College has always been pricey, but these days tuition and other college-related expenses are rising much faster than general cost of living. That is why it’s important to know how you will pay for college, what options are available to help you do so and how to develop a sound financial plan.
Financial aid, sponsored by governmental, education and private organizations, is provided in order to help college students pay for education-related expenses such as tuition, room and board, books, supplies, and fees.
While a lot of financial aid comes through government funding, government subsidies for public education are not considered financial aid. Financial aid is limited to financial awards provided to individual students.
In the United States, both federal and state governments provide merit- and need-based financial aid for college students, in the form of low-interest loans, grants and work-study.
There are about nine federally sponsored financial aid programs, 605 state programs and as many as 7,000 higher education institutions that offer financial aid.
The most popular federal programs include Stafford Loans, Pell Grants, Work-Study Program, Federal PLUS Loans, Perkins Loans and Federal Supplemental Educational Opportunity Grants. Federals Stafford Loans and Federal PLUS Loans are extended directly through the U.S. Department of Education (DoE). Federal Perkins Loans are also made by the U.S. DoE but issued through participating schools via annual appropriations from the DoE.
While the majority of financial aid programs are sponsored by the federal government, state governments often offer some merit- and need-based options – usually in the form of grants, tuition waivers, scholarships, and work-study programs.
In addition to the federal and state government, most post-secondary institutions offer several forms of financial aid to students. Students requiring financial aid beyond that offered by the government or school they’re attending may consider other alternatives, including private education loans that are offered by most large banks and lending institutions.
Of course, education loans obtained through private lenders typically have higher interest rates than federally funded education loans. In order to apply for financial aid, most institutions require students to submit the FAFSA form. Some institutions require the FAFSA along with a need-based analysis document – the most common being the CSS/Profile.
What Kind of Financial Aid Programs Are There?
Once you’ve selected a college, one of the first things you should do is contact their financial aid office. Before you select classes, before you find a place to live, you need to develop a financial plan for college. The financial aid office will provide information about what specific financial aid packages your school provides.
The range of options can vary considerably from school to school and student to student. Make sure you understand what is offered and what you qualify for.
The United States government offers several financial aid options, including student loans, grants and work-study programs. In order to qualify for any of these, you are required to fill out the Free Application for Federal Student Aid, commonly known as FAFSA.
The application is due the January before you attend college. You can find it, along with plenty of information about federal aid, at www.fafsa.ed.gov.
Scholarships and Grants
Scholarships and grants are the most desirable form of aid because they do not have to be paid back. They are essentially free money. Scholarships tend to be awarded for academic or athletic performance, while grants are most often based on financial need.
Scholarships come from a variety of sources, but most commonly from colleges and many of their individual schools and departments. You can also apply for scholarships from the state and federal government, as well as the private sector, which can include businesses, special interest groups and private scholarship funds.
When you contact the financial aid office, also ask about scholarships from outside groups, including businesses, private scholarship funds and social, ethnic and religious organizations. You may qualify for a scholarship based on any number of factors, including income level, military service, gender, race, age, religion and field of study.
Grants are typically based on financial need. Undergraduate students can apply for the Federal Supplemental Educational Opportunity Grant and the Federal Pell Grant. Many states award need-based grants, as well grant funding for graduate research projects.
Some students actually choose which college to attend based on the availability of scholarships and grants. One school may have a dozen such awards that you could apply for, while another may only have a few. There are a number of websites that allow you to focus your college search based on scholarship and grant criteria.
Learn more about Scholarships and Grants
Like scholarships and grants, fellowships do not need to be paid back. Fellowship money may come from the government or from private organizations. The money typically comes in the form of semesterly stipends, and may also cover the cost of tuition.
In some cases, recipients of fellowships are chosen by the school’s faculty. In other cases, students may apply and compete for fellowships, and money is awarded based on merit, faculty choice, and need.
Graduate students who receive assistantships are paid to work as teacher assistants (TA), research assistants (RA), or some other on-campus job related to your major or department.
Money for TAs comes directly from the school, while money for RAs come from federal or private grants.
Assistantships vary in amount, based on government aid and faculty grants. In many ways, assistantships are similar to work-study programs in undergraduate school, and require the student to perform a job in exchange for money.
TAs commonly teach introductory-level classes to undergraduate students, and RAs commonly help faculty do research in laboratories. The specifics of assistantships vary greatly by school, department, and program, so contact your school for more information.
If you have served or are currently serving in the United States Armed Forces, you most likely qualify for financial assistance from the Department of Veterans Affairs. The VA also has programs for military families, including spouses and children of soldiers who have been killed or wounded in military service.
Federal Work-Study (FWS) programs are funded by the federal government, but operated through individual colleges. FWS programs are only available to students who demonstrate a financial need and are enrolled at least half-time at a participating college or university.
Currently there are over 3,000 educational institutions that receive FWS funds. Most schools that do not participate still operate student employment programs geared to help low-income students pay for college.
In either of these programs, the job opportunities are typically limited to part-time, lower level positions on campus. These may include jobs like department clerk, parking attendant, cashier, cafeteria cook and campus/building maintenance.
The United States government offer two different need-based loans: the Federal Perkins Loan and the Federal Subsidized Stafford Loan. They also sponsor the Federal Parent Loan for Undergraduate Students and the Federal Unsubsidized Stafford Loan, which are available regardless of financial need.
Student loans are typically very low interest (anywhere between 2% and 8%), but even so, students often accumulate tens of thousands of dollars in debt and spend decades paying off loans. This is because college is so expensive in general. That is why you want to exhaust all the options described above before you apply for a loan.
Despite the promise of debt, most students rely on loans for at least part of their college education. If you plan on getting student loans, make sure you have a long-term employment plan so you will have the means to begin repaying the loans after you graduate.
Read also: How Much Money Should You Borrow
Sources for Financial Aid
Understanding the types of financial aid is the first step, but it’s just as important to know how to find the various types. The sources for financial aid fall into three basic categories: governmental aid, aid from your college or university, and private aid.
The federal government offers several programs to help pay for college, and most states do as well. For government aid, everything starts with the FAFSA.
The Free Application for Federal Student Aid, more often known by the acronym FAFSA, is the place to start for federal financial aid. Filling out this application determines if you’re eligible for the Pell Grant, the Federal Supplemental Educational Opportunity Grant, the Federal Work-Study Program, and government-subsidized loans. Be sure to apply by the January prior to your starting college.
State Aid Programs
According to the National Association of Student Financial Aid Administrators (NASFAA), nearly every US state education agency has one or more aid programs available. These programs vary widely, of course.
Many are need-based, and many require recipients to attend college in their home state. The NASFAA has a clickable map that describes all state-based aid programs in each state. Some states (Florida, for example) have their own application process similar to the FAFSA.
Pursue whatever programs are available in your state. If you’ve decided to attend college out of state, be sure to check out the programs available in your state and in your institution’s state. You won’t be eligible for aid with an in-state restriction, but you may still find programs in both states for which you qualify.
Colleges and Universities
The vast majority of colleges and universities offer aid themselves through their endowments and other funded scholarships. These include merit-based scholarships (things like sports scholarships, academic scholarships and fellowships, and music scholarships), need-based scholarships, and more.
With around 5,300 colleges and universities in the USA, it’s far beyond the scope of this guide to outline the programs available at each. Once you’ve narrowed your search down to just a few institutions, contact their aid offices to determine your eligibility. Your admissions counselor will usually help connect you to the correct people.
CSS Financial Aid Profile
While contacting your prospective institution’s aid office is a great place to start, you may be able to learn more (and about multiple institutions’ offerings) by completing a CSS Financial Aid Profile.
Many universities rely on the College Board’s CSS Financial Aid Profile to determine eligibility for their various financial aid programs. It’s not unlike the FAFSA, though the questions won’t be identical. The CSS is a fee-based profile service, so before you purchase be sure to check with your admissions office to determine whether your institution uses this service.
Assistantships and Fellowships
Many universities offer assistantships and fellowships to graduate and doctoral students. These tend to be awarded based on the student’s ability to assist the university, either through teaching lower-level classes or through advancing research in a given field.
Offerings vary among institutions, and availability is always in flux: it doesn’t matter how great an instructor you might be in your field if your university has just two slots and they’re both full.
To learn about what assistantships and fellowships are available, contact the relevant program head or dean. If you don’t have a way to contact that person directly, check in with admissions or the aid office.
The final source of financial aid, private scholarships, is the most wide-ranging. Governmental aid programs follow a fairly linear path. College and university-based aid programs do, too, although the process has slight variations unique to each institution. Private scholarships, on the other hand, are all over the map.
Private scholarships come from all sorts of sources, from companies looking for cheap advertising (Duck Tape’s Stuck at Prom scholarship, for example) to every sort of niche foundation and club you could imagine. Weird and wild examples include these:
- $10,000 Create-A-Greeting-Card Scholarship (Prudent Publishing Company)
- FMA Solo Scholarship to a music student with an interest in flying (Flying Musicians Association)
- $1,000 for being tall (Tall Clubs International)
- $2,000 for having a solid plan to survive a zombie apocalypse (Unigo)
These are all 100% real, actual scholarships that you could win if you meet the criteria. Those links are to their actual application pages.
Not all private scholarships are as unusual as those, however. Many are for much more standard achievements, such as writing an essay on a particular topic or performing well academically in high school. Others are awarded to people from specific ethnic or religious backgrounds.
Corporations often sponsor scholarships tied to specific majors that would ultimately benefit the corporation. For example, a large corporation with a need for a specific type of engineer may create a scholarship for promising or underprivileged students pursuing that specialty.
With such a wide range of scholarships available (Unigo estimates there are north of five million!), many students are overwhelmed trying to decide which to apply for. Applying for scholarships takes time, so you’ll want to focus on good-fit scholarships—the ones that give you the best chance of success. Here are two methods to do so.
Method 1: Leverage Your Own Network
Generally speaking, the scholarships you’re most likely to win are the ones that you’re already connected with in some way. Your first step, then, is to mine your own network for scholarship opportunities.
If you have a part-time job, ask your employer if they have a college scholarship program. Ask the leaders of any extracurricular activities you’re involved in (from 4H to chess club to volunteering at a nonprofit) if they have access to or know of any relevant scholarships. If you are religious (and especially if you’re applying at religious schools), enquire about scholarships with your denomination.
Network with any organizations related to your intended field of study, too. In summary, exhaust every personal connection you have to companies, nonprofits, foundations, clubs, and so forth.
After chasing down those leads, you should have at least a couple high-likelihood scholarships to apply to. But don’t stop there. Find out if your parents’ employers offer any scholarships to employees’ children. (These are rarer than they used to be, but it’s still worth asking.)
Pick two or three friends that are high achievers and ask them if they’ve heard of any scholarships you should apply for. Apply the same strategy to any other mentors in your life: coaches, music teachers, and so forth.
Method 2: Use a Scholarship Search Tool
Method 1 is great for identifying a smaller number of high-value scholarships, ones that you stand a better than average chance of receiving due to their proximity to your network. But the truth is no matter how many scholarships you receive using Method 1, you’ll probably need more to cover your entire bill. The next most efficient way to find good-fit scholarships is to use a scholarship search tool.
The College Board’s Big Future Scholarship Search tool is a great place to start. They tout over 2,200 scholarships totaling $6 billion in aid. As a well established and highly respected entity, you can trust the scholarships and programs included here to be reputable.
Scholarship Search lets you toggle on and off various forms of aid, and it has a powerful Affiliation Information tool. This tool allows you to customize your search based on careers and employers, clubs and organizations, and military service.
Another highly reputable scholarship search tool is the US Department of Labor’s Scholarship Finder. This tool currently shows over 8,200 available awards. It’s searchable by keyword, and you can filter results by numerous qualities, including level of study, location, and affiliation.
Fastweb is a newer, higher tech tool that has been well reviewed by major media outlets. It boasts a database of over 1.5 million scholarships totaling $3.4 billion in aid. It promises a smarter, more targeted approach (which may also mean a less customizable approach). Powered by the job-search giant Monster, Fastweb also offers tools to help you find a part-time job perfect for your college schedule.
If you’re still hungry for more, check out USA Today’s article on the ten best sites to search for scholarships.
Now that we’ve covered all the major types of and sources for financial aid, it’s time to discuss
How to Apply for Federal Financial Aid
Applying for Federal Financial Aid can certainly be overwhelming, stressful, and confusing. With a little guidance, however, you’ll find that the process is simpler than it may appear.
Know Your Deadlines
Most of the stress of applying for financial aid comes from waiting until the last minute. It’s an involved process, and if you don’t give yourself enough time, it can be completely overwhelming. Do your research, find out the deadlines for any form you need to complete, and get started early.
The deadline for the Federal FAFSA form is typically at the end of June for a given school year. In other words, the deadline for the 2021-2022 school year will be on June 30, 2022 and on June 30, 2023 for the 2022-2023 academic year.
Deadlines for aid from the state, however, usually come much earlier. If you are applying for aid from the state, you’ll need to fill out forms in addition to your federal paperwork.
Scholarships or other programs which are unique to your college or university will likely have their own unique deadlines. Many schools use the CSS Profile Form for private scholarships and aid.
Double-check the deadlines for all the kinds of aid you’re applying for. The federal deadlines can be found on the application deadline page of the Department of Education’s website.
There’s a lot of paperwork involved in the financial aid application process, and it’s crucial that you don’t lose any of it. A great way to keep your papers organized is to buy an accordion-style file folder. Use this folder to store your completed FAFSA forms, loan agreements, personal financial documents, etc.
Also, it’s a really smart idea to print out every financial aid-related email you send or receive, as well as the online forms you fill out. That way, you’ll have a hard copy in case your computer crashes, or in case you need to dispute any terms for any reason.
Your file folder will be full of very sensitive information (Social Security number, tax returns, personal information, etc.), and should be treated accordingly. Keep it in a very safe place. Doing otherwise is basically asking for your identity to get stolen.
Get Your FAFSA PIN Number
The Department of Education assigns each student a unique PIN number, which you must have in order to electronically “sign” your online FAFSA application. This PIN number is also necessary for accessing your account and information.
Make sure you apply for this PIN far ahead of time. It may take only 1-3 days to receive your PIN number, but it may take a fair amount longer if the system is overloaded, or if your information isn’t correctly filled out. If you wait until the last minute to apply for your PIN, you could very well miss the submission deadline.
You’ll use this PIN number throughout your entire college career, so keep it safe and never share it! You can create your FAFSA PIN number at https://fsaid.ed.gov/npas/index.htm.
Fill Out and Submit the FAFSA Form
Many people find the FAFSA form to be quite confusing. This is largely due to the fact that the FAFSA form asks for information from your tax return, and if you’re one of the many people who hire someone else to complete your tax return, this information may be unfamiliar to you.
Before you begin filling out the form, go through a blank copy of the form and see if there are any fields, categories, or terms which you don’t understand. If you do find some confusing parts, contact your tax preparer ahead of time for some clarification. Getting answers to all your questions may take some time, so it’s important that you get started well before the deadline.
Before starting to fill out the online form, make sure you have completed the most recent year’s tax return. You’ll need a lot of information from your return to complete the FAFSA form.
Check Online for the Status of Your FAFSA Form
You can monitor the status of your FAFSA form online, at the FAFSA website. You’ll need to use your PIN number to check if your form has been processed. Processing time for a FAFSA form may range from 1-2 days up to 2 weeks.
The status of your FAFSA form won’t tell you what financial aid you’re going to receive. However, it will tell you if you’ve completed the form correctly, and if it’s been processed. Information about the aid you’ll receive comes from the school you plan on attending.
Contact Your School’s Financial Aid Office
After your application is processed, contact the financial aid department of the school you’re planning to attend (or the several schools you’re considering). The people in this department will be able to tell you what your options are, in terms of financial aid. You may qualify for scholarships, grants, subsidized or unsubsidized loans, tuition waivers, and/or work-study.
Be courteous and patient with the people in these offices, even if the process gets frustrating. It’s a difficult job to divide up a school’s limited financial aid funds, and being disrespectful to them certainly won’t make the process easier for anyone.
Apply Again Every Year
New students often think that once they’ve received financial aid, they’re set for the rest of their time in college. This can be a costly mistake. The FAFSA form, as well as most state applications, must be completed every year in order to receive financial aid. For school-specific programs and scholarships, students usually need to reapply or re-qualify in order to continue receiving the aid.
There’s Help Out There
If this all just seems like too much work, too confusing, or overwhelming, remember that there are professionals you can hire to help. Hiring a professional in no way guarantees that you’ll receive the aid you’re hoping for, but it can certainly ease the stress of the application process. Be careful, though: there are several financial aid scams out there. Do your research, and only hire a reputable professional.
Finding all applicable financial aid is one step toward making college affordable. The other step is to do everything you can within reason to reduce your expenses. Doing both pushes on both ends of the financial puzzle, increasing the amount you have and decreasing the total amount you’ll need. Let’s illustrate. Say you manage to accrue $20,000 per year in aid. Nice work! Every single dollar of aid takes a dollar off your total bill for education, so that’s $20,000 per year you no longer owe anyone for your college education.
But hold on a second. The College Board pegs average private college tuition at over $32,000. And that’s before room and board! Whether you choose campus housing or the swanky college apartments just down the street from campus, your total yearly costs will quickly balloon upwards of $50,000. All the sudden that $20,000 in aid isn’t going very far. This is why it’s important to reduce your costs wherever possible. Consider whether you can reduce your costs in these ways.
College is expensive but valuable. So, the more expensive the college, the more valuable the degree, right? Not so fast. According to Shana Lebowitz, senior reporter for Business Insider, not every expensive college consistently produces high-earning graduates. Our advice, then, is to choose an affordable program that’s known for its high quality.
Stay in State
The average tuition cost of in-state public four-year college is just $9,410 (again according to the College Board). States have a vested interest in hanging onto their brightest minds, so they subsidize the cost for in-state students.
Yes, there’s likely a more prestigious program elsewhere. But do some serious searching about whether this matters. There are some fields or specialties where it does matter, but truthfully a great many career paths don’t depend on possessing an Ivy-League degree. This is especially true on the undergraduate level. Find the best in-state program in your field and focus your efforts there.
Start with a Two-Year Program
If your field of study allows it, start with a two-year public college in your city. The College Board reports the average cost for two-year public colleges drops to $3,440. If you can complete your first two years at this rate and then transfer to a four-year program, you’ll have saved (on average) $12,000 in tuition and fees.
Housing (along with food) is the other big cost driver for college students. Here are two suggestions to help stay within your means.
Live at Home
For most students, living at home with their parents is the cheapest option of all. If you live within an hour of a good in-state program (whether two year or four) and your parents are amenable, stick around. You may elect to begin paying for some of the food or utilities or even pay them some rent. You’ll still come out way ahead of your peers.
Find Creative, Cheap Housing
If living at home isn’t an option, you still have options. Remember the big picture: you’re going to college to earn an education, not to party or live it up. Skip the high-end college apartments with resort-style amenities, and make a more practical choice. In the age of Craigslist and Airbnb, it’s easier than ever to find people looking to rent out a room. Some have found a free room in an elderly person’s home in exchange for help around the house with basic tasks. If you get creative, you can find a place to stay for far less than typical rent.
Have a Financial Plan
When approaching college, many students only think of finances as an afterthought. But just like the rest of your college experience, you should have a long-term plan. If a more expensive college will lead to higher paying employment, such as doctors or lawyers, the investment may be worth it.
If you can incorporate your college finances into a big-picture plan, you will not only know where you’re going in life, but how you’ll pay for it.
Making college affordable is hard work, but it can be done. You can do it by following these two principles: first, accrue as much aid as possible. Second, reduce your costs wherever you can.
Topics and Resources
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