Getting Ready for College: Paying for College

Families are not alone in paying the costs of college: Every year millions of students apply for and receive financial aid, and almost half of all students who go to college receive some kind of financial aid, according to the U.S. Department of Education. College represents an investment in this country's most precious resource—its children. No child who wants to go to college and is willing to work hard should be prevented by financial need. Here's what to do:

• Start saving early. Saving money is the best way to prepare for meeting the costs of college. Set aside money each month, starting now, to build a college fund. Think about where your child might attend college, how much that type of college might cost, and how much you can afford to save. The earlier you and your child begin saving, the smaller the amount you will have to set aside each month.
• Apply for financial aid. All needy students can apply for federal, state, and other student financial aid to help them pay for college. The two major types of aid are grants or scholarships, which do not have to be repaid, and loans, which are available to students and parents. Like a car loan or a mortgage, these must eventually be repaid.

Where can you apply for financial aid?

According to the U.S. Department of Education, the federal government supplies billions of dollars annually in student aid and is the largest provider of all student aid:

• Pell Grants are the most important form of student financial aid for the nation's neediest students. The size of the grant depends on the student's need.
• The Work-Study Program lets students work during the summer or part-time during the school year to help pay for college. Colleges help find jobs for students, and the federal government helps pay the salary. Work-study jobs give students valuable work experience and are often related to the student's classes or future career, in addition to helping pay the costs of college.
• Federal Loans are available to both students and parents. Stafford Loans for students are either subsidized, for needy students, where some of the accumulated interest is paid by the government, or unsubsidized, where the student pays all of the accumulated interest. PLUS Loans (formerly Parent Loans for Undergraduate Students) are loans to parents for any costs that are not paid for by other aid.

A Quick Word About Student Loans

Students usually do not have to start repaying their loans until after they finish school, and the interest rate is usually lower than for other kinds of loans. Many students are hesitant to take out loans, but remember college graduates usually make a good deal more money than people who do not have a college education, so paying back a loan after graduation will be easier than it might seem. Nevertheless, it is important that both students and parents understand the terms of the loan before agreeing to them, and know when repayment will begin and how much their payments will be. There are many different education loans, so before taking out any loan, be sure to find out what the exact conditions of the loan are.

Other Forms of Aid

• Federal Aid Administered by Colleges—College-administered aid includes Perkins Loans and Supplemental Educational Opportunity Grants (SEOGs). The U.S. Department of Education gives the aid to colleges, who decide which of their students need it most.
• HOPE Scholarships (Helping Outstanding Pupils Educationally), Lifetime Learning Tax Credits, and Other Tax Benefits for Higher Education—The HOPE Scholarship tax credit provides a maximum of $2,500 (per student, per year) for the first four years of college. The Lifetime Learning tax credit provides a maximum of $2,000 tax credit to college students. For detailed information on who is eligible for these tax benefits, it's best to refer to Internal Revenue Service (IRS) forms and publications which are available at Link opens in a new windowhttps://www.irs.gov.
• States and Colleges—Many states and colleges offer financial assistance directly to individual students based on need or merit. Merit-based aid, usually scholarships or grants, is given to students who meet requirements not related to financial needs—like doing well in high school or displaying artistic or athletic talent. A notable example of state aid is the Georgia HOPE Scholarship, which guarantees students who are residents of Georgia free tuition at public colleges and universities as long as they have earned a B average and stayed off of drugs. Call or write your state's higher education agency or college financial aid offices to request information about similar opportunities that may be available in your state.
• Other Assistance—Organizations, foundations, and other groups offer scholarships to academically promising students, minorities, women, and students with disabilities. To learn more about these scholarships, speak with your school guidance counselor, research online or go to the reference section of the public library.
• Serve your country. Many opportunities exist for students to pay for all or part of a college education by serving their country during or after their college years. Service in AmeriCorps, the Merchant Marine Academy, the country's domestic Peace Corps, or in the Reserve Officer Training Corps (ROTC) entitles students to scholarships of varying amounts to cover educational expenses. The U.S. Army, Navy, and Air Force each has its own military academy (a four-year college and a commission in the military after graduation), where tuition is free, but only the most highly qualified students are admitted. Local armed forces recruiting offices can provide more information, as well as the following:
  • Call the National Service Hotline at 800-942-2677 for more information about AmeriCorps.
  • Visit the Merchant Marine Academy website at Link opens in a new windowhttps://www.usmma.edu.
  • Find out more about Peace Corps University programs at Link opens in a new windowhttps://www.peacecorps.gov/volunteer/university-programs.
  • Visit Link opens in a new windowhttps://www.todaysmilitary.com/education-training/rotc-programs for more on RTOC.

More Information on Federal Aid

For the most up-to-date information about student aid supplied by the U.S. Department of Education, call the Federal Student Financial Aid Information Center toll-free at 800-4FED-AID (800-433-3243). You can also get a copy of the federal financial aid form, which is required to apply for all federal financial aid, by calling this number. You can also obtain the guide to federal financial aid for students, called The Federal Student Aid Handbook—which provides an extensive and annually updated discussion of all federal student aid programs—by writing to the following address:

Federal Student Aid Information Center
P.O. Box 84
Washington, DC 20044

To apply for other aid in addition to federal aid, you may need additional forms. High school guidance counselors can tell you more about applying for financial aid, including where to get forms you might need for state aid. College financial aid offices can also be of help to you.

More Information

For the latest U.S. Department of Education publications on topics related to college preparation, call 877-4ED-PUBS (877-433-7827) toll-free or visit Link opens in a new windowhttps://www.ed.gov/edpubs.

A Final Note

A college education is a major ingredient for success in the world today and by taking the right courses and working hard, your child can be prepared to go to college. Building a strong foundation of high-level classes in middle school, and continuing to take rigorous courses through high school will better prepare students for college admissions tests and college course work. By saving for college and taking advantage of financial aid from the U.S. Department of Education, colleges, and states, you can change college from a dream into a reality for your children.