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Financial aid packages can definitely be tricky. There are various types of financial aid, and it may be difficult to understand which you received and what they mean.

If you completed the FAFSA (Free Application for Federal Student Aid), you’ll receive a package stating what financial aid you’re eligible for during the upcoming school year. If you’re having trouble understanding how your package works or don’t know where to start, you’re in the right place. We’ve talked to scholarship expert Monica Matthews, Kathryn Knight Randolph, Contributing Editor to FinAid and Fastweb and the James Madison University Financial Aid Office to help you navigate your financial aid package and make the best financial decisions for you. Read up, pre-collegiettes!

What does a financial aid package look like?

This may seem like a silly question, but it’s important to know what to expect when delving into your financial aid package. The JMU Financial Aid Office says, “Financial aid packages are vastly different at every school, however, they should all include the following information: cost of attendance, the amount of grant assist and the amount of loans offered.” Basically, the financial aid package will list what aid you have received, what category that aid falls into and what the amount is.

“Financial aid is determined based off of the student’s Expected Family Contribution (EFC), which can be determined when a student fills out the FAFSA,” Randolph explains. “The cost of tuition minus EFC will determine a student’s financial aid package.” Now that you’ve got the equation down, you’re ready to go.

What type of financial aid is it?

Without a doubt, knowing what type of financial aid you received is the first and most important step in understanding your financial aid package. “When students are trying to find funding for college, there are four types of financial aid they may receive,” Matthews shares. Your package will likely include several of these types of aid. Matthews helps us understand the differences below:


A scholarship is money awarded to you if you’re selected after an application process. Sometimes you have to maintain a certain GPA or fulfill other requirements to obtain and keep the scholarship. Scholarship money can come from schools, independent organizations or even the government. They don’t need to be paid back and can be awarded for financial need, academic achievement or even for parts of your identity.


A grant is money awarded to you that doesn’t need to be repaid. You can receive grants for various reasons, including being a legacy or having significant financial need. Grants differ from scholarships because one party awards them, whereas a scholarship is awarded based on certain criteria reflecting the values of who’s awarding it.

“A grant can be need-based aid or [merit-based],” shares the JMU Financial Aid Office. “Need is determined through the FAFSA form. Some examples of grants are Pell, Virginia Guaranteed Assistance Program (VGAP) and Commonwealth Award. Grants and scholarships can both be free assistance.” It’s also important to read the fine print of the grant to determine if it remains “free.”

“Certain scholarship packages can actually grant you more money for going abroad and for other scholarships if you qualify for those government grants,” shares Abigail Zeitler, a junior at The University of Texas at Austin. “I receive a government grant for school, and because of that, I was able to apply for other scholarships to study abroad for free!” Be sure to check with your school for all the financial aid information you can get.


A loan is money that is lent to you for a certain period of time, but needs to be repaid eventually. It can be either a subsidized or unsubsidized loan; “subsidized” means a low interest rate you can start paying after you graduate, and “unsubsidized” means a higher interest rate. Financial need is not necessary to obtain an unsubsidized loan.

“You can receive the offer for a student loan by filling out the FAFSA form,” the JMU Financial Aid Office shares. “Once the FAFSA is received by the financial aid office, the offer will be made on the student’s account and that is where you would start the process for the loan by accepting the loan there.”

Anyone can qualify for an unsubsidized loan. “All they need to do is fill out the FAFSA,” Randolph adds. “The school actually determines the amount that you can borrow with your unsubsidized loan based on the cost of attendance and your other financial need.” Feel free to contact your school’s financial aid office for more information.

Federal Work-Study

Federal Work-Study (FWS) is a program in which schools hire students for part-time jobs in order to help pay for their tuition. You must work with your college directly to find a FWS job, and the amount you will receive varies by school. Look on your college’s website for more details or speak to a financial aid officer.

“Some examples of FWS jobs are research assistant, working in the library or working in different offices on campus,” says the JMU Financial Aid Office.

Where is the money coming from?

Now that you’ve (hopefully) tackled what type of financial aid you’re eligible for, it’s important to know where the money is coming from.

Federal aid program

Federal aid programs, like FWS, allot certain amounts of money to schools for their students. This amount varies by college. They can also offer money in the form of grants.


The government uses some of its money for financial aid, so the money for grants and loans can come directly from them. The government will allot certain amounts of money to colleges, and it will show up in your financial aid package if you’re eligible.

“If the government is providing a grant or a loan, the funds are sent to the university first to be applied to the students tuition bill, and any funds that are left over after the bill is paid is then sent to the student as a refund,” the JMU Financial Aid Office shares.


Colleges offer their own financial aid, which can include scholarships, grants and loans.

“Students are sent their financial aid award notices in June,” the JMU Financial Aid Office says. “This is information based upon the FAFSA form the student has filled out for that school year. If the student needs to adjust their aid award due to extenuating circumstance, the student can make a request to our office using a process called Professional Judgment.”

Independent organizations

Independent organizations may choose to offer scholarships or aid money to students. This is money funded privately by the organization and offered to the student.

Scholarship nonprofits

Scholarship nonprofits raise money for student aid or have funds from private donors. This money is solely used for scholarship recipients.


Corporations or businesses may offer scholarship money to college students. Looking into the companies where your parents work to see if they offer scholarship opportunities is a good place to start.

“The financial aid award notice will be clearly labeled to let the student know where the aid is coming from,” the JMU Financial Aid Office adds.

How do you put it to use?

Accepting/declining the aid

Now that you know where your financial aid is coming from, the next step is putting it to use. Just because you were offered financial aid doesn’t mean you have to accept it. “Students must determine what aid needs to be paid back and what aid is free money,” says Matthews. “Also, student loans do not have to be used and may be turned down by the student if the funds are not needed.” You should weigh your different options and decide with whoever is financing your education what your best bet is.

If you’re financing your own education and relying on aid to do so, it is up to you to make the most of what you’re offered. You may decide that you’d rather not accept the loan you were offered, or you may think that FWS is the way to go. If you don’t need to accept a loan, it’s probably best not to do so. There’s no reason to owe extra money if you can pay out of pocket without assistance. No matter what you decide, make sure that you’re choosing the smartest and healthiest option for you.

“Students who have applied to multiple colleges need to sit down with their parents and compare financial aid packages to make an enrollment decision,” says Matthews. “Once a decision has been made, they need to contact the school and accept the financial aid package in full or partially by turning down unneeded aid like student loans. They then need to come up with a financial plan that includes working over the summer to help pay for school and understanding what is expected when the student is in school.”

The JMU Office of Financial Aid says, “In most cases, grant and scholarships are already accepted on the student behalf. Before a student takes out a loan, they may want to make sure that the loan is need to cover an existing bill and not being used toward expenses other than school.” Loans need to be paid back and add up really quickly!

Making a financial plan

If you and your parents have questions or don’t understand parts of the package, call the financial aid office. They are extremely knowledgeable and should be happy to assist you. To officially “accept” your financial aid package, you will either have to fill out a form online or sign a paper and mail it back to the school.

“The key to a good financial plan is budgeting your funds and setting a goal that you want to achieve,” shares the JMU Financial Aid Office.

“First and foremost, students and their families should save early and often; however, at the same time, it’s never too late to save,” says Randolph. “Second, fill out the FAFSA, regardless of whether or not your parents are actually going to contribute to your college education. Supplying their information in no way requires them to pay for college, but it does give you a chance to qualify for financial aid. Without their information on the application (unless you’re a dependent student), it will be close to impossible to get any financial aid. Finally, there are a few tips and trips to maximizing aid eligibility: don’t save in the student’s names and pay off debt or contribute more to retirement funds in order to free up your family’s liquid assets.”

When creating a financial plan, be sure to know what funds are coming in (if you parents are supporting you or your salary) and what funds need to be going out (the price of your tuition, room/board, supplies). This way, you’ll be able to determine what aid you should and shouldn’t accept.

Just because you submitted your FAFSA once doesn’t mean you’re done! Stay on track by continuing to apply for scholarships and resubmit your FAFSA each year. “Financial aid packages vary from year to year and are sometimes higher the first year that a student attends college,” Matthews shares. “Getting familiar with contacting the financial aid office is a must for students who need financial assistance to go to college.” If you stay on top of your FAFSA and ask for help when you need it, you’ll be in good shape.

If you take the time to sort through your financial aid package, it’ll be a lot easier to understand how it works. Figure out what type of aid you’ve received, where that aid is coming from and whether or not it’s worth it for you to accept. Once you’ve got these basics down, you’re golden! Don’t stress, and if you have any more questions visit the Federal Student Aid website.

Rachel graduated from the Honors College at James Madison University in May 2017 and is pursuing a career in the media/PR industry. She majored in Media Arts & Design with a concentration in journalism and minored in Spanish and Creative Writing. She loves spending time with friends and family, traveling, and going to the beach.
Cassidy is a Digital Production intern at Her Campus. She's currently a junior studying journalism at Emerson College. Cassidy also is a freelance reporter at the Napa Valley Register and a staff writer at Her Campus Emerson. Previously she blogged for Seventeen Magazine at the London 2012 Olympics, wrote for Huffington Post as a teen blogger and was a Team Advisor at the National Student Leadership Conference on Journalism, Film, & Media Arts at University of California, Berkeley and American University in Washington, D.C.. When she's not uploading content to Her Campus or working on her next article, Cassidy can be found planning her next adventure or perfecting her next Instagram. Follow her on Twitter at @cassidyyjayne and @cassidyjhopkins.