College Financial Aid Information
Going to college is expensive. According to data from the United States Department of Education, the average total cost of attending a four-year public university is just under $125,000. When going to a public college out of state, the cost breaches $200,000. At a private institution, the average cost is more than $260,000. Shockingly, this cost continues to increase as universities grapple with declines in public funding and competitive pressure to support extensive campus amenities. In comparison, students 50 years ago in 1976 would have gotten a four-year degree for under $50,000 (adjusted for inflation). In this environment, it is more essential than ever for students to maximize and manage financial aid awards to avoid excessive debt after graduation.
First, it is important to distinguish between the three major types of financial aid available to prospective college students: scholarships and grants, work-study, and loans.
Scholarships and grants are considered “awards,” meaning that they generally do not have to be repaid and should be thought of as “gifts.” Scholarships can be awarded as need-based or merit-based depending on the organization that issues them and their specific rules for the award. The Department of Education advises against applying to a scholarship that requires an application fee, as most credible institutions do not charge such a fee. Many entities issue scholarships, such as for-profit businesses, nonprofit organizations, community organizations, and universities. You can search for scholarships on various websites, but the most trusted option is BigFuture (run by the College Board). At Loveland, scholarships are also published in the “Scholarship Matching” section of SchooLinks. Similar to scholarships, grants do not have to be repaid. However, most grants are awarded by government programs (such as the federal Pell Grant or a state-level equivalent) and only take financial need into consideration, not merit. By filling out the Free Application for Federal Student Aid (FAFSA), students will be evaluated for possible federal grants.
The second major type of financial aid is work-study. When filing the FAFSA, students are evaluated for federal work-study eligibility. A work-study program allows students to work a part-time job while enrolled in a college and earn money toward their education. A major benefit of work-study programs is that income earned through participation is not counted against students during future financial aid applications, whereas money earned through a standard job would be. Every student has a different maximum amount of money that can be earned through federal work-study programs, which is determined by financial need.
The third major type of financial aid is loans. Loans have to be repaid (often with interest), so it is best to maximize the amount of money acquired through scholarships and work-study programs before taking out a loan. Federal loans have fixed interest rates below 7% for undergraduate students regardless of credit score, but students are limited in how much money they can borrow from federal programs. Private loans can extend beyond the capped federal amount, but usually carry higher interest rates (especially for borrowers with an average or poor credit score).
All things considered, there are many ways to make higher education more affordable. Even if a student’s family does not have significant college savings, there are opportunities for everyone to afford a degree.
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