How State Financial Aid Organizations Work

State Financial Aid Eligibility

The eligibility requirements for state-funded financial aid are similar, but not identical, to the requirements for federal aid. For example, in most states you must be a U.S. citizen, U.S. national or eligible noncitizen to apply for aid, as federal guidelines require. But some states, like Texas, allow undocumented aliens to apply for state funds. Texas tells undocumented students to forgo the FAFSA and fill out the TASFA (Texas Application for State Financial Aid), which provides grants and scholarships without regard to citizenship [source: Texas Higher Education Coordinating Board].

The most important requirement for all state financial aid organizations is state residency. Using our Texas example, undocumented students can apply for state aid, but only if they're classified as Texas residents [source: Texas Higher Education Coordinating Board]. Each state has its own requirements for establishing residency, but here are some general rules:

  • If you're a dependent student, then one of your parents needs to be an established resident of the state.
  • If you're an independent student -- self-supporting and not listed as a dependent on anyone's tax returns -- then you must have lived in the state for at least 12 consecutive months before applying for financial aid.
  • If you serve in the armed forces or serve a religious mission in another state or country, most states don't count that against your residency status.

Interestingly, if you live in a certain state while attending a college, university or any post-secondary institution, that time doesn't count toward your residency [source: PHEAA]. So if you grew up in Colorado and spent four years in Pennsylvania for college, those four years don't make you a Pennsylvania resident. For financial aid purposes, you're still a Colorado resident.

State departments of education have developed very nuanced and specific rules for establishing residency. This is because state colleges and universities charge wildly different tuitions for in-state and out-of-state students. There's lots of emphasis placed on intent: Why did you move out of state temporarily? Was it always your goal to return? For tuition purposes, many state schools require applicants to sign statements of legal residence [source: UCSB]. For state-based financial aid, it's not as strict. Beyond the residency requirement, male students between 18 and 25 must register with the Selective Service.

Now that we know who is eligible for state financial aid, let's look at the types of aid offered by each type of state agency. We'll start with the nonprofit higher education agencies found in most states.