Don't let news of the rising cost of college scare you. With planning and creativity, you can afford a college education for you or a child.
Know the difference between need-based and non-need-based: All financial aid falls into two categories. Need-based aid is for students who cannot afford to pay for education. Non-need-based is awarded even to those who can afford education.
Complete the Free Application For Federal Student Aid: Most schools use the FAFSA to determine how much a student can pay for education. This is called the estimated family contribution. Financial aid is based on the difference between the EFC and the cost of attendance. Some schools use other forms; however, the FAFSA is required for government programs including Pell Grants and Stafford Loans. Since the FAFSA is standardized, it does not consider special situations. If circumstances limit the ability to pay for college, contact the school financial aid office directly.
Start early: Don't wait until a college accepts you to apply for aid. Schools distribute resources on a first-come, first-serve basis and may run out of funds. Complete the FAFSA any time after Jan. 1; you can use estimated numbers if you haven't completed your tax return. Those who complete the FAFSA online (www.fafsa.ed.gov) will get results about two weeks faster.
Be creative: Many students think if they don't have exceptional academic or athletic talent, they can't qualify for a scholarship. Scholarships are awarded for nationality, area of study, membership in professional or community organizations and place of employment. You just have to look for them. Beware of paid scholarship searches; you'll do just as well talking to family members and counselors and checking free scholarship searches on the Internet. Don't overlook your bank either; ask your banker for information.
Consider a loan: Since loans can be either need- or non-need-based, terms vary. Government subsidized loans, such as Perkins loans, offer lower interest rates and deferred payments until after graduation. Even unsubsidized loans, such as PLUS loans, can be a good alternative to cashing in investments, using 401(k) funds or taking out a home equity loan. Talk to a financial advisor about your options.
Compare award packages: Since your EFC is the same for each college, you need to look at the amount and type of financial aid each school offers. You want more grants and scholarships than work study or loans. If you have outside scholarships, find out how your school applies them to your financial aid package. Some schools use scholarships for your EFC, but others decrease work study or loan amounts. A few even reduce grant money with scholarships.
Get a job: The federal work study program lets students earn money on campus working limited hours that don't interfere with studying. Cooperative education programs let students earn and gain professional experience by alternating semesters of study with full-time work. Resident and teaching assistantships provide a small salary and reduced tuition, fees or housing costs.
Save up: To make the most of college savings, look into state-sponsored, professionally managed 529 Plans. Parents, grandparents and students can contribute, and withdrawals are exempt from federal and some state taxes as long as you use the money for a qualified educational expense. 529 Plans include prepaid college plans (which require the student to attend a state school) and college savings plans (which are more flexible). 529 Plans also allow much higher contributions than plans such as Coverdell Educational Savings Accounts and Educational IRA Accounts.
This article was submitted by Van Canada, Riverside Bank president in Volusia County.