“Financial aid” is a general term that basically means “money to help you pay for college,” paid for by either the government or your college itself. It can be based on your family’s financial need or on your personal merit (like great grades, SAT scores, or athletic ability).
For need-based financial aid, you need to apply for the FAFSA®. This qualifies you for three types of aid:
Grants and scholarships (also known as "gift aid"): This is free money from either the government or your college. You do not have to pay it back.
Work-study: This is money you are guaranteed, as long as you work for it. There are usually many work-study jobs on campus.
Loans: The federal government may offer you lower-interest loans than what you would get from private companies. You are not obligated to accept the amount offered to you. (You can decide to only take the grants, or to take only part of the loans offered.)
The average undergraduate financial aid package (including a blend of grants, work-study, and loans) is worth about $15,000 per year.