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Understanding financial aid for college

At a glance

  • Completing your FAFSA® form is the first step in applying for many types of financial assistance.
  • Federal grants like the Federal Pell Grant and Federal Supplemental Educational Opportunity Grant generally do not need to be repaid. Other grants and scholarships may be merit or financial need based, while some exist for special groups of borrowers, such as teachers or military families.
  • Federal loans generally provide better interest rates and repayment options than private loans. It’s important to understand the terms and conditions of your loan and borrow only what you need.
  • Learn about the ways University of Phoenix can help you save on your degree program!

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.

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

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Types of financial aid

The Federal Student Aid Estimator is a valuable tool to predict the amount of federal student aid you may be eligible for. But truly beginning the process of pursuing financial aid involves completing your Free Application for Federal Student Aid (FAFSA) form. After your school’s financial aid office receives your completed FAFSA, it will assemble an aid package tailored to your needs.

Depending on your situation, you may be eligible for any or some of the following.


The wonderful thing about grants is that you generally don’t have to pay them back! For this reason, you should thoroughly research all grant possibilities before investigating other options.

Grants can come from the federal government, your state government, your college or private institutions. Apply for any that you 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 usually are awarded only to undergraduate students who display exceptional financial need and have not earned a bachelor's, graduate or professional degree.

Maximum amounts for a Pell Grant may change yearly. For the 2023-2024 academic 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 from $100 to $4,000 per school year depending on the availability of FSEOG funds at the school you are attending, your financial need and the amount of other aid you are awarded. Because each school receives a certain amount of FSEOG funds for the year, it is important to apply early to avoid missing your school’s deadline.


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, you can:

  • Reach out to your financial aid office
  • Explore the U.S. Department of Labor’s free scholarship search tool
  • Ask contacts and organizations with which you are affiliated about potential opportunities

Application deadlines vary, so research scholarship opportunities early.

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According to Stacy Tucker, vice president of financial aid operations at University of Phoenix (UOPX), 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,” Tucker says.

If employer benefits are available, Tucker adds, speak with your employer’s human resources department as well as your school’s financial aid office to understand how you can best maximize those benefits.


Borrowers who acquire a loan must repay it with interest. Loans can come from the federal government, private lenders or your home state’s higher education agencies, and they may be offered as part of your 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 offer better terms than Direct Unsubsidized Loans to undergraduates who demonstrate financial need. The amount you can borrow depends on your student status and available financial need. 

The U.S. Department of Education pays interest on your loan while you remain in school, are in a deferment period, and for six months after you drop below half-time enrollment at school.

Direct Unsubsidized Loans are available for both undergraduate and graduate students, and you don’t need to show financial need.   

The amount you receive depends, in part, on what year you are in school, and there are higher loan limits for “independent” students.

For the 2023-2024 school year, fixed interest rates for Direct Subsidized and Unsubsidized Loans are 5.50% for undergraduate borrowers and 7.05% for graduate/professional borrowers. The 1.057% loan fee is proportionately deducted from each loan disbursement.

Direct PLUS Loans (for graduate/professional students)

After passing a credit check, borrowers can receive up to the cost of attendance after subtracting other financial aid they’ve received. You can choose from several repayment options designed to make repayment easier.

Direct PLUS Loans (for parents)

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 in your career but also represent a legal obligation to repay what you borrowed plus interest that accrues. 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

UOPX is committed to making education affordable. The following are a few of the ways ways it accomplishes this goal.

  • Savings Explorer® tool: Students curious to see how much they can save on a degree at UOPX 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 when starting at UOPX.
  • Self-paced alternative credit providers: UOPX has teamed up with learning providers that help students earn credits toward their undergraduate degrees.
  • National testing programs: Students can demonstrate existing knowledge by taking a test from one of the acceptable national testing programs such as CLEP, DSST and AP. Passing scores on these exams may result in awarded credits.
  • 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.
  • Work and life experience: Certifications, trainings, licenses and even life skills all bring something to the educational table. 
  • 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.


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.


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