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Financial Aid 101:
Which Option is Right for You?

By Edie Horwath
Student Services Specialist, Monroe Community College

College is one of the largest expenses an individual will have in his or her lifetime, and the cost of attending is only continuing to rise. However, with proper planning and a thorough understanding of the financial aid options available, you can significantly reduce the financial burden of a college education.

The first step for anyone making college plans is to complete the Free Application for Federal Student Aid (FAFSA). The FAFSA is the form that the federal government, states, colleges, and other organizations use to award financial aid, making it the key to accessing grants, scholarships, work-study programs, and federal student loans. Students can fill out a FAFSA for free at

Federal Aid

The U.S. Department of Education provides more than $150 billion in financial aid every year through a combination of grants, work-study programs, and loans .


Grants are a form of financial aid that generally don’t require the money to be paid back, unlike loans. There are three types of grants students can apply for: a Federal Pell Grant, Federal Supplemental Educational Opportunity Grant (FSEOG), Teacher Education Assistance for College and Higher Education (TEACH) Grant, or an Iraq and Afghanistan Service Grant.

  • Pell Grants are available to low-income students who meet the requirements of the Basic Eligibility Criteria for federal financial aid, have not earned their first bachelor's degree, and are enrolled in certain post-baccalaureate programs through participating institutions. The amount of the grant depends on your financial need, costs to attend school, status as a full-time or part-time student, and plans to attend school for a full academic year or less. These students may also be eligible for a Federal Supplemental Educational Opportunity Grant (FSEOG) at certain institutions.
  • TEACH Grants are federal grants that provide up to $4,000 per year to students who agree to teach for four years at an elementary school, secondary school, or educational service agency that serves students from low-income families and to meet other requirements. If the service obligation is not met, the grant is converted to a Direct Unsubsidized Loan.
  • Students who have lost a parent or guardian after the events of 9/11 as a result of military service in Iraq or Afghanistan may also be eligible for an Iraq and Afghanistan Service Grant. To qualify, the student must have been under the age of 24 at the time of his or her parent or guardian’s death or enrolled in college or career school at least part-time.

Work-Study Programs

Federal Work-Study provides part-time jobs for undergraduate and graduate students who qualify for financial need, allowing them to earn money to help pay education expenses. The program is available to both full-time and part-time students and encourages community service work and work related to the student’s course of study. However, this program is only offered at certain participating schools, so students should check with the financial aid office at the school(s) of their choice to see if the school participates.


Student loans are money that is borrowed for college or career school, which must be repaid with interest. There are four types of Federal Student Loans:

  • Direct subsidized loan — This loan is only available for undergraduates, and it relies on the U.S. Department of Education to pay the interest while the student is in school or during periods of deferment. So, students aren’t required to start paying the interest until up to six months following their graduation or deferment (the current interest rate for undergraduate programs is 4.53%).
  • Direct unsubsidized loan — This type of loan is available to both undergraduate and graduate students, and it requires the borrower to begin paying interest as soon as they start borrowing (the current interest rate for graduate programs is 6.08%).
  • Direct PLUS loan —This loan is available for graduate and professional students, and for parents of dependent undergraduates. Like the Direct Unsubsidized Loan, the borrower is responsible for paying the interest as soon as they begin borrowing.
  • Federal Perkins Loan — This loan is available for undergraduate and graduate students through participating schools. With a Federal Perkins Loan, no interest accrues while the student is in school or in a grace period and during periods of deferment.

Compared to private student loans, federal student loans often have lower fixed interest rates, flexible repayment options, and many other benefits that you won’t find elsewhere.

State Aid

New York State offers various financial aid options for students, the most common of which are the NYS Tuition Assistance Program (TAP) and the Excelsior Scholarship Program.


TAP helps eligible New York residents pay tuition at approved schools in New York State. Depending on the academic year in which you begin study, an annual TAP award can be up to $5,165. TAP is a grant, which means it does not have to be paid back.

TAP is also available for students attending a SUNY, CUNY, and not-for-profit independent degree-granting college on a part-time basis. To be eligible for part-time TAP, students must be a first-time freshman or have earned 24 credits or more in two consecutive semesters while maintaining a “C” average.

Excelsior Scholarship Program

The Excelsior Scholarship Program, in combination with other student financial aid programs, allows students to attend a SUNY or CUNY college tuition-free. Applicants must be a NYS resident for more than one year, have a household income of $125,000 or less, and be pursuing an undergraduate degree at a SUNY or CUNY college, among a few other restrictions.

Aid for Part-Time Study (APTS)

Another popular New York State grant is Aid for Part-Time Study (APTS). Financed by NYS in conjunction with participating educational institutions throughout the state, this program provides grants to eligible part-time undergraduate students taking 3 -11 credits per semester. Students must be matriculated in an approved program and meet the state’s income guidelines.

To learn more about the other grants offered by New York State, as well as offered scholarship programs, visit


While everyone hopes to earn a scholarship from his or her university of choice, these scholarships rarely yield the return you might hope for. Instead, students should take the time to search and apply for scholarships elsewhere; there are currently $46 billion in scholarships available for perspective college students, and many of them go unused. A simple internet search can help you find the right scholarship for you—supplementing any federal or state aid you might receive and further easing the financial burden of higher education.

Getting Started

While financing your college education may seem daunting, there are a few key steps you can take to get a head start on getting the financial aid you need:

  1. Complete your FAFSA early. It’s important to complete your application as early as possible—before you start applying for or visiting colleges, even—so that you will know right off the bat what your financial aid package will be.
  2. Apply early to schools. Once you receive your financial aid package, make sure you’re applying early enough to schools so that you have plenty of time to speak to the financial aid offices at the school(s) of your choice so that you can get a better sense for any additional financial aid they can offer. What many students don’t realize is that there are several tactics they can use to negotiate more affordable options with college admissions, particularly when it comes to private schools.
  3. Utilize your school counselor. School counselors are college experts. In addition to conducting an online search, be sure to visit your school counselor to see if there are any scholarships they know of for which you might qualify.
  4. Avoid taking out a loan (if you can). Avoid taking out loans if you can, even if that means attending a community college first. Many community colleges, including MCC, offer 2+2 Dual Admission Degree Programs which are guaranteed transfer programs offered by the community college and participating four-year colleges. Students admitted to these programs are assured transfer with full junior-year status to a four-year institution following the completion of their associate degree.
  5. But if you can’t… Make sure you find the loan that’s right for you. is a great resource for those who are college bound, as it outlines the different types of student loans and the eligibility requirements for each. There are plenty of other online resources too—LendKey, for example, is an online platform that helps match students with community banks and credit unions to find more accessible and low-cost borrowing options. Selecting the right loan will help you avoid default, which is crucial for any borrower, since defaulting can ruin your credit, impacting your life after college (finding a job, or buying a house, for example). However, if you do borrow and find that you’re struggling to make payments, be sure to contact your loan servicer to see how they might be able to work with you.