Planning for College: Financial Aid Basics

From scholarships to student loans, there are a wide variety of financial aid sources to consider while planning for college.

Common Sources of Student Financial Aid has a helpful article that describes the basic financial aid source types, but most applicants will consider scholarships, grants and student loans as their first options to pay for college.

A scholarship or a grant does not need to be repaid. Scholarships are usually awarded for merit, meaning excellent grades or community service, or on the basis of financial need. Some scholarships are awarded to students based on their ethnic background or gender, such as scholarships for Latino students or scholarships granted specifically to women. Other scholarships are given to students because their parents have a relationship with a specific organization. For example, the Marine Corps Scholarship Foundation provides scholarships to students whose parents have served in the Marines.

Students may also be eligible for financial aid based on the program they are studying or their career plans. For example, the Teacher Education Assistance for College and Higher Education (TEACH) Grant Program awards a grant of up to $4000 for students who plan to teach in public or private K-12 schools after graduation.

Scholarships and grants, however, usually will not pay for the entire cost of college tuition, not to mention the additional expenses of books, fees and housing. According to the National Postsecondary Student Aid Study, the average amount for scholarships in 2008-2009 was approximately $2,500. This may not be enough to pay for an entire semester, but because a scholarship does not need to be repaid and because there are a wide range of scholarship options for all types of students, a college applicant should explore all scholarship and grant options before applying for a loan.

Student Loans

Federal Student Aid (FSA) provides a wide range of programs for college students. Based on eligibility, there are loans for students or their parents, and the interest rates on these loans are low and can be adjusted based on salary once you are working. The Federal Student Aid website, a government site, is the only source for these funds, so make sure you or your parents are applying for aid only through the government sources.

Military Scholarships

Participating in a military scholarship program, such as the ROTC program, requires application to the program; completing testing, including physical testing; and an agreement for military service. These scholarships can be quite generous. For example, the Air Force Reserve Officer Training Corps provides $15,000 per academic year, plus funds for books and a small stipend. However, applicants must meet and maintain the scholarship requirements while they are studying in college.

Financial Aid through Research

Some college students are extremely proactive in identifying methods to finance their college education. Some students will devise a research project or focus their studies on a particular area to secure funding. For example, the American Public Power Association offers a $4000 research grant for students to prepare a research project in an energy-related project. There may be other corporate, industry or professional association scholarships available to college students based on their area of study.

When pursuing financial aid for college, begin at the financial aid center website for the college where you plan to study and apply for as many scholarships and grants as you qualify for. Then explore repayable student finance options.