It would be a rare occurrence for any college or university to expect students to be able pay for their education with money straight out of their pockets.  As time goes on, the total cost of education has only been increasing, making it harder for the average person to afford going to school.  With the economy struggling and the job market becoming more and more competitive, having a college degree will only greatly assist you in landing the career that you desire, as well as providing you with an experience that will last you a lifetime.

Financial aid is the general terminology used for financial assistance that is used as a means by which to pay for college.  Unfortunately, many people choose not to attend a post secondary education institution due to a lack of understanding about the financial aid process; basically, they do not know where to begin to find the financial aid they need to pay for school.

There are countless options for financial assistance available to each and every person, as financial aid is obviously a necessity for the vast majority of college-seeking students and their families.  College is an expensive investment, but one that will more than pay for itself once you receive that diploma.

  • Education loans are one of the most popular forms of financial assistance because everyone is entitled to the full amount of financial aid they qualify for.  Loans are mainly broken down into three broad categories: federal, state and private.  Most everyone who attends school uses federal loans, and most colleges and universities themselves require that students complete the FAFSA before admittance.  While all loans must be repaid, there are various forms of interest rates and repayment plans, allowing you to select a best-fit plan based on your financial situation.  Most loans, especially federal, also follow a need based versus non-need based system, which affects your qualifications based on what category you fit into.
  • Scholarships and grants are other popular forms of financial aid that are highly sought after, mainly due to the fact that they offer financial assistance as a reward that you do not need to pay back.  Generally, scholarships and grants are awarded to students that meet specific criteria, such as academic integrity, athletic achievement, personal financial situation and even ethnicity.  Universities also offer institutional aid, which are simply scholarships provided specifically by the school.  Many students become overwhelmed with the task of searching for this kind “free aid” because they do not know where to begin.  There are thousands of opportunities available, especially via the Internet, and it only requires time and determination to find the options that work for you.

Financial assistance can also come in other not so generally advertised forms.  Most all colleges and universities offer Work-Study programs, which allow students to work jobs on campus that pay at least minimum wage.  These jobs tend to provide flexible schedules and feasible hours; particular to each student’s course load and overall amount of time he or she desires to work.  As this program is federally sponsored, the income made from Work-Study jobs is not counted toward the student’s contribution to the family’s overall income.  The payment received by these jobs can also be put directly toward tuition costs in many cases, helping the student eliminate their debt first hand.

Parents and students alike often find themselves puzzled by what seems like a daunting task--the financial aid process. For anyone applying for financial aid for the first time, this task can seem confusing and slightly intimidating. In reality, there is no need to worry. Understanding where the money is coming from is information that will send parents and students on the path to maximizing financial aid.

Financial aid sources

A students financial aid package can come in a variety of forms. This can include federal and state agencies, private lenders, institutions, employers, clubs, or churches. The federal government issues more than $100 billion in financial aid each year. The remainder of aid is issued from state agencies, private loans, and scholarship funds.

  • The Department of Education - Federal financial aid which includes loans, grants, and campus-based programs are based mainly on need as opposed to academic achievement. There are three types of loans that can be received from the federal government: Stafford Student Loans, PLUS Loans for parents, and Perkins Loans, which are reserved for students who can demonstrate high financial need. There is also the Federal Pell Grant, which does not require repayment. This grant is awarded to undergraduate students based on need, cost of attendance, and other factors. Campus-based programs, often referred to as work-study, let students work to earn money for their education.
  • Federal Agencies - The United States’ government agencies, including the Department of Veterans Affairs and the Department of Health and Human Services, among others offer a wide variety of scholarships, loans, and educational benefits. The major federal student aid programs are:
    • Federal Pell Grant Program
    • Federal Supplemental Educational Opportunity Grant (FSEOG) Program
    • Federal Work-Study (FWS) Program
    • Federal Perkins Loan Program
    • William D. Ford Federal Direct Loan Program
    • Federal Family Education Loan (FFEL) Program
  • State Agencies - All states offer aid programs. Check with each individual state to find out exactly how a student’s state aid can work. States often give preference for students that are permanent residents of their state and attending an in-state school.
  • Private Lenders - In previous years, private loans were in abundance and could easily fill in the gaps that federal programs did not. However when credit seized up, dozens of lenders fled the market. Now, private loans are difficult to obtain. Students will need excellent credit and a parent with excellent credit to serve as a co-signer.
  • Private Companies - Many private companies offer scholarships to students that may have an interest in their company or their field. These scholarships often help to build relationships between students and future employers or organizations providing services to college students.

Financial aid can be complicated and can come from a variety of sources. You may want to consider hiring a financial aid consultant to ensure that you're exhausting all of your options.

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