Paying For College: What You Need To Know

While a college education can be an excellent investment in your (or your child’s) future, it also can be one of the largest investments you'll make in your lifetime.  There are many opportunities for financial assistance – merit aid, scholarships, loans, grants, work-study -- to make college more affordable and help you pay the bill.

A college education can provide the knowledge and skills to open doors and eyes to interesting and lucrative career opportunities, probably not otherwise possible.  

According to the U.S. Census Bureau, college graduates with a Bachelor’s degree earn nearly twice as much as high school graduates. Over the course of a lifetime, the difference in earning potential can easily exceed $1 million.

More than half of college students receive some sort of assistance to help pay for college.

Learning about the various types of financial aid – grants, scholarships, loans -- is the first step to exploring your options.

Federal Programs - FAFSA

You may qualify for financial aid through the U.S. government. You should know about federal student aid programs such as: Pell Grants, Federal Supplemental Educational Opportunity Grants (FSEOG), Federal Work-Study (FWS), Perkins Loans, Federal Family Education Loan (FFEL), Stafford Loans, Federal PLUS Loans, Direct Loans and Direct PLUS Loans.  The Free Application for Federal Student Aid (FAFSA) is the basic application that is used to apply for federal student aid.

EFC and How to Estimate

EFC stands for Expected Family Contribution. That amount is determined by the agency or institution awarding the need-based financial aid—usually the government or individual colleges and universities – and is generally based on your family’s financial resources, income and particular situation.  There are some excellent tools to help estimate EFC.

College Sticker Price vs. Affordability

Before you cross a college off of your wish list due to “sticker shock”, understand that the real cost of college is the “net price” (list price minus the amount of financial aid) which may make the situation look a lot less dire. "Compare Your Aid Award” tools can help you estimate actual college costs and do side-by-side comparisons of financial aid awards.

Scholarships & Merit Aid

Unlike need-based aid, which is based entirely on your family’s financial situation, merit aid awards are in recognition of your achievements and promise — academic, athletic, community, artistic, intellectual, extracurricular activities, etc. Merit aid – grants, scholarships and tuition discounts, awarded without regard to financial need – is available to students with wealthy families and those with modest means.

According to the National Association of State Student Grant and Aid Programs' (NASSGAP) 38th annual survey, merit aid comprised more than 25% of the $9.3 billion of state-funded aid during recent years. Billions more dollars of merit aid are awarded annually by colleges, universities, endowments and other groups.

Scholarships come from many sources such as colleges and universities, organizations, charities, businesses, schools, alumni clubs, religious groups, and individuals. Some scholarships are open to all applicants while others are based on certain criteria such as need, being a member of an organization or religious group, pursuing a certain course of study, place of residence, athletic or extra-curricular achievements or community service.

Applying for Scholarships

After you find scholarships for which you may be eligible, contact the sponsors to request the applications. Review the applications carefully to determine if you are eligible to be considered and also if you have any reasonable chance of being selected. If you decide to apply, complete the applications carefully and send them in by the deadlines.

Financial Assistance from the U.S. Military

If you are interested in military service, the U.S. armed forces may help you pay for your college education. The various branches of the armed forces offer government-sponsored financial aid programs. Some programs allow you to attend college full-time and then serve following graduation.