How Does Financial Aid Work? A Guide for Adult Learners & Prospective Students
You know you want to pursue your degree—and investing in your education can have long-term benefits. According to the U.S. Bureau of Labor Statistics (BLS), individuals with a bachelor's degree earn on average about 66% more per week than those whose highest education level is a high school diploma.1
Returning to school or beginning a degree program can be a major decision, especially when it comes to managing costs. Understanding how financial aid works can help you make informed choices about funding your education. Let's break it down step by step.
What is Financial Aid?
Financial aid is the name used for federal, state and private resources that may help pay for college costs. Typically financial aid consists of grants, scholarships, and loans. Grants and scholarships generally do not have to be paid back. Loans must be repaid, with payments usually beginning after the student is no longer enrolled at least half-time. Pursuing a degree is an investment, and many students rely on financial aid to make that investment possible. Financial aid helps bridge the gap between what you can pay and the total cost to attend school—tuition, fees, books, and living expenses.
In most cases, you apply for assistance, and if eligible, the funds are awarded (or "packaged") to help fund your educational expenses.
What Is the FAFSA?
To access most forms of federal and state aid, you'll start by completing the Free Application for Federal Student Aid (FAFSA®). This form collects financial information such as income, assets, and household size to determine your eligibility for different types of aid.
What Is Needed to Complete the FAFSA?
- Social Security number (for U.S. citizens) or Alien Registration number (for eligible non-citizens).
- Driver's license (optional but helpful for verification).
- Federal tax returns and asset information for the past two years (for both the student and any contributors (parents if the student is dependent or spouse if the student is married)).
- Dependent students and their contributor(s) (typically parent(s)) each need their own FSA ID to sign electronically. You can create an FSA ID at studentaid.gov.
After submitting your FAFSA, you'll receive a Student Aid Index (SAI) number and a summary of your FAFSA submission. A financial aid advisor will use this information to determine your eligibility for federal aid and provide an estimated aid package showing the types and amounts of assistance you may qualify for.
Why is Parent Information Required on the FAFSA?
Your dependency status determines whether parent information is needed. Dependent students are typically those under the age of 24, are not a veteran or currently serving on active duty in the military, or do not have children they support. Dependent students must include parent financial information on the FAFSA to determine eligibility for federal aid. If you’re unsure about your dependency status, contact your school’s financial aid office for clarification.
What Are the Types of Financial Aid?
Here are the main types of aid and how they differ:
| Type | Description | Does it Require Repayment? |
|---|---|---|
| Grants | Funds based on financial need (for example, the Federal Pell Grant) | No |
| Scholarships | Awards based on merit, talent, or other criteria | No (typically) |
| Work-Study / Student Employment | Part-time work opportunities (on campus or in the community) | No |
| Loans | Borrowed money used for education | Yes |
Grants, scholarships, and work-study generally don't require repayment. Loans, on the other hand, provide flexibility but do come with repayment responsibilities.
Your institution will typically apply financial aid directly to your tuition and fees. If there are remaining funds, they may be distributed to you to help with other educational expenses such as books or housing.
When does loan repayment begin?
Repayment on most loans will begin after the student is no longer enrolled at least half time. Some loans are interest-free while the student is enrolled. Interest may accrue on other loans even while the student is enrolled. Check with the financial aid office, to help explain the differences in the types of loans you may have. In all cases, loans must be repaid regardless of whether you complete the program or are satisfied with your educational experience. Failure to repay your loans can result in serious consequences and can negatively impact your ability to obtain credit in the future.
How often do I have to reapply for aid?
Students must reapply for federal and state aid every Award Year (July 1 - June 30). The application for the upcoming Award Year is available starting October 1. For each award year you are attending, you will need to complete a FAFSA. Depending on the dates of your enrollment, you may need to fill out multiple FAFSA forms. Please check with your financial aid office to determine when you should reapply. Financial aid eligibility can change each year, so reapplying is essential. Factors that may affect eligibility include:
- Changes in income or household size
- Enrollment status (full-time or part-time)
- Academic progress, including GPA or credit completion requirements
Helpful reminder: Stay organized with deadlines and keep copies of important documents such as tax returns and W-2s.
Final Thoughts
Financial aid can make pursuing your education more manageable by helping you to plan for necessary costs. The process typically includes:
- Submitting the FAFSA and any required school-specific forms.
- Reviewing and evaluating your financial aid package.
- Choosing which types of aid to accept.
- Using funds to cover tuition and educational expenses.
- Reapplying each year to maintain eligibility.
- Repaying loans responsibly after leaving school.
If at any point in the financial aid process you have questions or need more information, an AIU financial aid advisor can provide assistance. They can help you explore your funding options, including whether you may qualify for any employer or military benefits. You can also speak with our admissions team to find out if you can save time and money on your degree by earning credits from previous college, work or military experience.*
Have more questions about Financial Aid?: Download our Financial Aid Guide.
*Transfer credit is evaluated on an individual basis. Not all credits are eligible for transfer. See the University Catalog for transfer credit policies.
1 Bureau of Labor Statistics, U.S. Department of Labor, "Earnings and Unemployment Rates by Educational Attainment," on the Internet at https://www.bls.gov/emp/chart-unemployment-earnings-education.htm. Based on median weekly earnings. These are national projections covering all levels of experience; conditions in your area may vary.
Financial aid is available for those who qualify.
REQ2169726 10/2025