College Financial Aid: Gift Aid vs Self Help Aid

Do you receive gift aid on your birthday? Graduation? Special Occasions?  No, birthdays and holidays are not applicable for this scenario of gift aid for college.  However, you may be eligible to receive gift aid if you complete a FAFSA.  

Gift aid can come in one or more forms and various amounts. Be grateful for any amount that reduces your need to borrow. Here, we will explain the differences between gift aid and self-help aid for college. 

Gift Aid

"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:

1. Complete the FAFSA before college deadlines to get access to Federal Pell Grants, FSEOG or TEACH Grants, most state grant programs, and many college grant programs.
2. 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.
3. Apply for outside scholarship opportunities to help supplement any federal, state, and institutional gift aid. Scholarships are available to all kinds of students.  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. Don't think applying for a small $500 award is a waste of your time. A few of these awards can cover your book costs and some living expenses. 

Self-Help Aid

"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 the federal government determine eligibility. Private student loans do not require FAFSA completion, 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.