The cost of financing a child's college education can be
daunting to many families. Although most colleges agree that the
family should be the primary support vehicle, financial assistance
does exist. In addition to private sources, such as trade unions,
fraternal or service organizations, professional associations, and
religious groups, numerous state and federal aid programs are
available. A thorough investigation of all assistance programs is a
fundamental part of financing a college education.
Under many present aid programs, a parent does not have to be in
a low-income bracket to receive financial assistance. Most
need-based programs take into account family living expenses, the
number of children in the family, and how many children are in
The federal government administers several major financial
assistance programs. Some are direct assistance programs -- the
assistance goes directly to the student. The other programs are
administered through the college that the student attends; funds
are sent directly to the college, which in turn dispenses the money
to the student in accordance with federal guidelines.
Pell, Academic Competitiveness, and National SMART Grants
The Pell Grant (formerly the Basic Educational Opportunity Grant
Program) was named for Senator Claiborne Pell, who sponsored the
legislation that established the program. A Pell Grant is based
solely on financial need. The amount of the award is based on
student need (within certain limits) and on how much money Congress
appropriates to the program each year. It's important to apply for
a Pell Grant even if you think you won't qualify, since many
college and state aid programs require it. Just check the proper
box on the financial aid application.
The Academic Competitiveness Grant (ACG) provides need-based
grants for the first two years of undergraduate study to full-time
students who are U.S citizens. The National Science and Mathematics
Access to Retain Talent (SMART) Grant is is available during the
third and fourth years of undergraduate study to full-time students
who are eligible for the Federal Pell Grant and are U.S. citizens.
SMART Grants are available for students majoring in physical, life,
or computer sciences, mathematics, technology, or engineering or in
a foreign language determined critical to national security. These
latter two grants are for students eligible for a Pell Grant and
who successfully complete a rigorous high school program, as
determined by the state or local education agency and recognized by
the Secretary of Education. The ACG program is available for
first-year undergrads who graduated from high school after January
1, 2006, and for second-year students who graduated from high
school after January 1, 2005. Second- through fourth-year
undergraduate students must have maintained a cumulative grade
point average (GPA) of at least 3.0.
Stafford Student Loans
The Stafford Student Loan (formerly the Guaranteed Student Loan)
is a federally subsidized loan program that allows the student to
borrow from private lenders and the government at lower interest
rates. Families with high incomes are eligible for the program if
certain needs tests are satisfied. The loan is insured either by
the federal government or a state agency.
Banks and other lending institutions voluntarily take part in
the loan program. Repayment of principal and interest is deferred
until six months after a student graduates or leaves school, and
standard repayment is made over a 10- to 30-year period depending
upon the amount owed.
An undergraduate may borrow up to certain limits each school
year under the program. The government pays the interest for all
undergraduate and graduate school years and for six months after
the last class.
Rising College Costs
Source: ChartSource®, DST Systems, Inc. Based on
data published by the College Board for the 2018-2019 academic
year. Chart is based on hypothetical growth rates; your results
will vary. © 2019, DST Systems, Inc. Reproduction in whole or
in part prohibited, except by permission. All rights reserved. Not
responsible for any errors or omissions. (CS000206)
PLUS Loans for Undergraduates
PLUS loans are available to parents of dependent undergraduate
students and to graduate or professional students who reach their
Stafford Loan limits.
Repayment of a PLUS loan begins 60 days after parents receive
the money, and lenders typically establish a repayment period of 10
to 25 years. Graduate students may defer payment while in school at
Supplemental Education Opportunity Grant
A Supplemental Education Opportunity Grant (SEOG) is a grant to
a student with demonstrated financial need. The money is sent,
however, by the federal government directly to the colleges, which
determine the award amount and dispense the money to the students.
(These are in addition to Pell Grants.)
The Department of Education allocates a specific amount of money
to each participating college. Once distributed, there are no
additional sums. Applications are made through the academic
institution's office of financial aid. Early application is
College Work-Study Program
The College Work-Study Program is a program administered by each
participating college to provide employment for students who
demonstrate financial need. The federal government grants funds to
colleges for this purpose. Students normally obtain employment
under this program as part of an overall financial aid package.
They generally work 12 to 15 hours per week during school sessions
and up to 40 hours a week during vacation periods. Examples of
college employment include library clerks, faculty aides,
maintenance workers, and cafeteria workers. The awards are
determined by the colleges, and once a student has earned the full
award amount, employment is terminated for that academic year.
Application is made to the college financial aid office.
Eligibility is based solely on financial need. Students must be
enrolled at least half-time in an accredited college and maintain
good academic standing while employed. These earnings will not
reduce the student's financial aid eligibility. However, funds are
limited, so apply early for financial aid and work-study.
The Perkins Loan
Perkins Loans (formerly National Direct Student Loans) are
administered by colleges that also act as lenders. Eligibility is
based on the student's calculated need. Although the interest rate
is low, funds are limited and students should submit the financial
aid application early. A student will pay no interest while still
in school. There is a nine-month grace period after leaving
college. Repayment is stretched out over 10 years.
Other Financial Aid Sources
- ROTC -- Uncle Sam hands out millions of
dollars each year to members of the Reserve Officers Training
Corps. Recipients must serve up to eight years in the
- National Merit Scholarships -- Each year, more
than 8,000 top students win awards of up to $2,500. Recipients are
chosen from among the highest scorers on the PSAT exam, which is
based on skill, ability, and accomplishment.
- Siemens Westinghouse Competition -- Each year,
entrants submit research projects in science, mathematics, or
technology. Scholarships range from $1,000 for regional finalists
to $100,000 for the national winner.
Your child's high school guidance office can provide information
on these and other sources of scholarships.
State governments also offer a variety of assistance programs.
But most state assistance is available only to state residents
attending schools within that state. Some states do make exceptions
and permit state residents to attend out-of-state schools. A few
states allow nonresidents to receive assistance while attending a
school within the state or have reciprocity arrangements with other
Many states have special programs for teachers and National
Guard enlistees. Others offer work-study programs and special
Application procedures vary from state to state. While most
states allow the student to use one of the same need analysis
application forms used by the federal programs, some states do
require separate application forms that must be completed for state
programs. Students may find out about state programs and
requirements through their high school guidance counselor, their
college financial aid office, or a state agency.
It is important to begin early and thoroughly investigate all
potential sources of financial aid. Your child's college placement
office can be a good starting point for information on financial