Your first stop for advice on college or university should be your high school counseling office. It’s never too early to start this process.
Your first stop for advice on college or university should be your high school counseling office. It’s never too early to start this process (i.e. Grades 7-8).
High school guidance counselors and university/career counselors are full of information about scholarships, grants and financial aid resources. They can provide you with:
And much, much more. Take advantage of their help at every opportunity.
Almost every U.S. college and university has a financial aid office and a section on their website where you can find resources, cost calculators and contact information for financial aid advisors.
Don’t be afraid to contact financial aid offices directly – they will have the most up-to-date information on their institutional financial aid. But also keep in mind that they exist to make money for their school. So be sure to double-check the information you receive and do not disclose your financial information to them until you know it’s accurate.
For state-based aid, the first place to start is the website of your State Higher Education Agency (a.k.a. Commission for Postsecondary Education, Student Aid Commission, Department of Higher Education, etc.). This office will have information on state grants, scholarships, loans, work-study and state-administered financial aid programs.
Since each state has specific residency requirements, eligibility rules and application procedures, you should look at websites for both:
This will give you a good sense of your options.
The U.S. Department of Education relies on a number of independent accrediting bodies to determine if a college or university is meeting baseline quality criteria. You will not be eligible to receive federal financial aid (and probably state financial aid) if you attend an unaccredited school. The most important accreditation for traditional, brick-and-mortar institutions is regional accreditation from one of six regional accrediting bodies (e.g. Northwest Commission on Colleges and Universities).
Although the U.S. Department of Education recognizes both regional and national accrediting agencies (e.g. Accrediting Commission of Career Schools and Colleges, Distance Education Accrediting Commission, etc.), national accreditation is typically applied to for-profit schools that offer vocational, career or technical programs.
Regional accreditation is the “gold star” standard. If you do not attend a regionally-accredited college or university, you may find it difficult to:
If you’re interested in receiving any kind of federal financial aid or state loans, grants and scholarships, you should begin by filling out the Free Application for Federal Student Aid (FAFSA). FAFSA is responsible for managing student financial assistance programs authorized under Title IV of the Higher Education Act of 1965. The term “federal aid” includes federal grants, loans and work-study funds for colleges, universities and career schools.
It’s worth your time and effort to fill out the FAFSA.
You can fill out FAFSA online (recommended), via PDF or you can request a paper version. Because the government uses tax information to judge your eligibility for the upcoming academic year, the FAFSA must be submitted after October 1st (for example, October 1st 2016 for the 2017-2018 school year). Ideally, on October 2nd. Seriously! State aid may be limited, and if you’re last to the party, there may not be any left. So make it your New Year’s Resolution #1. Some students seek assistance from their high school guidance counselor or a fee-based FAFSA preparer, but there are plenty of free resources online. You must renew your application for financial aid every year.
Don’t believe the myths you might hear about federal financial aid – your family can have college savings, home equity and/or a good income and you might still be eligible for funding. Also, in addition to assessing your eligibility for grants, FAFSA also acts as your application for federal student loans and a lot of state-based aid. So it’s worth your time and effort to fill it out.
Once you submit your information, you will be notified by email or mail if federal funding has been awarded. The U.S. Department of Education will also forward the relevant information to your state student assistance agency. Every state has a deadline for receiving FAFSA submissions (March 1 is usually safe for all states apart from Michigan). Please check with your State Higher Education Agency and visit the government’s FAFSA deadlines page to make sure you submit your FAFSA in time.
Short for “College Scholarship Service Profile,” CSS/Financial Aid PROFILE® (a.k.a. CSS/Profile) is a detailed application form for non-federal financial aid from approximately 400 colleges and scholarship programs.
It’s not always necessary to fill out a CSS/Profile, but it could be required for certain applications. Along with the FAFSA, some private colleges will ask you to complete the CSS/Profile in order to assess your eligibility for institutional scholarships, grants and loans. Colleges with early acceptance programs (i.e. before January 1) may also use it to make preliminary financial aid decisions. Check with your individual school to see if a CSS/Profile is necessary.
Thinking about earning an online qualification? Check first to see if the degree qualifies for federal and state financial aid. There are regionally-accredited schools who offer online programs. A limited number of DEAC-accredited institutions also participate in federal financial aid programs. We have some more specific advice available in our article about What Every Online College Student Needs to Know About Financial Aid.
The U.S. Department of Education awards approximately $150 billion per year, primarily in need-based aid. This includes grants, work-study funds, and low-interest loans to 15 million+ students attending college or career school. To be eligible to receive this aid, you must complete a FAFSA.
We cover some of the major federal grants and loans below, but there are more. The best place to start for information is the government’s website: Federal Student Aid. You can also find information about federal veteran and active military aid in our Military Financial Aid section.
Federal financial aid is available to U.S. citizens and certain non-citizens (e.g. permanent residents). Although the majority of funds are awarded according to need, many students are eligible to receive aid. Don’t count yourself out until you’ve filled in your FAFSA. International students are typically not eligible for federal aid, but they often receive college and university aid.
Direct Subsidized and Unsubsidized Loans (a.k.a. Stafford Loans) are available through the U.S. Department of Education through the Federal Direct Loan Program (FDLP). You’ll sometimes see this referred to as the Federal Direct Student Loan Program (FDSLP) or simply “Direct”.
Direct loans have a low, fixed interest rate and are given to undergraduate and graduate students who are enrolled in an accredited institution of higher education for at least 1/2 time. In this case, the U.S. Department of Education acts as the lender (i.e. the loans are made directly from the federal government, not through a bank or other lender).
There are two major types:
Provided you’ve filled out your FAFSA, you’ll be told which loan you qualify for – and how much you can borrow – in your award letter from college.
You’ll see the words “merit-based” and “need-based” pop up a lot in financial aid discussions. It’s important to know the difference between the two:
Like the Subsidized Stafford Loan, a Perkins Loan is a need-based student loan that is sponsored by the federal government. It is offered to undergraduates, graduates and professional students by participating schools. These schools receive annual appropriations from the U.S. Department of Education to finance their loan programs. Perkins candidates must demonstrate exceptional financial need.
Perkins Loans have a number of attractions:
Unlike the Stafford Loan, your school, not the federal government, will act as the lender. Not all schools participate in the Federal Perkins Loan Program, so check with your college’s Financial Aid Office first.
A Direct PLUS loan is a federal loan that can be used to pay for college. These loans have a fixed interest rate (generally around 7%) and usually require a good credit history. However, even with an adverse credit history, you may be able to obtain an endorser or explain your circumstances to the U.S. Department of Education.
There are two major types of PLUS loans:
In both cases, the U.S. Department of Education acts as the lender. The maximum loan amount is the cost of attendance (COA) minus any other student financial aid.
A Direct Consolidation Loan helps you to combine multiple federal student loans (e.g. Stafford, PLUS, Perkins, etc.) into one big loan. So instead of dealing with multiple loans each month, you only have to make one monthly payment.
On the up-side, loan consolidation can:
On the down-side, a consolidated loan may mean you:
Once you’ve consolidated your loans, you can’t go back. The original loans no longer exist. What’s more, PLUS loans made to parents cannot be transferred to the student for consolidation.
You can apply for a Direct Consolidation Loan through StudentLoans.gov.
The nice thing about federal grants is that they do not need to be repaid. Like the Pell Grant, the FSEOG is a need-based grant awarded to students who wish to earn a bachelor’s degree or similar. Grants hover between $100-$4,000 per year. The amount will depend on your financial need, how much aid you receive from other sources and the availability of funds at your school.
Unlike the Pell Grant, which provides funds to every eligible student, the FSEOG has a limit. Every participating school receives a certain amount of funds from the U.S. Department of Education per year. Once a school has exhausted its FSEOG funds, no more FSEOGs can be awarded that year. Please check with your college’s Financial Aid Office to see if it participates in the program.
The Pell Grant is intended to help students of low-income families who wish to earn a bachelor’s or professional degree. This grant is intended for undergraduates, but students enrolled in a post baccalaureate teacher certification program may also be eligible.
The maximum grant amount changes annually, but generally falls in the $5,000-$6,000 range. You cannot receive a grant for more than one school at a time. Money can be used for tuition, fees, room and board and expenses at one of approximately 5,400 participating institutions. Please check with your college’s Financial Aid Office to see if it participates in the program.
The Teacher Education Assistance for College and Higher Education (TEACH) Grant is designed to help students who wish to begin a career in teaching. The program provides up to $4,000 a year to qualified candidates.
In order to receive a TEACH grant, you must participate in a TEACH-Grant-eligible program and sign a TEACH Grant Agreement to Serve. In this agreement, you promise to teach:
If you don’t fulfil your service obligation, all TEACH Grant funds will be converted to a Direct Unsubsidized Loan and interest will be charged from the date the TEACH Grant was paid to you.
To learn if your school participates in the TEACH Grant, please check with your college’s Financial Aid Office. They will provide you with a list of teaching programs at the school that are TEACH-Grant-eligible.
The Federal Work-Study Program helps undergraduates, graduates and professional students with a demonstrated financial burden earn money to pay for their education. The program arranges for students to work in part-time jobs and community service related to their course of study. Wages can be used to pay for tuition, fees, room and board, etc.
Work-Study awards are given to both full-time and part-time students. Your job could be on-campus (e.g. working for your school) or off-campus (e.g. working for a public agency). Hours are capped and your salary can’t exceed your total Federal Work-Study award. The total amount of your award will depend on when you apply, your level of financial need and your school’s funding level.
Federal Work-Study is administered by approximately 3,400 participating institutions, so please check with your college’s Financial Aid Office to see if it is involved in the program.
In addition to federal financial aid, you can always seek financial help from your home state. State Higher Education Agencies provide tuition wavers, grants, work-study programs and scholarships. Most of this procedure is easy – after you submit your FAFSA, the U.S. Department of Education will forward relevant information to your state. The agency will then decide if you’re eligible for state aid.
However, it always pays to do your research. We discuss a couple of state-related funding options below, but we highly recommend you look at your state higher education agency website for information on specific scholarships and grants.
To be eligible for this aid, most states will require you to live and go to school within state borders. However, there can be exceptions for neighboring states. When in doubt, check with the State Higher Education Agencies of both your resident state and the state in which you wish to go to college.
Formerly known as the State Student Incentive Grant (SSIG), the Leveraging Educational Assistance Partnership (LEAP) Program is a federal-state partnership that provides grants to undergraduate and graduate students who have substantial financial need.
Students can apply for LEAP grants in the states in which they are residents. The maximum LEAP award varies from state to state, but hovers around $1,000-$2,500 per year per student.
Every state offers Section 529 College Savings Plans. These plans fall into two groups:
Some states offer only one of the two options; some states offer both. We cover these plans in more detail in our College Savings Section.
To encourage students to apply to their institutions, many colleges and universities provide merit- and need-based aid. This aid could include scholarships funded by endowments, college-administered loans and/or offers of campus jobs.
To establish your eligibility for this aid, schools will typically need to look at your FAFSA; some may also wish to see your CSS/Profile. You can ask the Financial Aid Office for more details on what institutional aid is available.
We also recommend contacting someone in your potential department (e.g. Department of Accounting, School of Nursing, College of Education, etc.). Departments may have subject-specific grants and scholarships available for your major.
Many colleges offer merit-based scholarships to students who have demonstrated excellence in academics, arts or sports. These are usually decided when college admissions boards are reviewing applications and transcripts.
To prepare ahead, you can always ask colleges what scholarships they offer and how many students receive them. You can also ask if specific departments have specific scholarships for your major. For more advice on searching for scholarships, please see our College Scholarships section.
In addition to distributing federal loans like Perkins, some colleges act as independent lenders, providing loans from their own endowments. Like federal loans, these are usually offered according to financial need and often have a fixed interest rate.
The Private 529 Savings Plan is a national prepaid tuition plan offered by a large group of private and independent colleges. We discuss this option in more depth in our section on College Savings Plans.
Tuition payment plans divide tuition bills into short-term installments (e.g. monthly tuition payments automatically debited from your bank account). Although these plans are usually interest-free, some colleges may attach fees or finance charges.
Overaward situations occur when your financial aid package exceeds your need. This can often happen if you win a merit-based scholarship from anybody other than the federal government or your college or university. At that point, you must report it to your school’s financial aid office.
Because this “outside scholarship” money is considered an asset, your college will typically reduce your need-based financial aid package as a result. However, they will often reduce your loans and work-study offerings before cutting your grants.
You can read more about these complicated situations in the government resource on Overpayments and Overawards.
A huge range of university/college scholarships are available for undergraduates and graduates. Scholarships are commonly merit-based, although some givers choose to combine merit with financial need (e.g. Gates Millennium Scholars Program). Unlike student loans, scholarships do not have to be repaid. If you have the chance to apply for one, do not pass it up.
That being said, scholarships will probably only cover a fraction of your education cost. Student loans, savings, federal aid and other sources of funding will need to make up the difference. Above all, watch out for Scholarship Scams.
Scholarships aren’t just for good grades. They are available for sports, academic achievement, artistic talent, special needs, subject areas, underrepresented groups and specific geographic areas. You’ll find them at the national (e.g. National Merit Scholarship, Intel Science Talent Search, etc.), state and local level. They may be sponsored by the government, large corporations (e.g. Coca Cola, Walmart), institutions or private donors.
Will your scholarship be taxed? This depends on the situation.
Community service scholarships reward students for their volunteer efforts. We discuss a couple of the most well-known ones, but there are plenty more out there.
A college savings plan allows your family to start saving money for college as soon as – or even before – you are born. Your parents will typically invest their money into a variety of financial plans that earn interest during the years you are growing up. Once you reach college age, you can start to use savings funds for tuition and expenses. This reduces the number of student loans you may have to take out.
Named after section 529 of the Internal Revenue Code, Section 529 plans are designed to help families save for college. There are two kinds of plans operated by state governments:
Some states offer only one of the above; some offer both. Most plans require that the account owner (e.g. your parent) or beneficiary (i.e. you, the student) be a resident of the state in which the plan is made. Some states limit plans to undergraduate education.
Anybody – parents, extended relatives, friends, colleagues and total strangers – can contribute to a child’s 529 plan. With that purpose in mind, some grandparents use them as an estate planning tool. Most states put a limit on cumulative contributions.
If you don’t go to college or don’t spend all of the fund’s money on eligible college expenses, your family can have the invested money returned – with income taxes and a 10% penalty owed on earnings. Also, families may find that they reduce a student’s eligibility for need-based financial aid if they pay tuition directly from a 529 account.
We recommend you discuss both 529 options with a qualified financial advisor before investing.
Tax-exempt Section 529 College Savings Plans are similar to 401k and IRAs for retirement. Plans usually follow an age-based asset allocation strategy. Money in the plan is invested in riskier options while the beneficiary (i.e. you, the potential student) is young (e.g. newborn – 6-years-old). As you grow up, the investments gradually become safer and more conservative.
Section 529 college savings plans have a variety of benefits:
Some plans also offer a minimum fixed rate of return and/or protection for the principal against inflation. On the other hand,
Section 529 Prepaid Tuition Plans are built to “lock in” tuition rates at the time of investment. These investments then increase in value at the same rate as college tuition.
So how does it work? Let’s say your parents purchase shares that are worth 1/3 of tuition costs at your state college. In 15 years time, those shares will still be worth 1/3 of tuition costs, no matter how high tuition rates have risen.
Benefits of prepaid tuition plans include:
But there are downsides:
If you wish to go to a private or out-of-state college, the plan will usually pay out the average in-state public college tuition and your family will be responsible for any difference. However, some neighbouring state colleges may be willing to treat you as an “in-state” student.
The Private (a.k.a. Independent) 529 Plan is a private college alternative to the state-run prepaid tuition plan. Instead of prepaying tuition for public state colleges, families can choose to prepay tuition for 270+ private colleges (e.g. MIT) participating in the plan.
The benefits of this plan are:
On the other hand:
Putting yourself through graduate school comes with its own set of hurdles. Graduate school is expensive and time-consuming. You will often be working a full-time job, which could impact your eligibility for certain awards. Most graduate schools will expect you to meet the cost of your education through savings, employment income and spousal or parental contributions.
That being said, graduate school is rapidly becoming the norm in many professions and there are now plenty of financial aid packages available – especially if your department is receiving a lot of research funding and grants.
The best places to start are the website of your college’s Financial Aid Office and the office of the college, department or school (e.g. School of Nursing, Department of Biochemistry, Business College) in which you are interested.
Their financial advisors will have specific information on institutional (i.e. university-based) aid, including specific details on fellowships, research assistantships, university-based loans and scholarship funds. To be eligible for federal and state aid, you should also complete your FAFSA.
Fellowships, grants and scholarships are the golden eggs of graduate financial aid. They can be merit-based, need-based or a combination of both. These non-repayable funds may be offered by private funders, non-profit organizations (e.g. National Research Council), the federal government or the institution itself.
Those interested in teaching may wish to investigate the federal TEACH Grant and the Pell Grant. Although the Pell Grant is primarily aimed towards undergraduates, graduate students involved in a post-baccalaureate teaching program are also eligible.
We discuss scholarships in more detail in our section on College Scholarships.
Graduate loans are available from public (i.e. federal and state governments), institutional (e.g. the college or university) and private sources (e.g. corporations and banks). Governments and universities almost always offer better interest rates and repayment terms than private lenders, so we always advise you begin with them first.
Federal graduate loans include:
To give graduates real-world experience and allow them to make back part of their tuition, many schools employ graduate students as teaching and research assistants. For your efforts, you may receive a salary, health insurance and/or discounts on tuition.
Your university’s Financial Aid Office and your department will have detailed information on how to apply for these opportunities.
In addition to putting your hand up for need-based federal work-study programs, you could also consider applying for jobs within the university you wish to attend. Lots of schools offer discount tuition and part-time degree programs to their employees.
To reward citizens for their service, the federal government offers a range of financial aid benefits to active servicemen, veterans, reservists and military dependents under legislation such as the Post 9/11 GI Bill, the Montgomery GI Bill and the HEROES Act of 2003.
The U.S. Department of Veterans Affairs is responsible for administering education and training programs. These programs provide a range of higher education and training benefits to specific service members.
There are a number of requirements you have to fulfil in order to be eligible for this aid (e.g. honourable discharge, days of aggregate active duty service), so please check with the U.S. Department of Veterans Affairs or your nearest VA regional office for details.
As an active servicemember, you may be qualified for certain loan benefits, including:
All of these options require you to show proof of your status. The first thing to do is contact the loan servicer administering your federal loans to see what you may need in terms of documentation.
Children of service members who died as the result of military service in Iraq and Afghanistan after 9/11 are eligible for additional aid. If these children are not able to receive a Pell Grant, they may be eligible for the Iraq and Afghanistan Service Grant. Children must be less than 24-years-old at the age of application and enrolled, at least part-time, in a college or career school.
Depending on their length of service and speciality, some full-time military personnel can qualify to have their federal loans repaid by the Department of Defense. This works out to 1/3 of the loan repaid for each year of full-time duty. Each branch of the service will set its own maximum repayment amount. For more information, consult your military recruiter or visit Today’s Military.
Reserve Officers’ Training Corps (ROTC) scholarships are merit-based. They include:
Many organizations offer scholarships to active duty personnel, military veterans and related family members. We’ve listed a few below, but you will also find state or local veterans service organizations who are willing to help.
There are always more sources of education funding out there – they’re just harder to find. We explore a few of the avenues below, but we also recommend you reserve some time to research your options online. There are hundreds of Q&A forums and message boards where other students discuss successful strategies and niche programs. For example, foster care youth websites will be sure to mention the Educational and Training Voucher Program.
Peer-to-peer student loans are also known as micro finance, microloans and social lending. In this scenario, you’d receive an unsecured loan from an individual (e.g. friends, family members or unrelated lenders). Sometimes you are able to make a personal case to the lender about why you deserve the loan.
If you’re having trouble gaining a federal student loan and don’t like the terms of a private loan, you may wish to consider this option. But we recommend you always start with the federal government.
Peer-to-peer loans have a few advantages over private loans:
But they often come with short repayment terms. You can get a sense of how this format works on peer-to-peer lending sites such as:
In addition to federal aid, you may need to take out a private (a.k.a. alternative) student loan from a private organization or large lending institution (e.g. bank, credit union, real estate agency, etc.). However, be aware that:
Employers – especially large corporations and organizations – are often willing to help you continue your education if they feel your new skills would grow their business.
Talk to your HR department, check with your supervisor and examine your benefits package. You may find that your company offers:
Employers may also offer education scholarships to dependents/children of employees. For more information, see our section on College Scholarships.
Don’t forget your education when it comes to filing time. The federal government gives students a number of tax breaks, including the:
Earning course credits ahead of time through AP classes, exams (e.g. CLEP), job training and MOOCs can help you save money on tuition and fees. You start ahead of your peers and don’t have to spend as much time in college.
We explore these options in much greater depth in:
Always read the fine print in your financial aid award letter.
Colleges have a nasty habit of enticing freshmen with large financial aid packages and then reducing student support in subsequent years. For example, they might provide you with a need-based grant that covers a good proportion of your tuition in your first year, then slash that money in your sophomore to senior years.
To avoid being taken advantage of:
Federal aid is calculated on a large number of factors (e.g. parental income, siblings in college, retirement bonuses, etc.) that can change from year to year.
These events can have a HUGE impact on how much money the government decides you should receive. Before you begin relying on a fixed sum of federal money for 4 years, examine the elements in your Expected Family Contribution (EFC) calculation in your FAFSA to see how the government is assessing your need-based aid.
It can be hard to spot a scholarship or student loan scam. Scammers often imitate official agencies and education lenders – by the time you realize they’re not legitimate, your money is gone.
The best way to avoid these scams is to go through reputable scholarship matching services and double-check any offers with your college financial aid administrator or high school guidance counselor. You should also keep a record of all your correspondence and copy of any telephone conversations with scholarship companies in case you wish to report any potential scams.
Be especially suspicious of companies who:
Common scams include:
NOTE: Although we believe the information above was correct as of date of publication, the content is provided for informational purposes only. We suggest readers verify the current accuracy through the links provided or via official sources.