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How financial aid works: a plain guide for families

Financial aid can make college far more affordable than its published price, but the system has its own vocabulary. This guide explains the basics for the United States. Other countries run very different systems, so if you live or plan to study elsewhere, check the official government student finance website for that country.

The main types of aid

• Grants: money you usually do not repay, often based on financial need. The largest US example is the federal Pell Grant. According to Federal Student Aid, the maximum Pell Grant for the 2026–27 award year is $7,395.
• Scholarships: money you do not repay, based on merit, talent, background, field of study or need. They come from colleges, companies and community organizations.
• Work-study: a part-time job, usually on campus, that helps pay for expenses.
• Loans: money you borrow and must repay with interest. Federal student loans generally have more protections than private loans.

Step 1: Complete the FAFSA

The Free Application for Federal Student Aid (FAFSA) is the starting point for federal aid and is used by most states and colleges too. It is free; never pay a website to file it. According to the U.S. Department of Education, the 2027–28 FAFSA opened in September 2026, earlier than the usual October 1 date.

The FAFSA calculates a Student Aid Index (SAI), which colleges use to work out your need. Some private colleges also ask for the CSS Profile, a separate form run by the College Board.

File early. Many states and colleges have priority deadlines and some award money while funds last.

Step 2: Understand the 2026 loan changes

Federal loan rules changed on July 1, 2026. According to Federal Student Aid and college financial aid offices, Parent PLUS loans for new borrowers now have limits of $20,000 per year and $65,000 in total for each dependent student, where before there was no fixed cap. If you are relying on parent borrowing, plan for these limits and ask each college's aid office how they affect you.

Step 3: Compare offers carefully

Each college sends a financial aid offer. These can look very different, so put them side by side:

Every college must publish a net price calculator on its website. Use it before applying to see an estimate.

• Find the total cost of attendance: tuition, fees, housing, food, books, transport and personal costs.
• Subtract only grants and scholarships. The result is your net price.
• List loans separately. A loan reduces what you pay now, not what you pay overall.
• Check whether scholarships renew each year and what grades are required to keep them.

Step 4: Ask questions, and appeal if needed

If your family's situation has changed, such as a job loss or medical costs, contact the college's financial aid office and ask about a professional judgment review. Be polite, specific and ready with documents. There is no guarantee of more aid, but it is always reasonable to ask.

Beware of scams

Be careful of anyone who charges a fee to find aid or guarantees a scholarship. The official FAFSA site is studentaid.gov.

Common words, explained

• Cost of attendance: the full estimated cost of a year at a college, including living costs, not just tuition.
• Net price: what you would pay after grants and scholarships are taken away.
• Subsidized loan: a federal loan for students with need where the government pays the interest while you are enrolled at least half time.
• Unsubsidized loan: a federal loan where interest builds from the start.
• Verification: a process where a college asks you to confirm the information on your FAFSA. It is routine; respond quickly with the documents requested.

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