Financial Aid Solutions for You

The day you get accepted to college represents your academic achievements and the start of a new path toward success. But for many potential students, it's also a scary day because it's time to figure out how to finance that college education. This can seem like a daunting task: not only is higher education the first really big lifetime expense for many, akin to buying a home, there is also a great deal of confusing information about paying for it all. Don't let that deter you — a college education is typically financially worth it in the long run, and financial aid options are plentiful and diverse. All you need to do is work through the following categories of financial aid options to put together a manageable financing package:

  • Fill out the Free Application for Federal Student Aid (FAFSA): No matter what your current financial situation may be, if you are thinking about enrolling in a college program in the future, you need to fill out the FAFSA. Provided by the U.S. Department of Education (USDOE), the FAFSA takes your financial information and calculates how much federal aid you are eligible for. Do not skip this step: the U.S. government provides upwards of $150 billion dollars of financial aid in the form of federal grants, loans, and work-study programs to millions of students every year. Many schools also require you to submit the FAFSA so that they can also assess your financial needs and provide funding support from the school itself.
  • Apply for Public Student Loans: The federal government offers three primary forms of public student loans. In general, public loans include low interest rates and the possibility of loan forgiveness depending on your career choice. Public student loan programs include:
    • Perkins Loans: These are based on economic need. Perkins loans debt can be forgiven after you graduate if you decide to teach at a low-income school or work in another area of public service for a specified number of years.
    • PLUS loans: These can be used by the parents of college students to help pay for college, or for graduate and professional degree students. Borrowers are required to have a good credit history and the loans are administered by the colleges.
    • Stafford Loans: These provide students with low-interest loans to cover tuition and other school expenses. There are two kinds of Stafford Loans: subsidized and unsubsidized. Subsidized loans are based on financial need as determined by the FAFSA, and the federal government pays the interest on the loans while you are still enrolled at least half-time as a student. Unsubsidized loans are not based on financial need and begin to accrue interest immediately. You can defer the interest payments while you are still in school, but the interest will be capitalized (added onto the total amount of your loan). If you decide to take out any Stafford Loans, make sure that you speak with a Stafford Loan specialist provided by the USDOE to find out what your monthly payments will be after you graduate to make sure that you can cover the loan and avoid defaulting on it, which can hurt your credit score.
  • Work-Study Programs: This is a form of need-based federal aid in which students are paid for employment through their school or other institution or agency affiliated with the Federal Work Study Program. A wide variety of jobs are available on and off campus, including many community service jobs.
  • Apply for Private Loans: Private student loans are offered by banks, credit unions, and other financial institutions not affiliated with the federal government. They vary depending on the institution, and generally have higher interest rates than federal loans.
  • Apply for state loans and financial aid programs: The National Association of State Financial Aid Administrators (NASFAA) provides an online directory of the financial aid programs offered to residents by every state. You should look into this even if you do not want to attend an in-state school because many states have tuition exchange programs with other states or throughout a region.
  • Research Private Grants and Scholarships: There are hundreds of private sources of free money for school from clubs, civic organizations, companies and businesses, and other groups. Eligibility will vary; for some grants or scholarships, you may need to write an essay, be a member of a specific ethnic group, want to study a specific field, be dedicated to a specific cause, or share a specific religious affiliation. There is such a huge variety in the kind of private funding sources available that there is probably something for everyone. Check out to conduct a search based on different categories.
  • Ask your employer about financial aid benefits: Many businesses provide funds for employees who wish to add to or improve their job skills and performance. Speak with your human resources representative or read through your company's website to see if there are any available programs.

Once you have exhausted all your options and begun your higher education, it's important to keep track of all of your funding sources and the terms of the awards and loans. For example, if you have earned a scholarship, it may be necessary for you to maintain a certain grade point average to maintain your eligibility. Finally, once you have completed your degree, look into the different options available for loan consolidation to make sure that your monthly loan payments are manageable. The USDOE offers a federal loan consolidation program with low interest rates, but many private loans do not provide this option, so it's important to keep track of your college financing throughout your education.