Introduction to Financial Aid and Paying for College

Pay for College
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The cost of college is one of the biggest and most common concerns among students who are interested in pursuing higher education. If you are feeling this way too, you’re not alone, and there are options for receiving financial aid! 

The cost of attendance consists of two types of expenses:

  • Direct Costs
    Direct Costs are set amounts that are billed to students by the school’s financial aid department. Expenses like tuition and fees are direct costs. These can vary depending on the number of course-hours you take, but you will need to pay these in advance to enroll at your institution.
  • Indirect Costs
    Indirect Costs are estimates and your lifestyle choices may impact these amounts. Expenses such as room and board, books and supplies, transportation, and personal expenses are indirect costs. These are indirect costs because they accumulate over time, and you will pay these throughout the academic year.

After submitting a FAFSA or TASFA, the amount of financial aid you will receive will depend on your Estimated Family Contribution (EFC) subtracted from the institution’s Cost of Attendance (COA). This formula will identify your Financial Need, and institutions can award financial aid up to the amount of your demonstrated financial need. Take into consideration each school’s Average Financial Need Met when researching best-fit schools.

The right time to apply for financial aid is right now! Submit your FAFSA or TASFA today! Check out these resources below to learn how. 

Let’s review the four main types of financial aid—scholarships, loans, grants, and work-study—and how to apply for each of them. For quick reference, download our financial aid chart. When you’re ready, check your understanding with our short financial aid quiz.


Scholarships are gift aid—meaning you won’t have to pay them back! Most scholarships are awarded based on merit, for example, your high school gpa or class rank, SAT or ACT scores, or an essay that you submit. However, there are also scholarships that are based on financial need, for example, after submitting a FAFSA or TASFA, your institution may award you a scholarship based on your demonstrated financial need.

How to apply:

It’s never too early to begin applying for scholarships! Researching and submitting scholarship applications should be something that you do year round, but if you haven’t started yet, start now! Here’s how: 

  • Students often are most successful in receiving scholarships when they have a connection to the scholarship provider. Search for scholarships available in your community, take time to contact your:
  • Check out this resource from Federal Student Aid on how to find scholarships. 
  • College Board (the same folks who offer the SAT and AP tests) offer a free scholarship finder through BigFuture. You can find it here!
  • AIE also has a great scholarship search tool. Simply enter in your major, career, interests, hobbies or something else to receive a list of scholarships.
  • There are many other online scholarship matching services that can connect you with scholarship opportunities. Try searching the web for scholarships related to your chosen major or career path, a hobby, or special talent.
  • Take a look at this resource on Ten Steps to a Strong Scholarship Applications from Texas OnCourse.


Loans are a type of financial aid that must be paid back with interest. Postsecondary degrees are investments in yourself and in your future, and just like other large investments such as a house or a car, they often require a loan. There are three types of student loans that you may explore.

Federal Loans

  • Federal loans are made by the federal government, and will typically have lower interest rates and more options for repayment than state or private loans. You apply for federal loans by submitting a FAFSA
  • The first time you accept federal loans you will need to complete Entrance Counseling which will provide you with information about understanding your loans, managing your spending, planning to repay, avoiding default, and prioritizing your finances.

State Loans

  • The College Access Loan (CAL) Program offers loans to Texas students who have a financial need that is not covered by other types of financial aid. Students need to be a Texas resident but do not need to be a U.S. citizen, however, you will need a cosigner who is a U.S. citizen or permanent resident. Apply here.

Private Loans

  • Private loans are offered through banks, foundations, or sometimes schools. Private loans will often have higher interest rates and fewer repayment options. You may check with your bank about their student loan programs, but explore other options first.


Grants are another type of gift aid. Generally, grant aid does not need to be paid back, unless you withdraw early from your program for which the grant was awarded, your enrollment status changes, or you receive additional financial aid that reduces your financial need. There are three different types of grants:


  • There are several different federal grants that can contribute thousands of dollars towards your higher education. Some examples include the Pell Grant, Federal Supplemental Education Opportunity Grant (FSEOG), and the TEACH grant. Apply for federal grants by submitting a FAFSA


  • Texas also offers several different grants such as the Texas Educational Opportunity Grant Program (TEOG), Texas Equalization Grant Program (TEG), and the Texas Public Education Grant Program (TPEG). 
  • Students must be a Texas resident to be eligible, but do not need to be a U.S. citizen or permanent resident.  Apply for Texas state grants by submitting a FAFSA or a TASFA (but not both).


  • Many postsecondary institutions also provide grants. You may check your school’s financial aid website to see what grants they offer. Apply for institutional grants by submitting a FAFSA or a TASFA (but not both).


Federal Work-Study is a program that allows students with financial need to work part-time jobs in order to earn money for education expenses. Students are not guaranteed to receive employment and will need to apply for work-study positions. Once you receive a work-study position you will be paid with a paycheck, just like you would in a non-work-study job. However, you can request that your school use your pay for education-related charges such as tuition, fees, or room and board. Apply for work-study by submitting a FAFSA. Recipients of Federal work-study must be eligible to submit a FAFSA. 

Texas College Work-Study Program also provides employment to eligible students with financial need. However, not all Texas institutions participate in the program, so check with your school to see if this is an option for you to receive financial aid. Recipients of Texas College Work-Study must be eligible to submit a FAFSA.

Avoiding Scams

Unfortunately, there are many scams out there relating to applying for and receiving each of these types of financial aid. Be cautious before sharing any personal information. Don’t pay any money to submit your FAFSA or TASFA. Check out this guide from Federal Student Aid on how to avoid financial aid scams.

Check Your Understanding

How well do you know the ins and outs of financial aid? Take this five-question quiz to find out!


See that wasn’t so hard! We think you’re ready for the next financial aid lesson.

Understanding financial aid can be tricky at first, but we’re here to help.


#1. When I apply for Financial Aid in October 2021, for the 2022 – 2023 academic year, I will need the tax information that my family filed:

When you file your FAFSA or TASFA you will use your tax information from 2 years prior to the academic year for which you are requesting financial aid. The 2022 -2023 FAFSA and TASFA forms, which will be available on October 1, 2021, will ask for 2020 tax information.

Submit your FAFSA or TASFA today!


#2. If my family makes above a certain amount, it’s not worth filling out the FAFSA/TASFA.

Everyone should file a FAFSA or TASFA. Colleges and universities will use the information you provide on your FAFSA or TASFA to award loans, grants, scholarships and work-study. In the 2018-19 academic year, over $2.6 billion in federal scholarships and grants went unclaimed by eligible students. 


#3. Who decides how much financial aid you receive?

The FAFSA or TASFA will determine your Estimated Family Contribution (EFC), and colleges/universities will use that number to determine your financial need. College and Universities will subtract your FInancial Need from the Cost of Attendance in order to determine how much financial aid you are eligible for at each institution. 


#4. You can only receive Financial Aid if you are a US Citizen.

You do NOT have to be a US Citizen in order to receive financial aid. Financial aid is available in many different forms, and many of them do not require US Citizenship. Students can apply for Federal, State, and Institutional aid through filing a FAFSA, and students who are undocumented may apply for State and institutional aid by filing a TASFA. Many private scholarships do not have a citizenship requirement. 


#5. I need to pay back loans when I graduate.

You are expected to pay back loans, with interest, after you graduate. 


Next Steps

Now that you understand the different types of financial aid, let’s explore how to submit a FAFSA or a TASFA.

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