# Understanding financial aid for college

March 15, 2023 • 8 minutes
Written by[Dawn Handschuh](/blog/authors/dawn-handschuh.html)

Reviewed by Chris Conway, Director of Financial Education Initiatives and Repayment Management

Many students embarking on higher education will need to apply for financial assistance. Often, aid comes from a variety of sources, allowing students to cobble together multiple ways of funding to meet school-related costs.

But just what is financial aid and how does it work? To answer these questions and figure out the best options tailored to an individual’s situation, it’s helpful to get familiar with the types of financial aid that are available. 

## Types of financial aid

The [Federal Student Aid Estimator](https://studentaid.gov/aid-estimator/) is a valuable tool that can help students predict the amount of federal student aid they may be eligible for. But truly beginning the process of pursuing financial aid involves completing the [Free Application for Federal Student Aid (FAFSA®) form ](https://studentaid.gov/h/apply-for-aid/fafsa). After a school’s financial aid office receives the completed FAFSA form, it will assemble an aid package based on a student’s eligibility.

Depending on the situation, a student may be eligible for any or some of the following.

### Grants

The wonderful thing about grants is that they do not generally require repayment. For this reason, students should thoroughly research all grant possibilities before investigating other options.

Grants can come from the federal government, state governments, colleges and private institutions. Students should apply for any that they may qualify for, being careful to note application deadlines and terms.

Some well-known federal grant programs include:

#### Federal Pell Grant

Federal Pell Grants are based on financial need. Federal Pell Grants are awarded only to eligible undergraduate students who display exceptional financial need and have not yet earned a bachelor's, graduate or professional degree.

Maximum amounts for a Pell Grant may change yearly. For the 2026-2027 award year, for example, the maximum grant is $7,395. 

#### Federal Supplemental Educational Opportunity Grant (FSEOG)

The FSEOG program is managed by the financial aid office of participating schools. Students may receive between $100 and $4,000 annually, depending on the availability of FSEOG funds at a given school you are attending, the student’s financial need and the amount of other aid a student is awarded. Because each school receives a certain amount of FSEOG funds for the year, it is important students apply early to avoid missing their school’s deadline.

### Scholarships

Like grants, scholarships generally don’t need to be repaid. They may be offered by private companies, civic groups or schools. Scholarships may be merit or need based, but they may also focus on students with a specific career interest.

To find scholarship opportunities, students can:

- Reach out to a school’s financial aid office
- Explore the U.S. Department of Labor’s free [scholarship search tool ](https://www.careeronestop.org/toolkit/training/find-scholarships.aspx)
- Ask contacts and organizations with which one is affiliated about potential opportunities

Application deadlines vary, so students should research scholarship opportunities early.

According to Stacy Tucker, vice president of financial aid operations at University of Phoenix, any funding source outside of loans will help lower borrowing costs. What’s more, there are opportunities to find unclaimed scholarships.

“There are many scholarships that go unused every year,” she says.

If [employer benefits ](https://www.phoenix.edu/blog/what-is-tuition-assistance.html) are available, Tucker adds, a student should speak with their employer’s human resources department as well as their school’s financial aid office to understand how to best maximize those benefits.

### Loans

Borrowers who acquire a loan must repay it with interest. Loans can come from the federal government, private lenders or a [state ](https://www2.ed.gov/about/contacts/state/index.html)’s higher education agencies, and they may be offered as part of a school’s overall financial aid offer.

Federal student loans and federal parent loans often have better interest rates and benefits (e.g., fixed interest rates and income-driven repayment plans) than loans from private lenders, like banks or credit unions. So, look first at federal student loans, which include:

#### Direct Subsidized Loans and Direct Unsubsidized Loans 

[Direct Subsidized Loans ](https://studentaid.gov/help-center/answers/article/direct-subsidized-loan) are for undergraduate students who demonstrate financial need. A school determines the amount a student can borrow, and the amount may not exceed one’s financial need.

The U.S. Department of Education pays interest on the loan while the student remains in school, is in a deferment period and for six months after a student drops below half-time enrollment at school.

[Direct Unsubsidized Loans ](https://studentaid.gov/understand-aid/types/loans/subsidized-unsubsidized) are available for both undergraduate and graduate students, and are not based on financial need.   

The school determines the amount a student may borrow based on their cost of attendance and other financial aid that may be awarded.

For loans first disbursed on or after July 1, 2025, and before July 1, 2026, the  interest rates for Direct Subsidized and Unsubsidized Loans are 6.39% for undergraduate borrowers and 7.94% for graduate/professional borrowers. The 1.057% loan fee is proportionately deducted from each loan disbursement.

#### Direct PLUS Loans

Parents can apply for a Direct PLUS Loan for their child, but the parents remain responsible for repayment. The interest rate and loan fee are the same for all Direct PLUS Loans.

Remember, loans are an investment and represent a legal obligation to repay what is borrowed plus accruing interest. Tucker urges students to understand the cost of attendance, lifetime aggregate loan limits and the future monthly payment obligation so they borrow only what is needed.   

“We work with students to ensure all aspects of financial aid are understood,” Tucker adds. “We provide support throughout the program as life circumstances can change and affect financial aid.”

## Ways to save at University of Phoenix

University of Phoenix is committed to making paying for school transparent and affordable. Here are a few ways it strives to accomplish that:

- [Savings Explorer® tool ](https://www.phoenix.edu/cost-savings/ways-to-save): Students curious to see how much they can save on a degree at University of Phoenix can answer a few questions through this online tool and identify transfer credits and other cost-saving opportunities. 
- **Scholarships**: Qualifying new students are awarded a scholarship or the best savings they are eligible for.
- **Transfer credits**: The University is a transfer-friendly institution[accepting college credits](https://www.phoenix.edu/tuition-financial-aid/transfer-credits.html)from more than 5,000 accredited institutions. The[TransferPath app](https://www.phoenix.edu/mobile-app.html)invites prospective students who have some college experience to receive a free, unofficial evaluation of which credits may transfer.
- **Employer tuition benefits**: The University offers reduced tuition to employees at[hundreds of organizations](https://www.phoenix.edu/tuition-financial-aid/employer-tuition-benefits.html)to make career-relevant education accessible.
- **Self-paced alternative credit providers**: The University works with select learning providers so students may earn additional credits toward their undergraduate degrees.
- **Military credits**: Members of all branches of the military can have their military experience assessed through the American Council on Education. University of Phoenix honors these credit recommendations.
- **Prior Learning Assessments:** Certifications, trainings, licenses and even life skills all bring something to the educational table. Prior Learning Assessments offer students the opportunity to demonstrate eligible skills for college credit.
- **Fixed tuition rate**: As part of the University’s tuition guarantee, students can confidently enroll in a degree program with the knowledge that the cost won’t change over the course of their program.

Learn more about[financial aid at University of Phoenix](https://www.phoenix.edu/tuition-financial-aid/federal-financial-aid.html), or[request more information](https://www.phoenix.edu/request/request-information)to learn about the University’s career-relevant skills and degree programs.

### ABOUT THE AUTHOR

Dawn Handschuh has been putting pen to paper for more than 30 years, writing widely on topics related to student lending, personal finances, everyday money management and retirement planning. She makes her home in Connecticut with her husband and two energetic German shepherds.

### ABOUT THE REVIEWER

As Director of Financial Education Initiatives and Repayment Management, Chris Conway works with departments across the University to provide resources that allow students to make more informed financial decisions. She is also an adjunct faculty member for the Everyday Finance and Economics course at the University, and she chairs the National Council of Higher Education Resources College Access and Success Committee. Conway is committed to helping college students make the right financial decisions that prevent future collection activity.

This article has been vetted by University of Phoenix's editorial advisory committee.   
[Read more about our editorial process.](/blog/editorial-process.html)

Read more articles like this:                                                                                                                                                

- [Save on a University of Phoenix Degree](/blog/ways-to-save-on-a-university-of-phoenix-degree.html) — Tuition and Financial Aid | November 13, 2025 • 6 minutes

- [5 Financial Aid Myths Debunked](/blog/five-financial-aid-myths-debunked.html) — Tuition and Financial Aid | May 30, 2023 • 6 minutes

- [College Credit for Work & Life Experience](/blog/college-credit-for-work-life-experience.html) — Tuition and Financial Aid | February 02, 2022 • 5 Minutes