Financial aid packages have broadly been divided into three main components namely federal loans, scholarship and grants, and private student loans.

Federal student loans are supported and funded by the US federal government. The loan is granted payable within 10 years at a fixed interest rate. It offers a protection for the borrowers by granting temporary suspension of payment or cancellations of loans while the student is in school. There are 3 basic federal student loans with different loan limits and terms available namely the Stafford federal student loan, Perkins loans, and Graduate Plus loan. Alternatively, parents can also apply for a federal student loan for parents if they want to help their undergraduate children to pay for their college expenses.

Scholarships and grants are considered the best form of financial aid because there is no need to repay it. Grants are usually awarded according to the financial need of the applicant. Merit scholarships, on the other hand, are typically based upon the student’s scholastic ability, religious affiliation, organization affiliation (i.e. news carrier, child of an employee, etc), athletic ability, specific talents (i.e. music, dance, theater) or a particular major/course.

Private student loans are a form of financial aid provided by private companies that offer loans at varying rates and often with less favorable terms than the federal student loans. This is typically the last option to consider just to supplement the above loans, scholarships, and/or grants awarded.