Financing Your Education

Paying for College 101

There's no way around it. A college education is expensive, especially if you or your child goes to a private school. How much it will cost depends on the school you choose. Once you've narrowed your choice of schools, contact them to find out how much the total cost will be and what scholarships and financial aid are available.

High schools often hold free seminars on choosing and paying for college. Another source of information on financial assistance from both private and government sources is finaid.org. This site also offers calculators that can help you figure out how much school will cost, how much you need to save, and how much aid you will need.

Many state governments have created programs to make it easier for families to save money for their children's education. Visit collegesavings.org for links to information on various state programs such as 529 plans.

Other helpful college planning tips:

  • Pay close attention to state and federal financial aid deadlines. You'll want to file well before the deadline though, so you can receive aid before funds run out.
  • Check the Department of Education's student budget calculator. You can plug in tuition costs, room and board and other expenses along with how much money you have in student loans or grants to get an idea of where you stand financially.
  • Make sure your college bound child gets involved in the process. Point them to College.gov where they can learn to manage their money in college and avoid common scams that target students.

Student Financial Aid

Student Financial Aid is available from a wide variety of sources including the federal government, individual states, directly from colleges and universities, as well as from numerous other public and private agencies and organizations. Whatever the source, all forms of college aid fall into four basic categories:

  • Grants. Gift aid from grants does not have to be repaid and is generally awarded based at least partially on financial need.
  • Work Study. The Federal Work-Study Program (FWS) is a federally funded source of financial assistance used to offset financial education costs. Students earn money by working and attending school. The money does not have to be repaid.
  • Loans. Funds that are borrowed and must be repaid with interest are loans. As a general rule, educational loans have far more favorable terms and interest rates than traditional consumer loans.
  • Scholarships. Offered by schools, local/community organizations, private institutions and trusts, scholarships do not have to be repaid and are generally awarded based on some specific criteria.

Federal Student Aid Information Center

The Federal Student Aid Information Center (FSAIC) can answer your federal student financial aid questions and can give you all the help you need for free. You can also use the FSAIC automated response system to find out whether your Free Application for Federal Student Aid (FAFSA) application has been processed and to request a copy of your Student Aid Report (SAR).

College Cost Reduction and Access Act

The College Cost Reduction and Access Act of 2007 created two new federal programs: a new Public Service Loan Forgiveness Program and a new Income-Based Repayment plan for the repayment of federal loans.
The Public Service Loan Forgiveness Program offers forgiveness for outstanding federal loans for individuals working full time in public service jobs. The Income-Based Repayment plan helps to make repaying education loans more affordable for low-income borrowers.
Both programs offer generous benefits, but the rules may seem complex, so it is important to get all of the details. For more information:

Under a new law passed in 2010, the Student Aid & Fiscal Responsibility Act, certain student loans-Stafford, PLUS, and Consolidation Loans- previously made by private lenders, will come directly from the U.S. Department of Education. More information about the new loans, including lower caps on monthly payments, can be found at studentaid.ed.gov.

Federal Student Aid