Guide to Financial Aid and Scholarships

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In 2017-2018, 86% of college students used financial aid to pay for school. The federal student aid program provides $120 billion each year in financial aid for college students. States, colleges, private foundations, employers, and professional organizations also provide college scholarships, grants, and other financial aid programs.

Undergraduate and graduate students can use financial aid to cover college costs like tuition, fees, and living expenses. Grants, fellowships, and scholarships offer free money for school, so students should exhaust these forms of aid before taking out student loans. Degree-seekers can also use work-study programs, employee tuition assistance programs, and 529 college savings plans to help pay for school.

Our financial aid guide reviews different types of financial aid and savings plans to help students make school more affordable.

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Find Out How Affordable College Is for You



Our affordability calculator makes it easy to figure out how much you can afford in tuition. Enter information about your income, cost of living, and expenses, and the calculator will estimate how much you can spend in annual tuition and your monthly payment. The calculator also considers expected financial aid.

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Average Tuition Costs



The cost of college continues to rise. In 2018-2019, public four-year colleges charged around $9,200 in tuition and fees for in-state students, according to the National Center for Education Statistics. Out-of-state students paid over $26,000 in tuition and fees. Undergraduates at private institutions paid nearly $32,000 per year, on average.

However, tuition comprises only part of the cost of college. Students must also pay for things like room and board, textbooks, and graduation fees. As a result, the average cost of college exceeds $35,000 per year.

College students benefit from many options to decrease their education expenses. In addition to scholarships and grants, learners can choose affordable programs. For example, an online learning format may offer tuition discounts and savings on living expenses and transportation costs. Online students can also shop around for the most affordable colleges rather than limiting their search to local programs.


FAQ


  • What do I need to fill out the FAFSA?

    Students need several documents to fill out the FAFSA, including tax returns and records of untaxed income and assets. Applicants also need their Social Security number and information from their parents if they qualify as a dependent student.


  • Can I appeal for more financial aid?

    Yes, students can appeal to request more financial aid. When students experience a change in their circumstances, they can correct their FAFSA, which may result in more financial aid. Additionally, college financial aid offices provide an appeal process.


  • What can I do if I have trouble paying my student loans?

    Rather than missing payments and incurring penalties, borrowers should consider applying for deferment or forbearance on their loans. These programs temporarily pause federal student loans. However, interest may accrue during the deferment or forbearance. Federal borrowers also qualify for income-driven repayment plans and loan forgiveness plans, which can lower their payments.


  • What factors can limit my student aid?

    Student aid packages consider several factors, including program costs, expected family contribution, and family income. Independent students may qualify for more college financial aid than dependent students. Citizenship status also affects financial aid eligibility; international students typically do not qualify for federal student aid.


Types of Financial Aid


  • Grants

    Grants can save students thousands of dollars in college costs. Like scholarships, recipients do not need to repay grants. Federal and state governments offer grants for college students, as do some private organizations. The federal Pell Grant program provides up to $6,495 per year for eligible students.

    Many grants, including Pell Grants, come with income restrictions. Students can qualify for federal grants by submitting the FAFSA. Most state grant programs also require the FAFSA. Learn more about federal education assistance programs.


  • Scholarships

    Scholarships provide free money for college, making them one of the best forms of financial aid. Colleges, private foundations, government agencies, and professional organizations all offer scholarships for college students. Need-based scholarships require proof of financial need, while merit-based scholarships consider an applicant’s academic and personal qualifications.

    Students can find scholarships through their college financial aid office, online databases, and government agencies. Scholarship requirements and amounts vary depending on the scholarship.


  • Federal Loans

    The federal student aid program distributes federal loans to undergraduates, graduate students, and parents. Federal loans come in several forms, including subsidized loans, unsubsidized loans, and PLUS loans. These loans offer lower interest rates than private loans and generally do not require a credit check.

    Students qualify for federal loans by submitting the FAFSA. Some programs, including subsidized loan programs, set income eligibility requirements. Borrowers can participate in several repayment programs, including loan forgiveness programs. Learn more about federal loans.


  • Private Loans

    Private loans help students cover college costs. Like federal loans, borrowers must repay private loans. However, private loans typically charge higher interest rates and offer fewer repayment benefits than federal loans. As a result, students should exhaust their federal loan options before turning to private loans.

    Borrowers can apply for private loans through banks and other financial institutions. Private loans typically require a credit check, and some borrowers ask a parent or guardian to cosign their loan to obtain better interest rates. Learn more about private loans.


  • Work Study

    Work-study programs connect eligible students with part-time jobs, often related to their major. For example, the federal work-study program coordinates with colleges to find work-study jobs for undergraduate and graduate students.

    Work-study students may take on-campus or off-campus jobs, depending on availability. Students qualify for work-study programs by submitting the FAFSA and meeting income eligibility requirements. Learn more about work-study programs.


  • Fellowships

    Like grants and scholarships, fellowships do not require repayment. Fellowships typically provide a tuition waiver and stipend for qualifying students. Some fellowships also offer health insurance, making them one of the best forms of college financial aid.

    Many universities offer graduate fellowships for doctoral students as part of their institutional financial aid. Private foundations and government agencies also award fellowships, such as the Fulbright student program. However, most fellowships only fund graduate students.


  • Employer Assistance

    SHRM’s 2019 employee benefits survey found that 56% of employers offered tuition assistance programs. Tuition assistance and reimbursement programs cover some or all of the cost of attending college. Students should check with their employer to learn about available tuition assistance programs. Learn more about workforce development programs.


Paying Out of Pocket: 529 Plans

Many students pay for at least some of their college costs out of pocket. While you can save money for college in any type of bank account, some accounts offer college savings benefits. For example, a 529 plan helps families save for educational expenses.

In 2019, the country’s 14 million 529 plans contained around $350 billion in college savings. A 529 plan offers tax advantages for educational expenses. For example, savers may qualify for tax benefits, depending on their state, and beneficiaries do not pay taxes on withdrawals used for college costs. Some states offer prepaid tuition 529 plans, allowing savers to pay current tuition rates to attend college in the future.

With over 100 options and different tax incentives depending on your state, it can feel overwhelming to find the right 529 plan to save for college. Learn more about 529 plans through our 529 plan guide.

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