For the longest time, I thought the phrase "never LOOK a gift-horse in the mouth," was "never LICK a gift-horse in the mouth." Yuck, I wondered, why would anyone do that?! Does that even require such a warning? It turns out that looking at the teeth of a horse someone gifted to you is bad manners.
Whether you are looking or licking (please, don't lick!), it's a bad idea when it comes to financial aid. Don't question free money for college, no matter the amount. Be grateful for any amount that reduces what you need to borrow. Here, we will explain the differences between gift aid and self-help aid for college.
"Gift aid" in the financial aid world refers to aid awards that do not require any investment or repayment from the student. It is free money awarded in the form of a grant or scholarship. Every family with a child going to college should be taking all necessary steps to maximize their gift aid, even small gifts. Here is how to do that:
- Complete the FAFSA before college deadlines to get access to Federal Pell Grants, FSEO Grants, most state grant programs, and many college grant programs.
- Submit any supplemental financial aid forms, such as the CSS Profile, to get access to institutional gift aid not awarded by completing the FAFSA, including many institutional grants and need-based scholarships.
- Apply for outside scholarship opportunities to help supplement any federal, state, and institutional gift aid. Scholarships are available to all kinds of students. Many are awarded based on financial need alone. Searching for scholarships can be time-consuming but it is well worth the effort if it reduces the amount of "self-help" aid a student needs. This is really where you shouldn't be looking that proverbial gift horse in the mouth. Don't think applying for a small $200 award is a waste of your time. A few of these awards can cover your book costs and some living expenses.
"Self-help" financial aid, unlike gift aid, requires an investment of time or money from the student. Student loans and work-study are both forms of "self-help" financial aid.
Student loans need to be repaid with interest, regardless of whether or not the student graduates.
Work-study requires a student to put in working hours to earn the funds. Work-study can be an on or off-campus job. The only difference between a work-study job and a regular job is where the funds that pay the student come from. Without putting in the time, the award is worth nothing to a student.
To get self-help aid, students should still complete the FAFSA and other financial aid forms. This helps the school and federal government determine eligibility. Private student loans do not require these applications, but it is always wise for a student to exhaust his or her Federal Direct Subsidized and Unsubsidized Student Loans (there are annual limits) prior to seeking other financing.
It's pretty clear which type of aid you want to get the most of. But don't worry if you have to take advantage of self-help aid in addition to gift aid; the vast majority of students do. Getting a work-study job can help build real-life experience and skills and can teach you important time management skills. Student loan repayment, despite what you hear in the news, is quite manageable for most borrowers. It helps teach students responsibility, gives them skin in the game, and shows them early on that it is important to prioritize needs and wants to avoid excessive debt.
If you would like to know more about the different types of gift-aid and self-help aid, or about financial aid in general, download our Financial Aid 101 Guide.