Financial Aid, Loans & Grants

Even if you have not been able to save all the money you will need for college, several alternatives exist to assist you in making up the difference.  

Financial aid comes in many shapes and sizes -- from scholarships and grants which do not need to be repaid, to federal loans which carry very favorable interest rates and terms.  The following are a few of the most popular sources of financial assistance:

Financial Aid

Usually due before January 1, the standard federal Free Application for Federal Student Aid (FAFSA) determines how much, if any, financial assistance the government will award to your child.  Both private and public schools use this standard form to dole out their own scholarship monies as well.  Additionally, some schools now require the Financial Aid Profile for assessing the need for non-government dollars. 

Working with a number of factors, a school will determine each family's financial "need."  From there, financial aid officers will attempt to craft a package, often combining both grants, which don't have to be paid back, and loans, which must be repaid, usually with interest.  Clearly, the better deal is the free money.  Oftentimes the earlier one applies, the more of their funds will come from the "grant" side of the ledger.

Government Loans: Stafford

With a Stafford loan, the US Government either provides the funds for the loan, or guarantees the funds loaned by other institutions.  The loans are available regardless of family income, but for families with incomes under $70,000 no interest accrues and no payments are required until the student leaves school.  

Government Loans: PLUS

The Parent Loan for Undergraduate Students (PLUS) loans are federally funded and guaranteed loans issued through local banks, credit unions and savings & loan institutions.  The maximum loan amount is defined as the total cost of college, less financial aid received.  Repayment of principal and interest begins immediately with interest capped at 9%.  Loan insurance is required to qualify for a PLUS loan.

Work / Study Grants

Many colleges and universities offer work/study grants.  Sometimes their earnings are deducted from tuition and other times the student earns a salary.


AmeriCorps is a network of national service programs that engage more than 50,000 Americans each year in intensive service to meet critical needs in education, public safety, health, and the environment. It is open to U.S. citizens, nationals, or lawful permanent residents aged 17 or older. Members serve full or part time over a 10- to 12-month period.

After successfully completing a term of service, AmeriCorps members who are enrolled in the National Service Trust are eligible to receive an education award. The education award can be used to pay education costs at qualified institutions of higher education or training, or to repay qualified student loans. The award currently is $4,725 for a year of full-time service, with correspondingly lesser awards for part-time and reduced part-time service. A member has up to seven years after his or her term of service has ended to claim the award.

The GI Bill

Veterans, active duty personnel, and their families are eligible for a wide variety of benefits and loan repayment programs   under the GI Bill, U.S. Army college fund, and VA educational services.


Material discussed is meant for general illustration and/or informational purposes only and it is not to be construed as tax, legal, or investment advice.  Although the information has been gathered from sources believed to be reliable, please note that individual situations can vary therefore, the information should be relied upon when coordinated with individual professional advice.