How to Pay for College: Financial Aid and Scholarships
It’s generally not news that the competition for college applications has become exponentially more difficult. But unfortunately, so has the cost. And that often leaves families with questions surrounding how to afford it, and indeed if it even makes sense.
If you’re in this boat, don’t worry yet! We’ll go into all of the levers you can pull to try and make the cost both more manageable and more justifiable.
There are 3 major types of aid that are typically available—federal aid, institutional aid, and third party aid—and how you apply for them and what exactly they entail varies. Let’s dive deeper into each of these. 🔎
Federal Aid (FAFSA)
Federal aid is offered via something called the FAFSA. FAFSA is an acronym for Free Application for Federal Student Aid, though almost everyone will refer to it as FAFSA.
The FAFSA application is offered through studentaid.gov, and most citizens or permanent US residents are eligible to apply.
| When | Usually during Fall/Autumn, the application opens for the next school year |
| Duration | The form itself often takes an hour or two (with financial documentation ready) |
| Types | Loans, grants, and work-study |
| Amount | This depends, but see maximums below |
Loans
There are 2 types of loans that undergraduates can typically be awarded—subsidized loans and unsubsidized loans.
💰 Subsidized loans are much more preferable, since any and all interest on your loan is paid for while you’re in school full-time and the immediate 6 months after you graduate. That means the amount you owe doesn’t accrue any interest until 6 months after graduating, meaning you won’t be hit with as big of a loan payment once you start working.
💰 Unsubsidized loans are not as friendly to students since they start accruing interest from day 1, for which you are responsible. Generally, we recommend trying to avoid these as much as possible if you can, or if you cannot, have a financial plan ready to go. While at Eritus we’re not Certified Financial Planners, we recommend consulting with one if you’re unsure of the financial burden and commitment.
As of 2026, the limits for undergraduates per year are listed below:
| Dependent student ¹ | Independent student ¹ | |
|---|---|---|
| First year (Freshman) | $5,500 (up to $3,500 may be subsidized) | $9,500 (up to $3,500 may be subsidized) |
| Second year (Sophomore) | $6,500 (up to $4,500 may be subsidized) | $10,500 (up to $4,500 may be subsidized) |
| Third year onwards (Junior-Senior) | $7,500 (up to $5,500 may be subsidized) | $12,500 (up to $5,500 may be subsidized) |
| Lifetime limit | $31,000 (up to $23,000 may be subsidized) | $57,500 (up to $23,000 may be subsidized) |
¹ FAFSA dependency status is determined by federal student aid rules, and not always the same as whether a student is claimed as a dependent on a tax return.
Grants
Pell grants are the primary federal grant that individuals can be awarded. In general, grants do not have to be repaid. (⬅️ That’s the main difference between loans and grants.)
However, these tend to be reserved for students who demonstrate an extraordinary need for financial assistance. Moreover, a Pell grant is typically capped at a lower amount than full tuition might be, especially if you live on campus. Lastly, there are some edge cases where you can receive more than the maximum amount for Pell grants, but we wouldn’t suggest counting on that.
There are also Teacher Education Assistance for College and Higher Education (TEACH) grants, which are for a subset of students who intend on pursuing teaching as a career. These have additional criteria beyond simply demonstrated need, and you can find more information here.
Similar to loans, there are annual limitations to both of these, which as of June 2026 are listed: below
| Annual maximum award | |
|---|---|
| Pell Grant | $7,395 |
| TEACH Grant | $4,000 |
⚠️ Note: Grant maximum amounts can change each year, and they often do.
Work-Study
The final bucket of federal aid comes in the form of work-study programs. Work-study is usually awarded as a dollar amount that the student can earn through part-time work, often on campus. The student is paid for hours worked, and total earnings are generally limited by the amount awarded.
These programs are quite common, and often you’ll work on campus but there are other opportunities through your individual school’s connections or partnerships. Note that work-study earnings are generally limited by the amount you were awarded.
Institutional Aid
In addition to federal aid, each college may also offer their own aid. This is especially true for private institutions, though some public universities will also offer aid.
The two major types of aid that an individual institution may offer are grants and scholarships. Not every school will offer these or may not offer both, but they’re often available. Additionally, some private schools may distribute lists of additional lenders to give you access to private loans if needed, though this is less common.
| When | Alongside applications |
| Duration | The CSS profile itself usually takes a few hours; scholarships much longer |
| Types | Typically grants, sometimes scholarships |
| Amount | This depends on the rest of your financial packages / individual need |
Grants
Most schools that offer financial aid packages will offer some of it as grants. Naturally, this is the preferred option since it means you don’t have to pay anything back—it’s essentially a gift! But how much you’re given depends on a variety of factors.
In addition to the federal aid that you’re offered, they also take into account more detailed information about your finances. They do this through the CSS profile. This is a separate profile maintained by College Board that is leveraged by private institutions.
It also depends on how much money the individual college or university has to allocate towards financial aid. For example, Harvard famously offers free tuition, room, and board to any family making under $100,000 per year, with a sliding scale thereafter, but other schools may not be able to offer anywhere near that depending on their own endowments. The nice thing about institutional aid is that it doesn’t usually have the same caps or limitations as federal aid, meaning you may be awarded far more than you receive in federal grants and loans.
Scholarships
Some schools will also offer merit scholarships. These are scholarships that most students are eligible to receive and apply for, and are based on academics, extracurriculars, sports, etc. Not all schools offer merit-based aid, but for those that do, it can be a great way to try and get more money to help cover the financial costs. Much like grants, scholarships don’t need to be repaid, and they can often be awarded from year to year, though the amounts may vary.
Schools like USC and Vanderbilt are renowned for their merit scholarships, and they invite many students to apply each and every year. Due to the fact that the most competitive scholarships may even offer full rides (i.e. you don’t pay anything) like the Trustee scholarship at USC, they are incredibly coveted.
Overall, we encourage you to look into your college list and see what scholarships might be on offer, and what deadlines and criteria you may need to meet. You never know if you just might secure that elusive full-ride!
Third-Party Scholarships
In addition to institutional scholarships, there is also a large bucket of third-party scholarships that are on offer. These are typically offered by companies, non-profit organizations, and even private citizens for a variety of different reasons.
More often than not, the amounts of these scholarships tend to be on the lower end when compared with institutional offers, but they also tend to have less competition as a result.
| When | Varies throughout the calendar year |
| Duration | Highly variable depending on scholarship application criteria |
| Types | Scholarships |
| Amount | Oten smaller than institutional scholarships, but can be significant |
Many third-party offerings have much stricter criteria than the typical merit-based scholarships at universities, meaning the eligible pool of applicants is much narrower. However, if you’re willing to put in the work to apply for these and are fortunate enough to be awarded one or even several, it can truly add up.
💡 If you get 3-4 scholarships each at $2,000-$5,000, that can quickly make a real dent in your budget, especially if you’re attending public school where the cost is more affordable than private schools.
The only downside to scholarships is that there is usually a written component to each one. That means you’ll have to spend time writing yet more essays and/or short answers to put your name in the hat. But again, to emphasize, this barrier to entry further reduces the amount of people willing to apply and only increases your chances. So if you plan appropriately by creating a schedule, then it’ll make your life much, much easier.
Other financial aid
While we’ve covered the primary means of securing financial aid, it’s also important to note a couple of other levers you may want to consider.
The first is simply that anyone can work part-time. You don’t have to be granted work-study to work—you can always go and get a job to help chip away at the cost. It might not be the most fun or desirable option, but it’s definitely a worthwhile one!
The other major lever that parents often forget or don’t know about is the 529 plan. This is a tax-advantaged plan that allows you to save up for your kid’s education from very early on (even from as early as birth). Contributions to a 529 plan are typically made with after-tax dollars, though some states offer tax deductions or credits. The major benefit is that the money can grow tax-free and be withdrawn tax-free when used for qualified education expenses. Each state has their own implementation of this plan so we encourage you to explore yours, but it’s a great way to help cover costs if you’re able to contribute to it.
Summary
All in all, there are a lot of options to help finance your (or your kid’s) educational journey. While we never want finances to hinder career choices and growth, we also recognize the reality of the situation. Armed with the information above, however, hopefully you can find some ways to make things more achievable.
Ultimately, you’ll likely combine or mix and match a series of these offerings, from federal aid to institutional aid to 529s, but just remember that loans are the one serious thing to watch out for. Yes, they are a great option, especially if you don’t have any other means of affording college. But also, be careful since it’s a very real, very large financial commitment to being in debt.
In any case, we hope you found this useful as an overview, but if you have more questions about aid, feel free to send us an email at hello@eritus.co or contact us below!
