Going to college is essential in many professions and careers. Tuition (not to mention room and board) costs are involved even if the college you attend is a vocational or technical school. Those costs can be even more substantial if you attend a university or private college. The average household cannot afford college tuition without assistance or financial aid. The good news is that numerous options are available – even for those with modest means. Here’s what you need to know about the many different financial aid options available to students today.

The Importance of Investing in Your Education

Education is an investment. It is not, unfortunately, something that is widely available to all. Making the dream of education possible will likely involve some sacrifices. For some, these sacrifices can be deferred as student loans until they have left the halls of academia behind. The investment for those who take advantage of the opportunity and earn a degree is higher earning potential, greater financial (and job) security, greater job satisfaction, increased opportunities, and a more comfortable life.

Types of Financial Aid

There are many different types of financial aid available for students today. Some require students to show financial need by filling out the Free Application for Federal Student Aid (FAFSA). This application allows students to apply for federal grant programs, student loan programs, and work-study opportunities. Many scholarship programs also use the FAFSA to determine if students meet specific “financial need” criteria to receive their scholarships. However, not all scholarships have “financial need” as one of the criteria. These scholarships often require individual applications and assessments by the scholarship committee. The following are the most common types of financial aid available:

• Grants
• Loans
• Work-study programs
• Scholarships

But other types of financial aid are also available, particularly for those who have served in the military or those willing to commit to military service in the future in exchange for their education. These are the GI Bill and Reserved Officers’ Training Corps (ROTC) Scholarships. While many financial aid opportunities mentioned above require students to show at least some need, financial assistance for military service is based solely on service and not on need.

How to Apply for Financial Aid

The first step for students interested in financial aid for college is to fill out the FAFSA form. Even if you feel you won’t qualify for federal grants, you may qualify for partial grants and subsidized or unsubsidized federal loans. For students who do not qualify as having sufficient financial need for government grants, the odds are good that they will qualify for work-study programs or loans. More importantly, many scholarship programs use FAFSA to help determine scholarship eligibility. Filling out this one form is essential for most types of financial aid readily available to students.

Additionally, many scholarships and some state and community grants have separate application processes that must be addressed on a case-by-case basis – even if the scholarships use FAFSA to determine eligibility, they are likely to have their own application processes students must follow. You must check with each one individually and fill out the appropriate applications.

Understanding Your Financial Aid Award Letter

Unfortunately, there isn’t a one size fits all solution when it comes to financial aid award letters. Each institution has its style and terminology when addressing financial aid and awards. Some common things you should expect to see in your award letter, though, include the following:

• Cost of attendance.
• Expected family contribution.
• Grant amount awarded for the year.
• Loans borrowed through the federal direct loan program for the year.
• Maximum work-study earnings available to you (though you will be required to apply for jobs on campus and work to earn this money).

You must accept the award from the school of your choice but choose wisely to ensure you’re getting the best possible “bargain” if you’ve applied for admission and financial aid to multiple colleges. You may find that the financial aid award goes much further at some colleges than others.

Alternative Aid Options

In addition to private grants, scholarships, and military service financial aid, there are other ways to help aid your college investment. Many of these require some degree of planning ahead of time or fortuitous employment situations. For instance, you can use a college savings plan that allows parents to lock in tuition rates when children are young rather than paying the current tuition once students graduate high school. These plans allow parents to pay a little over time for education using pre-tax earnings while removing inflation factors from education costs.

For those who started planning for college a little later in life or those returning to college after entering the workforce, some employers will offer tuition reimbursement or prepayment for tuition to full-time employees. Make sure to check with your organization’s HR department to determine what, if any, financial aid for colleges your company offers and how to take advantage of those offers best.

Effectively Managing Your Aid

To manage your college finances effectively, keep track of all financial aid applications, offers, and awards. Maintain a calendar with important dates, deadlines, and the start of the repayment period if you take out loans to pay for college. By living up to your financial obligations and maximizing benefits during your education, you invest in your current studies and future success. Organizing and managing your financial aid will help you cultivate healthy financial habits that will benefit you beyond college.

Takeaways

College is an expensive proposition. However, it can provide a substantial return on investment over your lifetime. It is worth making a few sacrifices today of time, attention, and money to enjoy the lifelong value of the education you will receive. Fortunately, many types of financial aid are available to help make your dream of a college education a reality.