Beginner’s Guide to College Financial Aid

Affording College, Planning & Saving
on March 13, 2014
Beginner's Guide to College Financial Aid

At this point, it’s no secret that financial aid can make the difference between whether the cost of a college education is manageable or if it ultimately outweighs the benefit of a degree in your chosen field. First and foremost, completing the Free Application for Federal Student Aid (FAFSA) will allow you to access the majority of financial aid options available to both parents and students in the U.S.—federal, state and even college-specific financial programs require the form. Many scholarships also require FAFSA completion as a prerequisite for application.

Grants and Loans

Grants and loans are two of the key financial aid programs available to help students afford college. Both are available through the federal government, as well as through many state governments. The key difference between the two is that grants, such as Pell Grants and Federal Supplemental Educational Opportunity Grants, do not have to be repaid after the student graduates from college. In contrast, loans—including subsidized loans—do require repayment. The loans administered through governmental programs (including Stafford, PLUS, and Perkins loans) tend to offer better terms than many other college loans available to college students through banks and other commercial lenders.

Work-Study Programs

Work-study jobs can be an appealing form of student aid: students can work part-time jobs that are essentially guaranteed to be available and to pay at least minimum wage at any school that participates in the Federal Work-Study program or administers one of its own.

In a recent podcast episode of Taming the High Cost of College, financial consultant Brad Baldridge urges students and their families not to write off need-based financial aid without actually running the numbers. “I’ve seen families with incomes as high as $250,000 qualify for some need-based aid. On the flip side, I have seen families earning $75,000 not qualify,” said Baldrige. “It is important that you get an accurate assessment of your particular situation to determine if you might qualify.”


Scholarships can provide an opportunity for financial aid, even for families that have a hard time qualifying for other types of help. A variety of different organizations—from schools to professional groups to religious institutions and beyond—make scholarships available on the basis of different criteria. The larger scholarships tend to be based on financial need, merit and athletic abilities, but as they say, there’s a scholarship for just about everything. When it comes to financial aid options, research is your best friend.

No Stone Unturned

Baldridge also notes that students may be able to reduce the cost of college through less obvious means. Reciprocity agreements, for instance, dictate that a student can attend school in a state where he or she is not a resident, but at in-state costs. “For example, with Minnesota and Wisconsin you can live in Wisconsin and attend Minnesota schools for the resident price and vice versa,” Baldridge noted.

Other strategies can include taking classes that can transfer to a desired college at less expensive schools like a community college, or even Advanced Placement classes at the high school level. It also makes sense to sit down with a tax professional or a financial planner as far in advance as possible to see how the family as a whole can save money towards college or find ways to qualify for a better financial aid package.

Related Articles: Filing the FAFSA: What Parents Need to Know, Finding Financial Aid: Confessions of a Scholarship Winner

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