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What are the categories of financial aid?

Various types of financial aid may be combined into a financial aid package. How much you receive will depend on your financial need and whether you qualify for merit-based awards. In most cases, the school won't tell you how much aid you qualify for until you've been accepted for enrollment and have completed the financial aid form.

  • Merit-based assistance is awarded to students with a particular skill, achievement, talent or characteristic, usually as a scholarship. Most scholarships require separate applications, often with written essays and referrals.

  • Need-based assistance is provided to students who cannot afford college using only their own or their family's financial resources. The level of need is determined through federal, state and institutional formulas. The most common forms of need-based aid are grants, work-study programs and subsidized student loans, which means the federal government pays the interest for you while you are in school. You must file the Free Application for Federal Student Aid (FAFSA) for federal and state need-based aid. Your college may require additional forms for institutional aid.

  • Grants and Scholarships are types of financial aid that do not have to be repaid.

  • Self-help aid is aid that requires repayment, such as student and parent loans.

University of North Dakota (UND) flight school student Max Kahlhamer didn't qualify for any merit-based scholarships. But he used his savings and federal student loans to help pay for his education at UND in Grand Forks. He also received a gift scholarship awarded to students pursuing an aviation career, and he receives free room and board in exchange for his work as a resident assistant.

"That's a big help, not paying for room and board," he says. "I can keep costs low."


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OCAP believes that financial literacy and understanding the financial aid process are critical aspects of college planning and student success. OCAP staff who work with students, parents, educators and community partners in the areas of personal finance education, state and federal financial aid, and student loan management do not provide financial, investment, legal, and/or tax advice. This website and all information provided is for general educational purposes only, and is not intended to be construed as financial, investment, legal, and/or tax advice.