Financial Aid Basics

All the terms can make a head spin. Take a breath. Millions of students and their families go through this every year.

First, some basics. Financial aid falls into two broad categories:

a)  Need-based: this category is tied to the student’s (and the family’s) financial situation.
b)  Merit-based: This second category is based on a student’s achievements in academics, music, athletics and other talents.

The next distinction is important. Gift help, such as scholarships and grants, does not have to be repaid (as long as the students maintain good academic standing). Loans that must be repaid and employment are considered forms of self-help.

The most important document in this process is the Free Application for Federal Student Aid (FAFSA). Most federal, state, and college financial aid programs use this form.

Help to pay for college is also available from foundations, cultural groups, and companies. Ask your guidance counselor about free scholarship search services, because there are plenty of them.

Tennessee residents can apply for several scholarship programs funded by the state lottery:

  • HOPE Scholarship: For full Time Students: Up to $1,500 per semester for two-year colleges and from $1,750 up to $2,250 per semester for four-year universities. Students must have an ACT score of at least 21 or a GPA of 3.0. Students who have a GED are eligible too, if they have ACT scores of 21 or higher (980 SAT) and an average of 170 on the Revised GED. For HiSet is 15.
  • HOPE Access Grant: For full Time Students: Up to $875.00 per semester for two-year colleges and up to $1,250 per semester for four-year universities for lower-income families. Incoming freshmen must have a weighted 2.75-2.99 GPA and an ACT score of 18, 19, or 20.
  • Aspire Award: For students of a four year university, an extra $750 award and for two year college students $250.00 in both cases for students who meet HOPE criteria and family income limits.
  • General Assembly Merit Scholarship: An extra $1,500 scholarship for students who have already Hope and a 3.75 GPA and an ACT score of 29 (1280 SAT).
  • Wilder-Naifeh Technical Skills Grant: Up to $2,000 for students who enroll in a certificate or diploma program at a Tennessee Technology Center. 
  • Tennessee Promise is both a scholarship and mentoring program focused on increasing the number of students that attend college in our state. It provides students a last-dollar scholarship, meaning the scholarship will cover tuition and fees not covered by the Pell grant, the HOPE scholarship, or state student assistance funds. Students may use the scholarship at any of the state’s 13 community colleges, 27 colleges of applied technology, or other eligible institution offering an associate’s degree program. Tennessee Promise participants must complete some requirements like eight hours of community service per term enrolled, as well as maintain satisfactory academic progress (2.0 GPA) at their institution.http://

Tennessee has other scholarships, and individual public and private colleges have their own programs as well. So do some county groups. Make sure you check with each institution that interests you.

But all roads start with the Free Application for Federal Student Aid (FAFSA). Keep these tips in mind:

  • Fill out a FAFSA even if you don’t think you’ll qualify for financial aid. You never know!
  • Don’t wait until you are admitted to a college or university to file the form. The sooner you file your FAFSA, the better chance you have of getting aid from programs that have limited funds.
  • File it as soon as possible. Individual states, universities and colleges have different deadlines. . The application deadline for Tennessee lottery scholarships is Sept. 1 of the previous year of the Fall semester of the year you are interested.
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  • The federal financial aid form is distributed to Tennessee and up to 10 specific colleges and universities you identify. That means you don’t have to send the FAFSA to colleges yourself.
  • Keep a copy of everything for your own records.
  • Don’t use any nicknames on your application; the name must match what is on your social security card.
  • Be wary of services that charge money to search for scholarships.
  • FAFSA application is free.

Click here for the FAFSA and detailed instructions on how to fill out the form or click here for the instructions in Spanish.

Filing the FAFSA online is the quickest option. You and at least one parent must provide signatures, either by mailing a signature page to the processing center or by signing electronically through the FAFSA system.

If you want to fill out a paper copy of the FAFSA, get one by calling the Federal Student Aid Information Center at 1-800-4-FED-AID.


Knowing other key terms before applying for financial aid will help:

Federal Direct Student Loan Program. In this program, the federal government, rather than commercial lenders, provides loans directly to students.
Federal Family Education Loan Program. Private lending institutions provide low-interest loans even if the student has no income, collateral, or credit history. This is a federally guaranteed student loan program.
Federal Stafford Loan (also, Federal Direct Loan)
Banks, lending institutions or colleges provide loans to students enrolled in a college degree program at least part-time. This used to be called the Guaranteed Student Loan program, or GSL.
Federal Supplemental Educational Opportunity Grant. This federal government program provides need-based grants to low-income college students.
Pell Grant
This federal program provides need-based educational grants for low-income students. Because they are grants, they do not have to be repaid.
Perkins Loan Program
This federally funded, need-based loan program provides low-interest loans to both undergraduate and graduate students.
Parent Loan for Undergraduate Students. Parents of undergraduates can get these federally guaranteed loans.
Adjusted Gross Income. Most financial aid forms require parents or students to disclose their taxable income minus allowable adjustments.
Parent Contribution
This is the amount of money parents are expected to be able to contribute to their child's education.
Student Contribution
This is the amount a student is expected to contribute to the cost of college.
Expected Family Contribution. This is how much money the family — the parents and the student combined — can reasonably be expected to contribute to college education.
Student Aid Report. This report summarizes the information entered on the main federal form and shows the amount of your Expected Family Contribution.