How Does Institutional Aid Compare to Federal Financial Aid?

Institutional aid and federal financial aid are both forms of assistance when it comes to paying for college. They just arrive from different places.

While institutional aid comes directly from your school (or institution) in the form of grants, scholarships, work-study programs or even student loans, federal financial aid is disbursed by the government.

Let’s look at the following:

What is federal financial aid?

Because your college or university will help you meet your cost of attendance with government assistance before dipping into its sources of institutional aid, let’s review federal aid first.

The Department of Education distributes federal financial aid to college and graduate students. This comes in a variety of forms, including:

• Need-based grants, such as the Pell Grant
• Federal student loans, such as Direct subsidized or unsubsidized loans
• Work-study benefits, which allow students to work part time on or off campus

With the exception of unsubsidized student loans, all of this financial aid is typically based on financial need. If you have significant financial need, for instance, you may qualify for the Pell Grant, which is money you don’t have to pay back, or might also gain access to subsidized student loans, which don’t accrue interest while you’re in school.

Unsubsidized student loans, on the other hand, are available to everyone, regardless of family income level; however, they start accruing interest from the date of disbursement.

The amount of federal aid you receive ultimately depends on your need, as well as the amount your college decides to distribute.

What’s more, there are federal student loan limits. Freshman undergraduates who are considered dependents, for instance, can only borrow up to $5,500 in their first year. Since this might not cover your full cost of attendance, you could need other sources, such as scholarships or private student loans, to fill the gap.

How do you get federal aid?

Accessing federal financial aid is easy — all you need to do is submit the Free Application for Federal Student Aid (FAFSA). The FAFSA opens on Oct. 1 each year, and it’s a good idea to submit it as soon as possible, since some aid is given on a first-come, first-served basis.

Along with submitting the FAFSA, you will also need to apply to and get accepted at a college. Once you’re accepted, your school will put together your financial aid package, which will outline how much you can receive in federal aid.

Remember that you don’t have to accept your full offer of federal student loans. To avoid taking on a burdensome amount of debt, only accept as much as you need and can reasonably afford to pay back. Otherwise, you could end up in a bad financial spot after you graduate.

What is institutional aid?

Depending on your college, your financial aid package might include institutional aid along with federal aid. Institutional aid comes from the college itself, and it typically includes grants and scholarships. Note that some institutions also offer their own work-study programs and loans, though some have committed to being so-called no loan colleges.

Since you don’t need to repay grants or scholarships, these are the best kinds of financial aid. The awards might come from the college itself, or they might come from an organization or alumni offering scholarships to incoming students.

While some of these grants might be need-based, others will be merit-based. For instance, students could get institutional aid for strong academic performance or athletics. Some schools even offer full-ride scholarships to a select group of qualifying students.

If you receive institutional aid, make sure to read over any requirements. Some awards will mandate that you maintain a certain GPA throughout school to stay eligible, for instance. Others might only be available for your freshman year and can’t be renewed for later years.

If you have any questions about the aid you receive, reach out to your financial aid office for clarification.

How do you get institutional aid?

Like federal financial aid, you’ll need to submit the FAFSA to access most institutional aid. Again, submit the FAFSA as early as possible to put yourself in the running for institutional aid.

Some colleges also require a form called the CSS Profile, which delves deeper into your family’s financial situation. You can find this form on the College Board website, and it costs $25 for your first school and $16 for additional schools, unless you have a fee waiver.

Reach out to your college to find out if it requires additional school-specific forms. You might need to apply separately for grants or scholarships from your school, as well as meet certain deadlines.

Doing your own research and speaking with a financial aid officer will help you find all the opportunities your school offers for institutional aid.

What other kinds of aid are available?

Federal and institutional aid aren’t the only kinds of financial assistance available — you might also get funding from your state or a private organization. States typically offer grants for college and scholarships to in-state students attending public universities, though other students might be eligible too.

Private scholarship organizations also offer money to students who meet certain conditions, such as getting straight A’s or doing volunteer work. You can apply for scholarships throughout your time in college to secure additional funding for school.

While some awards will require their own applications, the most important step in getting financial aid is submitting the FAFSA. This multi-purpose form opens the door to federal, state and institutional aid, all of which you can use together to pay for college.

Make sure to complete the FAFSA as soon as you can, and keep an eye out for other application forms and deadlines. By staying vigilant about financial aid requirements, you can cover the costs of college without breaking the bank.