Student financial aid refers to funds given or lent to students by the government or other organizations to help them pay for college or any other form of higher learning. Financial aid helps students and their families pay for higher education costs such as tuition, fees, course materials, and other expenses.

According to a 2021 poll by Sallie Mae and market research firm Ipsos, families spent an average of $26,373 for college during the 2020-21 academic year. Financial aid accounted for over half of the total of this amount. Hence, it is pretty clear that education is expensive, and paying for it typically requires financial aid.

Also, the National College Access Network (NCAN) reported that 90 percent of high school seniors who submit the Free Application for Federal Student Aid (FAFSA) go straight to college, compared to only 55 percent admission rate of those who do not submit the FAFSA. In 2014, the FAFSA completion rate for high school graduates was only 44 percent.

You can categorize financial aid into need-based and merit-based financial aid. Need-based aid is provided after assessing the applicant's financial ability to pay for education by the awarding institution. On the other hand, merit-based aid provides financial assistance to students based on their academic performance or other extra-curricular achievements, like showing a remarkable talent or ability in athletics, music, or other fields.

Financial aid could include grants, scholarships, work-study programs, and federal or private loans. Grants are often referred to as "gift assistance" since they are not repaid. They are available from the federal and state governments and institutions. Most grants are need-based, awarded based on an applicant's family's financial situation.

On the other hand, governments, institutions, and private groups frequently award scholarships. For example, they might be given out for academic or athletic achievement, a passion for a specific subject, or volunteer effort. Some scholarships are awarded based on ethnic or religious affiliation. Companies may also award scholarships to employees' children.

Work-study refers to a program that allows students to work part-time on or off-campus while attending school. Students can get federal work-study if they can show that they have a financial need.

Taking out a loan involves borrowing money from a bank, the government, or a lending organization. A loan must be repaid with an additional fee known as interest. Low-interest loans are available from the federal government.

College students have two options for financial aid, namely the FAFSA and the CSS (College Scholarship Service) profile. The United States Department of Education sponsors the Free Application for Federal Student Help (FAFSA). It is necessary to apply for FAFSA to be eligible for federal, state, and college aid.

On the other hand, the CSS Profile is sponsored by the College Board. Private colleges and universities largely use the CSS Profile to grant non-federal funding to attend some of the country's most prestigious and costly colleges, such as Stanford and Harvard. Students can only complete the CSS Profile if they apply to a college or scholarship program that requires it.

Finally, whether an applicant received financial help based on need or merit has no bearing on whether they must repay it. What matters is the sort of assistance accepted. Most scholarships and grants, for example, do not need repayment, while loans are meant to be repaid.