The Cost of Education

1. The Cost of Education Financial Aid

2. Expected costs The cost of education includes: • tuition and fees • room and board • books and supplies • transportation • other personal expenses

3. The Cost of Education • Whether you have already chosen a college or you're still trying to decide, this is a good time to figure out what it will cost and how you'll pay for it. • Each college's financial aid office can provide information to help you figure the expenses. Don't be discouraged if the cost of continuing education seems too high—financial aid is available for students who qualify. • Financial aid is a general term for any financial assistance given to a student for any type of postsecondary education (four-year college, two-year college, trade and technical schools).

4. Types of Financial Aid • Generally, financial aid is divided into two groups: • need-based financial aid • merit-based financial aid • There are several types of financial aid and a variety of sources of financial assistance. Remember, not all aid is based on financial need. Some awards are based on academic performance or selected skills.

5. Need-based Financial Aid • Most people believe they need financial assistance to pay for college. Because there is so much need and funds are limited, the federal government has set policies to measure need. Most financial aid is based on need. • Need-based means that your family's financial resources, as measured by a formula established by the federal government, are not sufficient to cover your educational costs. This formula analyzes a family's income and assets to determine its Expected Family Contribution (EFC) toward the cost of college.

6. Need-based Financial Aid • The federal government's definition of financial need compares your income and savings to the cost of the college you plan to attend. Therefore, if you choose to attend a local community college, your financial need may be small, while if you choose to attend a higher priced college, your financial need may be large. • Once you determine your financial need, the college you plan to attend will help you identify sources of financial aid to meet your need. If you apply for assistance early, college staff may be more successful in finding financial aid.

7. Need based financial aid • Most financial aid packages include a variety of types of aid, including: • scholarships or grants (money that does not need to be paid back) • loans (money that is paid back, usually at lower interest rates than other types of loans) • work-study (a job on campus) Need-based financial aid can come from: • federal government • state government

8. Types of Financial Aid Financial assistance to attend college comes in many forms. • Federal Aid Programs—Federal programs are based on financial need. They are the largest single source of financial aid for college. • State Aid Programs—Most states support various aid programs (both need-based and merit). Generally, eligibility for state need-based programs follows the federal guidelines. • Grants and Scholarships —Awards based on merit or merit plus need. They don't have to be repaid. • Loans—Funds loaned through a lending institution or college. Interest rates vary by program. For federal loans, qualifying students—based on need—will not have to pay interest while in school. Loan programs also are available to eligible parents to help with college expenses of their qualifying children.

9. Types of Financial Aid • Military programs—The military offers several options to help you pay for college. • Work-study programs—Jobs that allow students to earn money toward their education while they are enrolled in school. Students can sometimes get jobs related to their program of study. • Working and Savings—As the cost of a college education rises, more students and parents will need to put money aside. Lots of college students have part-time jobs to help make ends meet. • Most people use a combination of these forms of aid to pay for college.

10. Federal Financial Aid • The federal government requires students to complete the U.S. Department of Education's Free Application for Federal Student Aid (FAFSA) as a basic application for its financial aid programs. You can get one from a high school or college for the appropriate year (usually available in November), or you can visitstudentaid.ed.gov(opens new window) for general student aid information and the online FAFSA. It will be processed free of charge. • Your local high school counselor can help determine the programs you may be eligible for and how to apply.

11. Free Application for Federal Student Aid (FAFSA) • The federal government uses the Free Application for Federal Student Aid (FAFSA) to compute need. Whatever source you are applying to, you probably will need to complete the FAFSA • First, decide if you are an independent or dependent student • Then, figure out which documents you need available to complete the FAFSA. The FAFSA website lists the documents you will need. • If you provided a working email address when you applied, you'll get an email within a few days with a secure link to your FAFSA results—the Student Aid Report (SAR)—on the Web. Within a few weeks of filing your FAFSA, you will receive a paper SAR. This provides information from your FAFSA and your Expected Family Contribution (EFC).

12. FASFA Information • To complete the Free Application for Federal Student Aid (FAFSA), you will need: • Your Social Security Number • Your Alien Registration Number (if you are not a U.S. citizen) • Your most recent federal income tax returns, W-2s, and other records of money earned. (Note: You may be able to transfer your federal tax return information into your FAFSA using the IRS Data Retrieval Tool.) • Bank statements and records of investments (if applicable) • Records of untaxed income (if applicable) • A Federal Student Aid PIN to sign electronically. (If you do not already have one, visit www.pin.ed.gov to obtain one.) • If you are a dependent student, then you will also need most of the above information for your parent(s).

13. Federal Financial Aid • Federal Programs • Federal Supplemental Educational Opportunity Grant (FSEOG) • These grants are provided to a limited number of undergraduate students withfinancial need. Preference is given to students with exceptional financial need. FSEOGs are awarded by colleges.

14. Federal Financial Aid Federal Pell Grant • Financial assistance awarded by the federal government on the basis of need. The Student Aid Report (SAR) informs students of their Pell Grant eligibility. The grant may be used toward tuition, room and board, books, or other educational costs and requires no repayment. Federal Perkins Loan • Loans funded by the federal government and awarded by the institution. The loans feature low interest rates and are repayable over an extended period of time. William D. Ford Federal Direct Loan (Direct Loan) Program • Provides both Stafford Loans for Students and PLUS Loans for parents. Eligible students and parents borrow directly from the federal government at participating schools. Direct Loans also include Direct Consolidation Loans. Repayment of these loans is made to the U.S. Department of Education.

15. Federal Financial Aid Federal Family Education Loan (FFEL) Program • Provides both Stafford Loans for students and PLUS Loans for parents through participating private lenders. FFEL also provides for Federal Consolidation Loans. Repayment of these loans is made to the bank or other private lender that made the loan. Subsidized FFEL or Direct Stafford Loans—are awarded on the basis of financial need. Recipients will not be charged interest until they begin repayment. Unsubsidized FFEL or Direct Stafford Loans—are not awarded on the basis of need. Interest accrues from the time the loan is disbursed until it is paid in full. PLUS Loans (for parents)—provide low interest loans to credit-approved parents of eligible undergraduate students. Repayment typically must begin 60 days after loan is fully disbursed. Consolidation Loans—allow students or parents the opportunity to combine several types of federal loans into a single loan with one monthly payment.

16. Federal Financial Aid • Federal Work-Study • A government-supported financial aid program coordinated through financial aid offices in which an eligible student (based on need) may work part-time while attending class, generally in career-related jobs. • For more information about federal financial aid programs and your rights and responsibilities under these programs, read The Student Guide: Financial Aid from the U.S. Department of Education(opens new window). You can also request your free paper copy by contacting the U.S. Department of Education(opens new window) at 1-800-4-FED-AID, or writing to: U.S. Department of Education Federal Student Aid Information Center P.O. Box 84 Washington, DC 20044-0084

17. Sources of Financial Aid • Sources of financial assistance include: • the federal government • state agencies • professional and service organizations • private foundations • individual postsecondary schools

18. State programs To learn more about the financial aid programs in your state and any additional application requirements, contact the state financial aid agency. Your local high school counselor may also have information about state programs. • State programs may include: • Scholarships • grants • work • state loans • tuition assistance

19. Other programs • While most student aid comes from federal and state programs, these are not the only sources. • There are also institutional, community, and foundation and corporate programs. • To find out more information about these options, contact college financial aid offices, your high school counselor, the human resources office of your parents' employers, or someone at the public or school library.

20. How to Apply for Grants and Scholarships • Scholarships and grants come from a variety of sources. A few sources of grants and scholarships are: • Federal and state governments • Individual colleges and universities • Community organizations • Parents' and students' employers

21. Scholarships and Grants • Scholarships typically do not have to be repaid. Many scholarships are extremely competitive, so start researching early. To find grants and scholarships: • Complete the Free Application for Federal Student Aid (FAFSA) to give you an idea whether you are eligible for need-based financial aid. • Ask employers, clubs, associations, or other local groups if they offer scholarships. • Talk to the financial aid office at the college you plan to attend. • Talk to your high school counselor and find out if they know of any grants or scholarships. • Use the Internet to do a scholarship search. Review our list of financial aid resources for ideas about where to begin. • Beware of scholarship scams.

22. Military Programs • Military benefits—The military offers several options to help you pay for college. • Reserve Officers' Training Corps (ROTC)—provides money for college while you are in school. Upon graduation, you enter the military as an officer. • Servicemembers Opportunity Colleges (SOC)—More than 1800 colleges participate in this program. It allows servicemembers to earn a degree from a civilian college while serving in the military. • Veterans—a variety of programs are available to those who have served in the military. Check with the Veterans Administration(opens new window) for details.

23. Work Study • Work-study programs are funded by the federal government and some states, and are included in many students' financial aid packages. Completing your Free Application for Federal Student Aid (FAFSA) may be the first step to finding a work-study job. • Work-study provides jobs for undergraduate and graduate students with financial need, allowing them to earn money to help pay educational expenses. The program encourages community service and work related to each student's course of study. • You will earn at least the current minimum wage, but you could be paid more, depending on the job. Work-study jobs are usually flexible and work is scheduled around your classes.

24. Employment On and Off Campus (No Work-study) • Most colleges and college communities offer a wide variety of employment opportunities for students who are seeking jobs to help defray their college costs. • Most colleges maintain a student employment office that will assist students in locating both on- and off- campus job opportunities.

25. College Savings Are you planning ahead? • College costs have increased by 8% a year in the past, more than twice the rate of inflation. Use a calculator to find out how much college will cost when you are ready to enroll, and how much you need to save each year. Parents should look into tax-free college savings programs. • Section 529 of the IRS code allows tax-free funds to be set aside for college. With Qualified Tuition Programs (QTP), you can prepay tuition (locking in today's tuition rate) to set aside money for college. See our list of financial aid resources for links to more information about these programs and other tax benefits for education.

26. References • Information obtained at http://www.actstudent.org/finaid/