community colleges typically have class sizes that hover around 25 to 30 students, depending on the course and school. Some four-year universities can have class sizes into the hundreds, especially for intro-level courses.

Application Process

The application process at a university vs. community college can be much more competitive. At many four-year colleges, the application process consists of requirements like a college essay, recommendation letters, and high school transcripts. Additionally, schools may have strict deadlines for admissions each year.

Community colleges often offer more flexibility in the application process. Many community colleges are open access, meaning almost anyone can enroll in classes. There may be restrictions for certain programs or classes, for example, classes required for nursing programs.

Campus Life

While some community colleges may offer on-campus housing for students, a large number of them will continue to live at-home or off-campus. This can make on-campus life feel very different than at a four-year college where most students live on-campus.

Similarities and Differences Between Community College vs. University
Topic	Community College	Colleges and Universities
Financial Aid	Both types of schools may be eligible for federal student aid.	Both types of schools may be eligible for federal student aid.
Prerequisite Courses	Both types of schools offer general education or prerequisite courses like General Chemistry 101 or American History 101.	Both types of schools offer general education or prerequisite courses like General Chemistry 101 or American History 101.
Cost	Community colleges are significantly cheaper than four-year institutions.	Colleges and universities are generally more expensive than community colleges.
Class Size	Class sizes at community colleges are generally smaller than at four-year institutions.	Class sizes may be larger at some colleges or universities. At some schools, intro level courses can have hundreds of students in a single class.
Application Process	The application process for community college is usually more lenient than at four-year institutions.	Colleges and universities often have strict requirements that may include a college essay, letters of recommendation, and standardized testing.
Campus Life	Because many students live off-campus, campus life may be less robust than at four-year institutions.	Many colleges and universities are known for having a rich on-campus life available for students and offer a variety of extracurricular activities.

Pros and Cons of Attending a Community College

There are both downsides and benefits of community college. Community colleges can offer an affordable path to get a four-year degree, but transferring and a lack of on-campus community can detract from the community college experience.

Pros of Community College

Cost

One of the top pros in the community college column is the price tag. As previously outlined, courses at community college can be significantly less costly than at a four-year institution. For students who are paying for college without parents’ help, starting at a community college can help them significantly lower the cost of their overall degree.

Additionally, students may be able to continue living at home with their family, which can cut costs even further since they won’t be paying for room and board.

Flexibility

Community colleges have flexible scheduling options that can make working while you are in school easier.

Students may also be able to take a variety of classes if they are not sure what field or major they’d like to pursue at a four-year college.

Qualified Professors and Small Class Sizes

As already mentioned, community colleges may offer smaller classes. These small class sizes can lead to more hands-on professors and lecturers — who may be just as qualified as those at larger universities.

Cons of Community College

Limited Curriculum and Degree Programs

Community colleges can be a good place to explore interests and fulfill requirements for a four-year degree. But they may be limited in the types of courses available. Students who are interested in exploring or fulfilling general education programs.

Need to Transfer for Bachelor’s Degree

To pursue a Bachelor’s degree, community college students will need to transfer to a four-year institution.

Lack of On-Campus Life

Because many students live off-campus, on-campus activity and extracurriculars may be limited.

Pros and Cons of Attending a Community College
Pros of Attending a Community College	Cons of Attending a Community College
Cost. Community colleges are generally more affordable than other educational institutions.	Limited Curriculum and Degree Programs. Students may be limited in the types of programs and degree options available.
Flexibility. Students can choose from a variety of class times that may make it easier to work while studying and can allow them to explore a variety of academic interests.	Need to Transfer for a Bachelor’s Degree. Community colleges typically offer up to an Associate’s Degree.
Qualified Professors and Small Class Sizes. Class sizes at community colleges hover around 25 to 30 students.	Lack of On-Campus Life. Campus life and extracurriculars may be more robust at a four-year institution.

Pros and Cons of Attending a University

Attending a four-year college or university can have pros and cons — just like its community college counterpart. Some benefits of universities include improved long-term earning potential and the opportunity to build a network. The major downside can be the steep cost.

Pros of a University

Long-Term Earning Potential

Bachelor’s degrees can lead to a significant boost in earning potential. According to the Georgetown University Center on Education and the Workforce, individuals with Bachelor’s degrees can earn up to 31% more than those with an associate’s degree.

Plus, a Bachelor’s degree is sometimes a prerequisite for careers in some fields, like human resources, marketing, or computer science and software engineering.

On-Campus Life and Extracurriculars

Many colleges have a rich on-campus life with an active student body and a variety of extracurriculars. Depending on your interests and the school you attend you could participate in the school’s television and radio station, join an intramural sports team, and more.

Build a Network

Many colleges have a strong and extensive alumni network that students can tap into post-graduation while they look for a job. While you are attending school, you’ll also build soft-skills like time-management, organization, and interpersonal communication that can be invaluable in the professional world.

Cons of a University

Cost

One of the biggest downsides to college is the cost. According to the College Board, the average cost of tuition and fees at private four-year institutions was $38,070 during the 2021-2022 school year. Add in costs for room and board and other living expenses and it can be easy to see why some students may be dissuaded from pursuing a four-year degree.

Social Distractions

With all of the hustle and bustle at a college, it can be challenging to balance work, well-being, and fun. With parties, extracurriculars, sports, and more it can be easy for students to get distracted from their studies.

Can You Combine Community College and University?

Yes! It’s very possible to attend a two-year community college and then transfer to a four-year college to complete your Bachelor’s degree. Many community colleges have articulation agreements in place with local state schools that can make it easier to transfer credits.

Check in with your academic advisor as you complete community college classes to be sure they will transfer to the college of your choice.

Figuring Out What’s Right for You

As you’re crafting your own pro/con list, here are some questions to ask yourself before making your decision.

•   Do I want to live at home or on campus? If you’re hoping to be close to family or need to stay in town for a job, finding a community college campus nearby could be the right call.

•   Do I want to join clubs and organizations? While community colleges offer lots of activities, universities typically provide a lot more for students to partake in.

•   Do I have enough money to go to a big school? Whether a major state school or a private college or university, student loan debt could follow you for a long time after you graduate.

•   Where is my support system? Not having friends and loved ones around may make school more difficult for some. If your support system is vital to you, and you can’t find a big school near your close family, opting for a community college might be better.

•   Is this the best option for my major? Determining what you want to pursue as a career is a big deal. If you aren’t certain about what you want to do, you might not want to move far away quite yet. Or alternately, maybe getting some distance from your close friends and family will help you find your direction.

The Takeaway

Community colleges can offer a more affordable path to a four-year degree. Universities can offer a rich on-campus experience and a strong long-term earning potential. Depending on your personal situation, either or both could be a good fit. Once you decide where you want to go, you’ll need to figure out how to pay for college. Typically, students rely on a few different funding sources to fund their education including scholarships, grants, work-study, and student loans.

If you’ve exhausted your federal student loan options, private student loans may be something to consider. They can help fill in funding gaps, but keep in mind, may lack borrower protections available to federal student loan borrowers.

SoFi doesn’t offer funding for community college classes, but does for undergraduate degrees and some graduate certificate programs. If you’re looking for funding to cover some higher education costs, consider SoFi. Student loans from SoFi have no fees and as a SoFi member, borrowers will qualify for additional benefits like career coaching.

Cover up to 100% of school-certified costs including tuition, books, supplies, room and board, and transportation with a private student loan from SoFi.

FAQ

Is community college easier academically than university?

Community colleges often have qualified professors and courses that are comparable to those offered at a four-year institution. The course selection and degree programs available at a community college may be more limited than at a university.

Is getting a degree from a community college worth it?

Getting a degree from a community college can be worth it. In addition to securing an associate’s degree, you may be able to transfer to a four-year institution to continue your education to get a Bachelor’s degree. Doing this can be less expensive than pursuing a Bachelor’s degree exclusively at a four-year institution.

Is going to community college a good way to cut down on the cost of a 4 year college degree?

The cost of classes at a community college is typically significantly cheaper than the cost at a four-year institution. Starting out at a community college transferring to complete your degree can significantly cut the cost of tuition. Plus, community college students may have the option to live at home which can reduce room and board expenses.

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Photo credit: iStock/simonkr

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs. SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility-criteria for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change. SoFi Bank, N.A. and its lending products are not endorsed by or directly affiliated with any college or university unless otherwise disclosed.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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All student loans are not alike. In fact, shopping around for a loan is not so different from buying a car. Some lenders offer better deals than others. And it helps if you know a little something about what’s “under the hood.”

Read on to find out what to look for when comparing student loans — from interest rates and fees to payback terms and special protections for borrowers. Soon, you’ll be able to choose a loan with confidence that it’s the right one for you.

But First, the FAFSA

Before turning to private student loans, you’ll want to complete the Free Application for Federal Student Aid, or FAFSA. Federal financial aid includes grants, scholarships, and work-study programs, which don’t need to be paid back. The FAFSA also gives you access to federal student loans, which are generally a better deal than private loans. The financial aid office at your preferred college can also help you navigate the different types of loans available to students.

4 Key Factors to Consider When Comparing Loans

Once you’ve completed the FAFSA, you may realize that you’ll need to cover some education costs with a private lender. Weighing the factors below will help you choose the right lender and loan for you.

1. How Much Do You Need to Borrow?

When calculating how much you’ll need to borrow the first year, answer the following questions to the best of your knowledge:

•   Will you have an off-campus job?

•   Will you receive any tuition assistance from your family?

•   How is tuition structured at your institution? At some colleges, you may pay per credit. Other colleges have flat tuition, regardless of how many credits you take.

•   Living expenses should be a part of your calculations. Are there ways to trim those costs? For example, can you live at home or with roommates? Can you rely on public transportation instead of your own car?

•   How many years will it take to complete your course of study? Does it make sense to take an accelerated program and complete coursework in fewer years? On the flip side, can you stretch out coursework to make more time for a part-time job?

•   Do you need to spend all four years at your first-choice college? Some students minimize their overall tuition bill by spending a year or two at a state or community college before transferring to a pricier dream school.

This isn’t an exact science, so don’t sweat the nickels and dimes. The goal is to avoid over-borrowing, because you’ll be paying interest on your loans. Also, there’s no rule that says you need to accept the largest loan offered, if you can get by on less.

You may even want to look at how well your future income will cover your bills after graduation. Search job listings and talk to recent grads in your potential field of study to get the scoop on entry-level salaries.
All this will give you a solid understanding of how much you’ll need to borrow. The next step is to compare the loans available from a variety of lenders.

Recommended: Cash Course: A Student’s Guide to Money

2. Do You Need a Cosigner?

Private loan terms are mostly determined by the borrower’s financial history, employment status, and credit score. The longer your history and higher your score, the better your interest rate. Since most students have a minimal credit history, they often apply for student loans with a cosigner.

A cosigner is someone who agrees to pay the loan in case the main borrower is not able to. A cosigner needs to provide financial information (such as employment status) and agree to have their credit checked. Should there be any issues with repayment on the loan, both the borrower’s and the cosigner’s credit may be affected.

Some borrowers can have a hard time finding someone with good credit who is willing to cosign. Knowing before you begin the loan process whether you’ll need a cosigner and who that cosigner will be can speed the application process. (If you have a minimal credit history, you’ll probably need a cosigner regardless of which lender you use.) Learn more about whether you need a cosigner.

3. What Are the Loan Terms?

Your loan “terms” will determine the overall cost of your loan and your monthly payments. These terms include:

Interest Rate

Your interest rate will partly determine how much money you owe over the life of the loan. Many private lenders have an online tool that allows potential borrowers to see their estimated interest rate before they apply for the loan. First, you can check out the average interest rates for student loans.

Interest rates may be either fixed or variable. A fixed-rate means the rate won’t change during the life of the loan. A variable rate can fluctuate over time. Variable rates may start lower than fixed rates but can go higher in the future. Sometimes, a variable rate makes sense for people who plan to pay off the loan quickly. A fixed rate is a good idea for people who want to budget the same amount per month.

Length of Loan

A shorter loan term typically has higher monthly payments but is less expensive, since interest has less time to accrue. A longer repayment period usually has lower monthly payments, but will cost you more in interest overall.

Another factor to consider is prepayment penalties. This is when a lender charges you a fee for paying off your loan before the end of the loan term. Many private lenders allow prepayment without any fees, but make sure to check with any lenders you are considering.

Repayment Options

Repayment schedules vary by lender. Some may allow borrowers who are in school to defer payment until after they graduate. Others may allow student borrowers to make interest-only payments.

Find out whether or not the lender offers flexibility in switching repayment plans during the life of the loan.

Loan Fees

Lenders make money on loans by charging borrowers interest. Some student loan lenders also charge additional fees. Student loan fees may include:

•   Origination fees – charged by the lender for processing the loan

•   Late payment fees

•   Returned-check fees

•   Loan collection fees

•   Forbearance and deferment fees

Before you choose a private loan, find out what fees (if any) you may incur.

Recommended: How Do Student Loans Work?

4. How Good Is the Lender’s Customer Support?

The above three factors are what’s known as “loan terms.” The last factor has to do with how the lender will support you, the borrower, during the life of the loan. This includes:

Customer Service

If you have questions or concerns, how can you contact your lender? Can you call a live person, or must you deal with a chatbot?

Financial Tools

Some lenders offer financial resources and tools to their borrowers, such as webinars, articles, and calculators.

Unemployment Protection

Some lenders may offer benefits that protect borrowers who are temporarily unable to pay their bills due to unemployment.

The Takeaway

If you’re new to borrowing money — as most undergrads are — you may not know what to consider when choosing a student loan. Before you shop around, determine how much you need to borrow by creating a college budget that includes tuition and fees, books and supplies, and living expenses. Then decide whether you’ll need a cosigner for the loan — someone with good credit who can help secure you a lower interest rate than you’d qualify for on your own. When comparing loans from different lenders, you’ll want to look at the interest rate, length of the loan, any fees and penalties, and the lender’s reputation for customer service. It all comes down to saving money over the life of the loan. If you’re careful, you won’t pay more than you need to.

If you’ve exhausted your federal financial aid options and still need funds to cover your cost of attendance, private student loans are one option to consider. Private student loans with SoFi have no fees, including no origination fees or late payment penalties.

SoFi private student loans offer competitive interest rates for qualifying borrowers, flexible repayment plans, and no fees.

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Photo credit: iStock/fizkes

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs. SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility-criteria for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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