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A Guide to the Different Types and Sources of Student Aid

College Student

It’s a well known fact that tuition costs and college expenses are rising. Luckily, future and current students have a lot of resources available to help ease the burden of paying for school. Perhaps one of the biggest resources available is student aid. Student aid can come from a lot of different sources, and there are a lot of different types of student aid, so it’s extremely helpful to know what is what. Not sure where to start? That’s where we come in! Here we’ve got a complete guide to the different types and sources of student aid.

Types of Aid vs. Sources of Student Aid

With so much jargon that can be confusing surrounding student aid, it’s important to know the basics. That being said, what’s the difference between a type of student aid and a source of student aid?

The type of student aid is what kind of aid is being received. This could be in many different forms, like a loan, scholarship, grant or work study (which we’ll get to). Accordingly, the source of student aid is where the type of aid comes from. This could be the federal government, state governments, institutions, and even private entities like banks (which we’ll also cover!).

Let’s explore all the different types of student aid and their sources!

Federal Student Aid


Federal Student Aid is probably a source and type of aid you’ve heard of before. Federal Financial Aid is an office in the U.S. Department of Education, and is the largest provider of student financial aid in the United States. Federal student aid offers three main types of aid: grants, loans, and work-study.

Anyone seeking Federal Student Aid must fill out a FAFSA form, or the Free Application for Federal Student Aid. For more information on the FAFSA and a complete guide to filling the FAFSA form out, check out our article How to Complete Your FAFSA Form.


Grants in general are often called “gift aid” because they don’t have to be paid back except in certain scenarios. A few reasons for a grant needing to be paid back are a student withdrawing early from an institution or program the grant was for, or a student’s enrollment status changing.

Grants are typically “need based,” meaning they are based on the student’s estimated financial need. Grants of course come from the federal government, but can also come from other sources, like state governments, institutions or schools, or private organizations.

There are four types of federal grants:

  • Federal Pell Grants
    • According to the Federal Student Aid website, Federal Pell Grants are awarded to undergraduate students who display great financial need. They must not have already earned a degree such as a bachelor’s, graduate or professional degree.
  • Federal Supplemental Educational Opportunity Grants (FSEOG)
    • These grants are also for undergraduate students that demonstrate exceptional financial need. They are only offered through participating institutions and schools, and the program is administered right through the participating school.
  • Teacher Education Assistance for College and Higher Education Grants (TEACH)
    • TEACH Grants are for those who plan on becoming teachers, specifically in high-need or low-income areas. They are unlike other types of grants because they require the student to take certain classes and then go on to keep a certain type of job in order to prevent the grant from turning into a loan. If the grant holder doesn’t hold up the requirements, the grant turns into a loan and needs to be paid back.
  • Iraq and Afghanistan Service Grants
    • These grants are for those who have had a parent or guardian pass away due to military service in Afghanistan or Iraq. To be eligible, the student must have been no older than 24 at the time of the parent’s or guardian’s passing.


Loans are financial aid that need to be paid back with interest. Federal loans are considered some of the best types of student loans as they typically have fixed interest rates, there is no credit check or cosigner on most, and they don’t begin repayment until the loan holder is out of college.

Some loans are “need based” like grants, but others are not need based. They can also come from a variety of sources, which of course includes the federal government, but can also include private organizations like banks.

There are four main types of federal loans:

  • Direct Subsidized
    • Direct Subsidized loans are based on financial need and are available to undergraduate students.
  • Direct Unsubsidized
    • Direct Unsubsidized loans are not based on financial need, and are available to undergraduate students, graduate students, and professional students.
  • Direct PLUS
    • Direct PLUS loans are for graduate students, professional students, and parents of dependent undergraduate students to help aid in paying for education expenses that aren’t already covered by other financial aid sources. These loans aren’t based on financial need, but a credit check is required.
  • Direct Consolidation
    • These loans are for those who may have several different loans; Direct Consolidation loans give students the chance to consolidate all of their loans and repay them through one servicer.

How Much Can Be Borrowed With Loans?

Federal loans have limits to how much can be borrowed. Undergraduate students are eligible to borrow from $5,500 to $12,500 per year based on the year they are in school and what their dependency status is. This applies to Direct Subsidized and Direct Unsubsidized loans. Graduate students can borrow up to $20,500 in Direct Unsubsidized loans and may add on Direct PLUS loans for additional aid if needed.

Work Study

Work study is another form of federal student aid. It provides part time jobs to undergraduate and graduate students that show they have financial need. Students that participate in work study can work jobs that are typically on campus, but may sometimes be off campus too. In order to be eligible for work study, you must demonstrate financial need, and your school must be participating in the Federal Work Study Program. Earnings and hours depend on the institution and job, and can vary greatly.

Additional Types of Student Aid


There are additional types of student aid rather than just federal student aid. These can come from a lot of different sources, like state governments, institutions and schools, and private entities.


Scholarships are a huge and popular resource for students. Typically, scholarships do not need to be paid back. Additionally, scholarships are usually more merit-based than need-based, meaning they are more based on grades, test scores, performance, and other things than just financial status.

Scholarships can be found from a lot of sources. One source that is particularly beneficial to students is through the school or institution they’re attending. To find scholarships through your school or institution, talk to your financial aid office or visit your financial aid office’s website online. Another popular source to find scholarships is by searching online. Many of those who provide scholarships post their scholarship opportunities online for students to find. Beware of scholarship scams when searching for scholarships on the internet, though.

Applying to scholarships is a huge part of the scholarship process. You can apply to scholarships wherever you found them, whether it be online or through your school. Make sure to pay attention to deadlines!

State Aid

A lot of states offer financial aid to its residents or those who choose to come to school in the state. State aid can come in the form of grants, scholarships, or loans but varies from state to state. State aid can be found through institutions or schools as well as through the state itself. For a list of where to find state aid complete with all 50 states, click here!

Institutional Aid

The institution or school being attended may provide its own student aid. This can come in the form of grants, scholarships, work study and financing plans. To find institutional aid options, check with the financial aid office or the school’s website!

Private Loans

Like we mentioned earlier, some student aid comes from private companies, like banks. These private companies may provide private loans for students. Most recommend that students exhaust all other options before considering private loans as interest rates can be high, aren’t guaranteed to stay the same, and applicants must have worthy credit or a cosigner with credit worthiness.

Now You Know

Student aid is a great resource for people everywhere, but it’s important to do your research on the different types of aid! Now that you know the basics, you can potentially seek out and receive some of this aid yourself. Let us know how it goes!