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MAIN Arrow to HomeYour Money Arrow to Financial Aid 101Financial Aid Facts

Financial Aid 101

Financial Aid College Scholarship Money

Parents in America may wake up one morning and discover that their kids are graduating high school, then just as suddenly find themselves marching double time to help finance their kids' college education.

To quote Ben Franklin, "He that riseth late, must trot all day."

Of course, it takes careful timing and a vigilant watch on your finances, (and sometimes the sheer wits of a Ben Franklin), but you really can see your way clear to helping your children get a college education - even if you have made a late start.

And, you're not alone. Every year millions of students in the U. S. apply for and receive financial aid and almost half of all students who go to American colleges receive some kind of financial aid. Because college represents an investment in our most precious resource—our kids—no child who wants to go to college and is willing to work hard should be prevented by financial need.

Where Can You Apply for Financial Aid?
The U. S. Federal government supplies $46 billion annually in student aid, about 75 percent of all student aid.

BenPell Grants are the most important form of student financial aid for the neediest students in the United States. Almost 4 million students receive Pell grants, but the size of the grant depends on the student’s need - as defined by the Federal government.

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 U. S. 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. Recent additions to the Work-Study program, the "America Reads Challenge" and "America Counts," let students work as reading and math tutors for young children—helping students to give back to the community while they pay for 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 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 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 Include:

Federal aid administered by colleges including Perkins Loans, Direct Loans, College Work Study (CWS), Supplemental Educational Opportunity Grants (FSEOGs) and the Higher Education Opportunity Program (HEOP) — the U.S. Department of Education gives aid to colleges, who then decide which of their students need it most.

The Lifetime Learning tax credit provides a maximum $1,000 tax credit to help college juniors and seniors and graduate and professional degree students, as well as adults who want to go back to school. For detailed information on who is eligible for these and other tax benefits, it’s best to refer to your Internal Revenue Service (IRS) forms and publications which are available at

Many states and colleges offer financial assistance directly to individual students based on need or merit. Merit-based aid, usually a scholarships or grant, 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 free college 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 these opportunities.

Some schools, notably Harvard, are beginning to offer generous grants and Financial Aid Plans for families with incomes as high as $180,000 and full scholarships for those from families making less than $60,000 per year.

Other Assistance. Organizations, foundations and other groups offer scholarships to academically promising students, minorities, women and disabled students. To learn more about these scholarships, speak with your school guidance counselor 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. Returning veterans often qualify for "GI Bill" benefits. Local armed forces recruiting offices can provide more information.

Call 1-800-94-ACORPS for more information about Americorps—a way to serve the community and pay for college.

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 at the U.S. Department of Education toll-free at 1-800-4FED-AID. 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 Student Guide, which provides an extensive and annually updated discussion of all federal student aid programs. You can obtain the Guide 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.

For the latest Department of Education publications on topics related to college attendance, call 1-877-4ED-PUBS toll-free or visit

The College Scholarships site lists dozens of free online searches for grants and money to help with school. They also have a good listing of colleges by state and other excellent resources.

A Final Note

A college education is a major ingredient for success in the modern economy—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, starting with algebra I and geometry by the eighth and ninth grades, 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 if they are willing to take the challenge to do their best in school right from the start.

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