How Does Federal Student Aid Work?

how does federal student aid work

Each year, thousands of Americans rely on federal student aid to help them bear the ever-increasing burden of college costs. Without it, many would be submerged in even more debt or may stop pursuing their education altogether. We can all agree on how important it is, but just how does federal student aid work?

Below, we’ll answer that question and reveal more about the federal student aid options that are available to you.

How Does Federal Student Aid Work?

Federal aid works by taking into account two primary factors to determine one’s personal need. The first factor is cost of attendance. COA refers to the total amount of tuition, room & board, books, transportation, insurance and other costs associated with attending school.

The other factor is your estimated family contribution. The EDC is the amount of money the government says you and your family can afford to put towards your education. The Fed then subtracts your EDC from your COA to determine how much financial support from the government you are eligible for. That, in short, is how federal student aid works.

Another way to look at it is the government basically assesses how much attending school costs, subtracts how much it believes you can afford and determines how much financial assistance you need.

Types of Federal Student Aid

There are several types of different types of federal student aid available that adults both young and old can take advantage of. Some of these types and government programs include:

  • Grants
  • Loans
  • Work-Study
  • Military Aid
  • Education Tax Benefits
  • Education Awards
  • Education and Training Vouchers

Federal student aid can cover anything from the costs of tuition to room and board, books, supplies, transportation and more.

The easiest way to apply for student aid is by using the Free Application for Federal Student Aid, or FAFSA. There’s no charge associated with FAFSA and it can be accessed by visiting

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