Financial Aid

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Understanding Your Financial Aid Options

You might be surprised to learn that more than $185 billion in financial aid is available to college students. While the primary source is the federal government, aid also comes from the colleges themselves, state governments, and scholarships from private companies, non-profits and religious organizations. According to The College Board, each source contributes as follows to that $185 billion:

Federal Government Financial Aid

According to the Federal Student Aid Office, more than $150 billion is available in federal aid for students who qualify. These federal awards and programs are funded by your tax dollars and are available to students and their families based on need. The only way you'll know if you qualify is by completing the Free Application for Student Aid, or FAFSA. It takes less than one hour and might result in an excellent return on your time investment.

Types of Federal Aid

Federal Perkins Loans are fixed-rate, low-interest loans given to students with the greatest financial need. They are federally funded, but administered by your school. Approximately 1,700 institutions participate in the Perkins Loan program. Graduates have up to ten years to repay these loans, although working in certain fields (teaching, military, health care) or certain volunteer work (Peace Corps, AmeriCorps) may make you eligible to have all or part of your loans cancelled.

Federal Direct Loans (also known as Stafford Loans) also have fixed interest rates and come in two forms, subsidized and unsubsidized.

  • Direct Subsidized Loans are based on financial need and have a low fixed interest rate, currently at 3.4%. You are not responsible for interest payments while in school.
  • Direct Unsubsidized Loans are not based on financial need and have a higher interest rate than subsidized loans, currently 6.8%. You're responsible for paying all interest during the life of the loan, and interest starts accruing as soon as you receive the money.

Parent PLUS Loans are federal loans that allow parents to borrow money for their child's college education. These loans currently have a fixed interest rate of 7.9% and are contingent upon the borrower's credit history. The U.S. Department of Education makes Parent PLUS Loans to eligible borrowers through schools participating in Direct Loan program. The loan amount cannot exceed the cost of attendance less any other financial aid.

State Financial Aid

Thirty-eight individual states also administer student loan programs, many with terms similar to the Federal Direct Loans. Most offer interest rates below those charged by private lenders. Programs vary in size and scope, so check with your state's department of education for specifics. State loans are generally unsubsidized, so count on paying interest while you're still in school.

Private Student Loans

Private lenders, such as banks, private foundations, credit unions, and schools or organizations offer student loans. They are credit - based loans, may have higher interest rates (both fixed and variable) than federal or state loans, may charge fees, and are not subsidized. Private loans also don't offer many options to reduce or postpone payments. Consider a private loan only after you've maxed out your federal and state loan options.

In October 2012, The Consumer Financial Protection Bureau reported that $150 billion of the more than $1 trillion dollars Americans owe in student loan debt is for private loans. After tracking student loan complaints, it found that 87% came from just seven big lenders, with Sallie Mae generating 46% of the complaints. Clearly, it's important to shop around. You may want to consider smaller lenders, like community banks and credit unions

When comparing private loans, look at the Annual Percentage Rate (APR). Unlike the interest rate, the APR takes into account all loan costs, such as finance charges and fees. It also considers deferment periods and repayment terms, all of which can significantly impact the loan's cost. Review the lender's reputation for customer service, as well as any borrower benefits, such as discounts for automated debit payments.

College - and University-Sponsored Aid

Many colleges award merit scholarships based on a student's academic promise, independent of financial need. These are not scholarships you generally apply for, but are rather awarded by the schools as an incentive for students to attend that institution. The more your academic profile exceeds the school's average profile, the more likelihood of obtaining a merit scholarship at that school. On the flip side, the more selective the school, the less merit dollars available, with zero merit dollars awarded at Ivy League institutions.

Every Ivy League school and many top-tier institutions, however, do generously award grants and scholarships to students with demonstrated need. At Yale, for example, accepted students whose family income is less than $65,000 are not expected to contribute anything to the cost of the student's education. Princeton has a no-loan policy where it commits to meeting the student's financial needs through grants, scholarships and work-study funds. This means students with financial need graduate without debt.

Some colleges also offer loans to students in addition to what's available through the federal loan programs. If your college offers this option, make sure you compare the terms and interest rates with those of other third-party lenders (banks, credit unions) to ensure you're getting the best deal.

Private Scholarships

Companies, non-profit organizations, clubs, and religious entities award $7.4 billion in college scholarships. They vary widely in criteria and requirements. For example:

  • A scholarship established in someone's memory for a student going into a nursing career from your high school.
  • The Gates Millennium Scholars (GMS), funded by a grant from the Bill & Melinda Gates Foundation, for African American, American Indian/Alaska Natives, Asian Pacific Islander Americans, and Hispanic American students.
  • Scholarships for dependents of PETA (People for the Ethical Treatment of Animals) members.
  • Ford Motor Company's "Heart Behind the Oval" scholarship contest, which looks for three students who best describe the impact they're making in their community.

It takes a bit of research to find appropriate scholarship matches for your interests and talents. A good place to start is at

How to Apply for Financial Aid


The Free Application for Federal Student Aid, commonly known as the FAFSA, is a form you submit to the office of Federal Student Aid at the Department of Education. It collects information about student and family finances, which the FSA uses to determine your eligibility for any of nine federal financial aid programs, such as grants, work-study, and federal student loans, as well as more than 600 state aid programs. For many, it's the first step toward an affordable education.

The FSA sends your FAFSA information to the colleges and universities you select. These institutions often require students to complete another college-specific financial aid form and use the combined information to award scholarships and other monies. Together, your federal and institutional aid make up your financial aid package. Each school will award you a different package, or none, depending on your eligibility.

How FAFSA Works

Whether seeking financial aid for colleges or financial aid for online schools, experts agree all undergraduate and graduate students should file a FAFSA, even if they think they or their parents make too much money to qualify. You could be leaving loan dollars on the table, but you won't know unless you apply. It's free, so there's nothing to lose and perhaps much to gain.

Within four to six weeks of filing the FAFSA, you should receive a Student Aid Report (SAR). The SAR indicates the contribution you and/or your family are expected to make toward your education expenses that year (Expected Family Contribution or EFC.) The government assumes you and/or your family will contribute to the cost of your education. The EFC is not the amount you're expected to pay; it is simply a number each school uses to calculate your eligibility for financial aid from that institution. Each school subtracts your EFC from its cost of attendance to calculate your need for that specific institution. Confused? Think of it this way:

Cost of XYZ College - EFC = Your Financial Need for XYZ College

Colleges That Accept Financial Aid: Timing Is Everything

Colleges award financial aid on a first-come, first-served basis. The sooner you file your FAFSA, the more aid that will be available to you. The FSA begins accepting FAFSA forms after January 1. You may file anytime after January 1st and before June 30, even if you need to estimate your tax information for the previous year. Each of the colleges you're applying to may require additional financial aid forms and may have different deadlines. Know these and keep track of them on a spreadsheet.

Filling Out the FAFSA

While it's certain not rocket science or brain surgery, knowing a bit about the FAFSA form before diving in can help. The following lists run down the items you'll need handy when finally putting pen to paper.

Parent information required (if you're not a dependent):

  • Social Security numbers
  • W-2 forms for the previous year
  • Federal tax returns for the previous year. Also accepted are the foreign tax return or tax return for Puerto Rico, Guam, American Samoa, the U.S. Virgin Islands, the Marshall Islands, the Federal States of Micronesia, or Palau
  • Records of additional, untaxed income (child support, welfare, veteran's benefits, interest income)
  • Bank statements/account information (including balances)
  • Investments records for the previous year

Student information required:

  • Social Security numbers
  • Driver's license number (if applicable)
  • W-2 Forms for the previous year
  • Federal tax returns for the previous year (including spouse's, if married). Also accepted are the foreign tax return, or tax return for Puerto Rico, Guam, American Samoa, The U.S. Virgin Islands, the Marshall Islands, the Federal States of Micronesia, or Palau
  • Records of additional, untaxed income (child support, welfare, veteran's benefits, interest income)
  • Bank statements/account information (including balances)
  • Investments records for the previous year
  • Student's Alien Registration Number (if not a US citizen)

Selecting a Format

Students and parents filling out the FAFSA have three options:

  1. Online at
  2. Fill out a PDF FAFSA (go to and select desired year.) You must submit the PDF FAFSA by mail.
  3. Complete a paper FAFSA. To order, call 1-800-4-FED-AID ( 1-800-433-3243 ) or 319-337-5665. If you are hearing impaired, contact the TTY line at 1-800-730-8913. Your high school college counselor may also have forms available.

Filing online comes with a handful of benefits:

  • A secure and easy-to-navigate website
  • A built-in help guide
  • Skip logic that eliminates questions that don't apply to your situation
  • IRS retrieval tool that automatically populates answers to various questions
  • Option to save your work and continue later
  • Ability to send FAFSA to as many as 10 colleges that accept financial aid, vs. the print form, which limits you to four schools
  • Reports get to schools more quickly

Understanding FAFSA: Question Groups

Questions on the FAFSA are organized into certain categories. Here's a glimpse of the specific groups:

Questions 1-31: General personal information and citizenship status questions.

Questions 32-57: Financial information questions, such as income, assets, exemptions, and household size.

Questions 45-57: Questions to determine whether the student is a dependent.

  1. If the student is a dependent, Questions 58-92 will gather financial information about the parents.
  2. If the student is not a dependent, skip to Questions 93-100, which review number of family members.

Questions 101a-h: Choose the schools you want to receive your report.

Common FAFSA Mistakes to Avoid

  • Complete the FAFSA whether or not you've been accepted to a college. Better to be ahead of the game.
  • Do not use nicknames. Only legal names, as they appear on the Social Security cards are acceptable.
  • When the FAFSA refers to "you" and "your," it is referring to the student, NOT the parents.
  • Double-check your answers, especially the numbers. If your social security number is wrong, it will slow down the process.
  • If an answer is "0", do not leave it blank. Write in the "0."
  • If you answer "yes" to work-study and student loan questions, you will be eligible for more aid options, but not required to accept them.
  • Don't forget to count the student as one of the people in the household attending college.
  • When parents are divorced or separated, the parent with whom the student lived the most time in the past year is the parent who fills out the FAFSA. Legal custody does not come into play here.

Ask the Experts: FAFSA Advice and Tips

Affordable Colleges Online has collected tips on filling out the FAFSA from financial aid officers across the country. These veterans have seen it all and share key advice on avoiding FAFSA pitfalls.

Robert Friedman University Director of Student Finance Yeshiva University New York, NY

  • The person in the household who communicates with the accountant should file FAFSA. If another person tries to file it, there may be pain and suffering involved!
  • Don't wait - estimate. Estimate your income and file the FAFSA, instead of waiting until you file your tax return. If you wait, you risk missing the school's deadline. In addition, institutional aid is generally awarded on a first-come first-served basis.
  • If you're filing online, use the "help" button. A detailed explanation will pop up and should answer your questions.
  • If the answer to a question is $0, put $0. Don't stress if you have nothing to report to a specific question. Put $0 and move on.
  • Don't include the value of the primary residence in real estate value.
  • Don't include the value of retirement accounts.
  • If you're a parent, get the student involved! This is a learning process for them too, and for many is the first step on a journey of managing their own personal finances.

Scott Seibring Director of Financial Aid Illinois Wesleyan University Bloomington, IL

  • Have as much documentation on hand as possible before you begin filling out the FAFSA.
  • Read the instructions carefully. Most mistakes can be avoided by reading and following the instructions.
  • If you're estimating your taxes, but your income hasn't changed much, it may be best to use last year's tax return until you file the current year's. People who estimate frequently use the amount of taxes withheld. This can result in an underestimated amount if you pay additional taxes at the time of filing, or an overestimated amount if you get a refund.
  • Do not use the tax withholding amount or the self-employment tax amount when estimating. Neither of those is cited in the FAFSA instructions as an amount to use for taxes paid.
  • It is important to note carefully what is excluded as what is included in the asset question. Applicants frequently list home equity and retirement funds, such as 401Ks and IRAs, even though the FAFSA instructions say to exclude place of primary residence and any qualified retirement funds.
  • Payments to tax deferred pensions are frequently not answered correctly. This amount is on the W-2, but people frequently omit the answer on the FAFSA, because it is not on the tax return.

Connie Brown Associate Director Student Financial Aid and Scholarships Texas Tech University Lubbock, TX

  • Rest assured that, while the FAFSA application takes some time, it is not difficult to complete.
  • Since financial aid in most institutions is limited, getting the FAFSA submitted as early as possible is important. Find out what the priority application date is for your college, and don't miss the deadline.
  • Submitting the FAFSA online is the fastest way to get the information processed.
  • Be sure you are submitting the correct FAFSA. 12-13 and 13-14 are both currently available at A student beginning his/her college study in the fall of 2013 will submit the 2013-2014 FAFSA.
  • Unless a student is 24 years old or meets some other specific criteria, the student is likely a dependent and will need to supply parental information on the FAFSA.
  • Use the IRS Data Retrieval Tool to access the IRS tax return information needed to complete the FAFSA. If you are eligible to use the tool it is the easiest way to provide your tax data; it's the best way of ensuring that your FAFSA has accurate tax information, and you won't have to provide copies of the tax return transcript to your college.
  • Contact your school's financial aid office after your FAFSA is processed to ensure they've received it and to ask whether they need any additional documents to complete your financial aid file.

Linda Parker Financial Aid Director Union College Schenectady, NY

  • Make sure you understand and meet the requirements, which vary between schools.
  • Early decision applicants must meet earlier financial aid deadlines.
  • If you estimate your tax information, make the estimate as accurate as possible so that schools can make awards that don't require dramatic changes upon verification of the final tax data.
  • Every incoming freshman has access to $5,500 in unsubsidized Stafford loans, an amount that increases every school year. Whether families need students to shoulder some college costs or simply want children to make a personal investment in their educations, access to loans can be helpful. Remember, students don't have to accept loans. But the money is there if needed.
  • Don't answer "No" to the question: Are you planning to apply for need-based financial aid? Checking "No" directs students' applications away from schools' financial aid offices, taking them out of the running for awards. Families should check "Yes" on this question to ensure the student's application reaches a school's admissions and financial aid offices.
  • If you have special challenges that aren't reflected on the applications - say a parental job loss or major medical expenses write a letter to the school's financial aid office. Such factors can be considered when awarding aid.
  • Do everything online. Union has access to FAFSA information within 10 days of a student's submission. It's the most efficient way to conduct all financial aid business.
  • All colleges and universities are required to offer a net price calculator online, which enables you to estimate the real price of attendance. These estimates can contextualize the perceived "sticker shock" of higher-priced schools, which might actually offer more aid. Families can use the calculators years before students apply, which may help influence choices.
  • Proofread all forms. Some parents who fill out applications for students accidentally enter their own names, causing major confusion.
  • Stay away from "services" that charge to fill out FAFSA forms (some up to $500). There is so much free help available, and families can also call schools' financial aid offices, the College Board, and federal processors with questions.
  • Above all, stay calm and follow directions. FAFSA usually only takes about an hour to complete. Updates can be made at anytime.

Bob Walker Financial Aid Director Creighton University Omaha, NE

  • Be sure to use the student's full legal name and Social Security number. The FAFSA is compared against SSA records and the two must match.
  • Dependent FAFSA filers should not include parents in the number of people in college, even if one or both is attending a post-secondary school.
  • If at all possible, use the Data Retrieval System provided by the Department of Education and IRS, as this will speed up FAFSA processing once the information is received by the school(s).
  • Respond promptly to all requests for additional information from schools in order to not delay your financial aid award.
  • Whenever questions come up, contact your school for help, guidance and assistance. That's what they're there for.

Heather McDonnell Associate Dean of Financial Aid Sarah Lawrence College Bronxville, NY

  • Take your time filling out the form. Speed causes mistakes.
  • When the form asks for your Social Security number, it's asking for the student's number. Many parents put down their social security numbers, which is a fatal mistake and very difficult to undo.
  • Pay attention to the deadlines. Any deadline in the college process is important, because it means there's a limitation.
  • When parents are divorced, figuring out whose information to include can be tricky. For FAFSA purposes, the parent with whom the student resides is considered the custodial parent. If this custodial parent is remarried, the step-parent information must also be included in the FAFSA. Schools don't assume step-parents will contribute to the student's education, but they do feel step-parents may be able to take over more of the household expenses, relieving the custodial parent from some of that responsibility.
  • Don't call schools with questions before the FAFSA data has arrived. The most effective conversations occur when the financial aid officer has your information on hand.
  • Everyone should fill out the FAFSA. Only your school can evaluate your financial aid situation, and the only way for the schools to do so is to review your FAFSA.
  • If you make an egregious mistake, the college will likely see it and help you correct the information. They, too, have a vested interest in ensuring the information is correct.

Financial Aid for International Study (Study Abroad)

Colleges often go out of their way to showcase study abroad opportunities in marketing materials, on websites and via other media. In today's global economy, having knowledge of other cultures and experience living in other countries is a definite asset. Yet, according to the Institute of International Education, only 1% of U.S. students study abroad during the academic year (273,996 students out of more than 20 million).

Britain's Education Intelligence organization polled 10,000 American and British students about studying abroad. The resulting report, Broadening Horizons, cites the following as the primary barriers to participation:

  • Lack of information about options
  • Financial concerns
  • Worries about homesickness

It's true that study abroad is not for everyone. According to Michelle Dervan, USA Manager for Education in Ireland, the students most suited to studying overseas are adventurous, mature and independent thinkers. If you meet that criteria, and are interested in studying in another country, then don't let financial concerns stop you.

Federal Aid for International Study

Whether you choose to study abroad for a few weeks, a semester, or for your entire undergraduate career, there are many financial aid options. In many cases, you'll be able to use federal student aid to pay for your expenses. Most colleges enable you to transfer your federal financial and sometimes state aid to a study abroad program, provided you receive credit toward your degree. In a recent Education in Ireland survey of 800 Americans studying in Ireland, 89% said they wouldn't have been able to study abroad without federal financial aid.

Students should check with their study abroad and financial aid offices for school-specific requirements. Work-study awards, for example, generally can't be used overseas because it's not possible to work while studying abroad as a foreign student. One way to supplement this lost income is through study abroad scholarships that cover program expenses such as travel, tuition, books and lodging.

Full Degree Study Abroad

Increasingly, students are discovering the benefits of obtaining their full degree abroad. International tuitions tend to be very competitive when compared to private U.S. four-year colleges. Tuition and room and board at Scotland's University of St. Andrew's, an Ivy League - comparable institution, is around $35,000. Even when you factor in travel expenses, that's significantly less than the $50-$56,000 Ivy League price tag. In Ireland, a degree at one of the world's top 5% institutions costs between $33-35,000.

"An advantage of obtaining your degree in a European Union country is that you can participate in the Erasmus program," says Dervan. "Any student enrolled in an EU school can study for a semester or longer at another EU school and your financial aid transfers." It's like studying abroad while studying abroad.

The bottom line is that financial concerns shouldn't scare you away from international study. Chances are you can afford what could be the opportunity of a lifetime.

Scholarship 101

Like grants, scholarships are considered free money because they don't have to be paid back. There are millions of dollars available in college scholarships from schools, non-profit organizations and the private sector. Chances are that your talents, experiences, characteristics, affiliations, or whatever makes you unique will align with at least one scholarship opportunity.

While competition can be fierce, it is well worth your while to identify and apply to scholarships that match your background and talents. As with any form of financial aid, you have nothing to lose by applying, and potentially much to gain.

School-Sponsored Scholarships

Many colleges award merit scholarships based on a student's academic promise, independent of financial need. These are not scholarships you generally apply for, but are rather awarded by the schools as an incentive for students to attend that institution. Most schools also offer scholarships specific to a course of study, demonstrated community service, or other criteria. For example:

  • Boston University awards the four-year, full-tuition Cardinal Medeiros Scholarship to graduating seniors from parochial schools in the Boston Archdiocese.
  • Incoming freshmen that plan to make leadership a major part of their Ithaca College experience can apply for the $7,000 Ithaca Leadership Scholarship.
  • Chicago University's Police and Fire Scholarship offers full tuition to children of active Chicago fire fighters or police officers.

Private Scholarships

Companies, non-profit organizations, clubs and religious entities award $7.4 billion in college scholarships. There are scholarships for Chrysler employees, cancer survivors, best duck call, knitters and even for tall people. You can research scholarships by many criteria, including:

  • Intended major
  • Artistic talent
  • Athletic talent
  • Scholarships for women
  • Corporate scholarships
  • Disease-related scholarships
  • Ethnic affiliation
  • Religious affiliation
  • Geography

Scholarships vary widely in criteria and requirements, and do take some work to uncover. Two great sources to get you started are Fastweb and

CSS Form 101

Your college may require you to complete a College Scholarship Service Profile (CSS Profile) in addition to the FAFSA. More than 400 private colleges and scholarship programs that are College Board members use the CSS Profile to determine your eligibility for non-government financial aid, such as a school's own grants, scholarships and loans. Designed to give colleges a closer look into the finances of a student and family, it is much more detailed than the FAFSA.

The College Scholarship Service, the financial aid division of the College Board, administers the CSS Profile form. Not all colleges and scholarship programs require the CSS Profile, so check with the schools in which you're interested before you go through the trouble of completing the form.

Completing the CSS Profile

Just like FAFSA, students can fill out and submit the CSS 101 online with just a few easy steps:

  1. If you don't already have one, create a College Board online account
  2. Access the CSS Profile online and follow the instructions
  3. Be sure to have tax records and financial documents on hand
  4. Use the pre-application worksheet to save time
  5. Enter the information
  6. Pay and submit
  7. Print the acknowledgement

The cost depends on the number of colleges or scholarship programs to which you have the form sent. The first report costs $25, and additional reports are $16 each. Students from low-income families with limited assets automatically receive fee waivers.

The CSS Profile may ask you questions specific to the colleges or programs to which you are applying. In addition, if you don't live with both parents for equal amounts of time, it requires the parent with whom you spend the least time to complete a Non-Custodial Profile.

Colleges use the data in the CSS Profile to determine your financial aid award, so be sure to submit the form by the deadlines specified by your colleges or scholarship programs. Once you have a College Board account, you can complete the profile application immediately, or begin it and come back to it later.

Can submit in the fall Cannot submit before January 1
Asks questions specific to your school or program Asks everyone the same questions
Asks more detailed questions. Factors in home ownership Asks for less detailed financial information. Does not factor in home ownership
Requires a minimum student contribution Does not require a minimum student contribution
Gives financial aid counselors greater freedom to award aid based on a student's circumstances Has more rigid award guidelines
Costs money Free

The Real Cost of College: Sticker Price vs. Net Price

As you research colleges, you'll find that many list the cost of attendance on their websites. "Cost of attendance" includes tuition, fees, books and room and board. This is the "sticker price," or what it costs to attend a specific college without any financial aid. Don't let this figure dissuade you from looking more closely at a school. You need to consider a school's "net price," or the cost of attending minus potential scholarships and grants. Many of the schools with the highest sticker prices, such as the Ivy League colleges, offer students the most financial aid.

A college's net price is usually considerably lower than the published price. According to The College Board, the average published price for a four-year public college is $8,660 per year, but the average net price - what families really pay - is just $2,910 per year. For four-year private colleges, The College Board lists the average published price at $29,060 per year, while the average net price is $13,380.

Sticker Price - Grants & Scholarships = Net Price
The full cost of attending a certain school Financial aid awards you don't have to pay back What you pay after subtracting grants and scholarships

Net Price Calculators

Net price differs for each family because it's based on the family's specific finances and the college's financial aid policies. A 2011 federal mandate requires that colleges post a net price calculator on their websites. The calculator allows students to estimate their net price of attendance based on what students with similar circumstances paid in the previous year. These tools are sometimes hard to find within the school websites, so the U.S. Department of Education offers a useful net price calculator search. You simply enter the name of the college you want and you'll be directed to its calculator.

For the purposes of these calculators, net price will be the total cost of one year for a first-time, full-time undergraduate, less any grant and scholarship aid you may receive. The calculator will estimate your eligibility for need-based aid at the school, and may require information from tax returns. Some schools deduct only the estimated federal need-based aid from their totals, while others may include merit awards, state aid and potential loans or work-study programs. Calculators that give families a breakdown of what is included in the net price estimate are the easiest to understand, although this is not a federal requirement.

The bottom line is that colleges you think might be too expensive could actually turn out to be affordable. Do your homework and find out.

Costs Beyond Tuition

You may already be suffering from sticker shock as you research tuition costs at different schools (be sure to understand the difference between sticker price and net price). If so, brace yourself, because there are a slew of other expenses you might need to consider.

The 2012 National Retail Federation's Back-to-School Survey found college students and their families spend an average of $907.22 on everything from dorm furniture and collegiate gear to school supplies and personal care items, up from $808.71 the previous year. Total retail spending for back-to-college is expected to reach $53.5 billion.

From cell phone costs to textbooks to storage until rentals, the costs of attending college do not stop at tuition and housing. Additional costs run the gamut. Consider which ones will apply to you, and plan accordingly.

Door Decor

There seems to be no limit to what students can buy to decorate their tiny dorm spaces. College dorm checklists at Bed Bath and Beyond and Target list 100 items. You'll certainly need sheets and a pillow, but blackout panels might be a stretch. Time Magazine estimates that $1 out of every $10 spent in back-to-college purchases went to decorating dorm rooms.


Books and school supplies can easily add up to $1,000. Science majors can expect to spend much more, as their textbooks average in the three figures. Buying used books is one way to help manage these expenses.


While most college libraries offer computers for student use, a student may be hard pressed to keep up without his or her own computer or laptop. Class notes and assignments are often posted electronically, and many professors require papers be submitted online. You may also need to purchase specific software for a class. A printer, however, is less of a necessity, as many colleges allow you to print at the library or computer lab for a small fee.

Class Fees

Lab fees for science classes average about $50 per class. Art classes also often have similar fees, and music majors may pay fees to cover practice room rentals.


According to, tutoring costs can range anywhere from $30/hour to $200/hour. These costs can quickly add up, if you find you need ongoing extra help. Some campuses, however, offer free tutoring as part of an education degree program. This gives certain students experience in their major. Students may also find tutoring offered by volunteer graduate students.


If you plan to commute to school, consider the cost of gas, parking, insurance and auto maintenance. Is public transportation available and is it more cost-effective? Does the school offer free shuttles around town, or will you need to spend money on buses or taxis when you leave campus?


How many trips home will you be able to make during the school year? Remember that air, bus and train travel costs more around holidays. Will you want to take a trip during spring break?

Personal Care

You're going to need toiletries on an ongoing basis. Haircuts and other personal care services, like manicures, need to factor in as well.

Health Insurance

Some health insurance plans do not cover dependents if they are living out of the plan's coverage area. Parents should check with their insurance companies to see if their child is covered while away at college. If not, most colleges offer health insurance plans for their students.

Cell Phone

Chances are you already own a cell phone and that it will be put to increased use while you're away at school. Evaluate your cell phone plan to make sure it will still be cost-effective, particularly when it comes to texting. An unlimited texting plan might end up being cheaper in the long run.

Greek Life

Sorority and fraternity dues can run between $400 to $800 or more per year.

Social Life

Most students have a budgeted amount for social spending. You'll need to decide what this amount will be, based on family contribution, your savings and money earned at jobs. While many schools offer free activities for students, you'll want to have funds on hand for things like pizza, beer, school sporting event tickets, concerts, local sights, and perhaps the occasional new outfit.


If your school is far from home or if it's otherwise impractical to take your stuff home each summer, factor in the cost of renting a storage unit. Rental fees for a 5-foot by 5-foot unit average $40-$60 a month. It may cost less, however, to rent a larger unit and share it with several other students.


You're going to want clean clothes and sheets, as well as a clean room. Laundry detergent and cleaning supplies can add up. Some schools offer the perk of free laundry, but most don't, so factor in that cost as well.

Saving for College: 529 Plans

The earlier you or your parents start saving for college, the more interest you'll earn and the longer your money will have to grow. Even if college is looming or if you're already paying tuition, when you put aside funds for college, you earn interest. When you borrow money, you pay interest. The first option is obviously more advantageous than the second. It costs less to save money for college than to borrow. The sooner you start saving, the better, but it's never too late.

Qualified Tuition Plans, such as 529 Plans, are excellent options for college saving. These plans allow parents, other relatives, or even non-relatives to save funds for higher education expenses on behalf of a particular student. Earnings grow tax deferred and withdrawals, when used for qualified education expenses, are free of federal income tax. Most states also allow tax-deferred earnings and tax-free withdrawals for qualified higher education expenses. Some states allow families to deduct the full or a partial amount of their contribution from their state income taxes.

Qualified Expenses

  • Tuition and mandatory fees
  • Required books, supplies and equipment
  • Room and board expenses, when the student is enrolled at least half-time
  • Any education-related special needs expenses

Note: Earnings on non-qualified withdrawals may be subject to federal income tax and a 10% federal penalty tax, as well as state and local income taxes.

The plans are named after Section 529 of the Internal Revenue Code and are administered by state agencies and organizations. According to an April 2013 Morningstar report, assets under management in 529 plans add up to $166 billion, and increased by 25% during 2012. You can view all available 529 Plans per state on Morningstar's website.

Note: Most states have no age limit for when the 529 Plan money has to be used, but if the beneficiary does not end up going to college, the funds can be transferred to another family member.

Two Types of 529 Plans

Prepaid Tuition Plans

Prepaid Tuition Plans, also called guaranteed savings plans, enable you to purchase future tuition based on today's rates. The plan then pays your tuition at the future cost while you're in college. Prepaid tuition plans are usually designed for use at in-state public universities and community colleges. In some cases, however, they can also be used at private institutions and at out-of-state public and private colleges and universities. Check with your state's plan to determine its specific restrictions.

The tax law now permits higher education institutions to offer their own 529 prepaid programs. Through the Independent 529 Plan you can buy prepaid contracts good for future tuition at any of 270 private schools.

Savings Plans

A 529 Savings Plan is not tied to specific schools or states. You can live in Arizona, invest in a California plan, and use it to pay tuition in Maryland. You can use the full value of your account at any accredited college or university in the U.S., as well as at some foreign institutions.

States set up their plans through asset management companies. You open the 529 Plan with the asset management company and deal with the company for all account service. Like any other investment, a 529 Savings Plan is subject to market risk, and the state doesn't guarantee your money. Most 529 Plans, however, do offer age-based investment options, where risk decreases as the child nears college age. In addition, many savings plans offer an FDIC/NCUA insured, money market or guaranteed option designed to protect an investor's principal while providing for some investment growth, while others offer investments in certificates of deposit.

Does Saving Affect Financial Aid?

Any assets, including 529 Plans, can affect your eligibility for financial aid. When parents are the account owners, about 5.6% of the account's value will be considered part of the Expected Family Contribution (EFC). The EFC is the contribution the student and/or family are expected to make toward education expenses. 529 Plans compare favorably to other savings vehicles, such as custodial accounts or assets that are in the name of the student, where 20% of the value is considered when determining the EFC.

Video Library

Getting admitted to your college of choice is a great feeling, until the reality of the staggering cost hits. Here we offer you a series of videos designed to help you gear up for your college tuition. Whether you're going to college next year or you're a parent looking to plan ahead, we have tips for you. Our video library features clips from financial aid experts, top colleges, and our own team of financial gurus. One of the key points that repeats itself in nearly all the videos? Fill out the Free Application for Federal Financial Aid as soon as possible. Most financial assistance, whether scholarships, grants or loans, is first-come, first-served.

A Financial Aid Overview

What kind of money is available, where does it come from, and how can you find financial aid for your education? Find an overview of aid available to you.

Overview of the Financial Aid Process

When it’s time to apply for financial aid, fill out the Federal Application for Federal Student Aid to help you get started. Be sure to understand the different types of aid out there before applying.

Types of Federal Student Aid

You know you’re going to need some help funding your college expenses. What are your options when it comes to finding aid and where do you start?

Paying for College: The Free Application for Federal Student Aid (FAFSA)

The Free Application for Federal Student Aid is your first step in applying for financial aid. But what information will you need, and what can you expect? Find out here.

Financial Aid Dictionary

As you navigate the world of financial aid to make college more affordable, you may find yourself having to learn a whole new language. We've compiled this glossary of terms to help you along the way.

Academic Year: The time during which school is in session, typically from September through May.

Accreditation: Accreditation ensures a college or school meets certain minimum quality academic standards, as defined by an accrediting body recognized by the US Department of Education. Only accredited schools can participate in federal student aid programs.

Assets: Assets, when referenced in the FAFSA, refer to income, checking and savings accounts, stocks, bonds, trusts, material goods, and investment or vacation real estate. Do not include your primary residence or retirement accounts, such as IRAs and 401Ks, under FAFSA assets.

Award Letter: An official notice from a school's financial aid office that details all the aid awarded to the student. If you decide to attend that school, you must return a signed copy of the letter indicating whether you accept or decline each type of aid.

Award Year: The school year for which the financial aid is requested or awarded.

Base Year: The tax year prior to the award year for which you're requesting financial aid.

Cost of Attendance (COA): The total cost of attending a particular school, including tuition, fees, room and board, books and supplies, transportation, loan fees, childcare, and personal expenses. COA for a specific school may differ depending on whether the student lives on- or off-campus, is married or unmarried, or from in- or out-of-state. The COA allows students to budget college expenses accurately.

CSS Profile: Some private colleges and universities use the College Scholarship Service (CSS) Profile to determine whether a student is eligible for non-federal loans.

Department of Education (DOE): The federal agency that establishes financial aid programs and processes the FAFSA form.

Deferment: A temporary period, common in federal loan programs, when a borrower is not required to make loan payments. In the case of deferred student loans, such as Stafford and Perkins loans, the student begins loan payments at a point in time after graduation.

Custodial Parent: When parents are divorced or separated, the parent with whom the student lived the most time in the past year is considered the custodial parent and the parent who fills out the FAFSA.

Dependent: A student is considered a dependent if he lives with his parents and depends on them for more than half of his living expenses.

Direct Loan: A federal, low-interest loan administered by the college or university.

Disbursement: The time when loan funds are released to the college and/or the student.

Expected Family Contribution (EFC): The contribution the student and/or family are expected to make toward education expenses. It's a calculation based on the information filed in the FAFSA. Schools use the EFC to calculate a student's eligibility for financial aid from that institution.

FAFSA (Free Application for Federal Student Aid): A free form you submit to the office of Federal Student Aid (FSA) at the Department of Education. It collects information about student and family finances, which the FSA uses to determine a student's eligibility for financial aid.

Federal Pell Grant: Federal grants awarded to students with significant financial need, and which do not repayment.

Federal Student Aid Office (FSA): The entity within the Department of Education that processes the FAFSA.

Financial Aid Offer: The total amount of aid a school offers you. Sometimes called "Financial Aid Package."

Financial Aid Office: The office at a college or university responsible for making financial aid award decisions and communicating with and assisting students and families.

Financial Aid Package: The total amount of aid a school offers each student. Sometimes called "Financial Aid Award."

Financial Need: The difference between a school's cost of attendance and the family's expected contribution. It's how much each student needs in financial aid dollars to be able to afford a specific school.

Cost of XYZ College - EFC = Your Financial Need for XYZ College

Financial Aid: Money awarded to help a student pay for the cost of higher education. Financial aid comes in many forms, including loans, grants, scholarships, and work-study.

Financial Aid Administrator (FAA): Also called Financial Aid Officers, Financial Aid Advisors, and Financial Aid Counselors, these are the college or university employees who work with families to award and administer financial aid.

Fixed Interest Rate: A loan interest rate that remains the same throughout the life of the loan.

Gift Aid: Financial aid, such as grants and scholarships, which the student does not need to repay.

Grace Period: The time period, usually six to nine months, between a student's graduation and when he or she must begin repaying student loans.

Grants: A type of financial aid award that does not have to be repaid.

Independent Student: A student who meets any of the following criteria:

  • 24 years or older
  • A graduate or professional student
  • Married
  • Has legal dependents
  • A veteran of the U.S. Armed Forces
  • An orphan or ward of the court

Institutional Methodology (IM): A formula colleges use to determine how to allocate the school's own financial aid funds (versus federal funds), based on need.

Interest Rate: The cost of borrowing money. Student loan interest rates are generally lower than standard loan rates.

Lender: The bank or lending institution from which you take out a loan.

Loan: A type of financial aid that the student must promise to repay with interest.

Merit-Based Financial Aid: Financial aid, usually scholarships, that is not calculated based on need, but rather on academic, athletic, or artistic merit.

Need Analysis: The process of determining a student's financial need, which typically begins when the FAFSA is filed.

Need-Based Financial Aid: Aid, such as most federal aid, that is awarded based on financial need.

Need-Blind Admissions: An admissions process used by most schools that does not consider the student's ability to pay. The objective is to eliminate admissions decisions based on whether a student needs financial aid or not.

Net Cost: The difference between a school's cost of attendance and the financial aid package. The net cost includes all financial aid, such as loans, versus the out-of-pocket cost, which includes only need-based aid. Families should evaluate financial aid awards using the out-of-pocket cost, not net cost, of attending that institution.

Parent Contribution (PC): Unless you're an independent student, the federal government expects your family to contribute to the cost of your education. The PC is an estimate based on parental income, assets, and other criteria.

Out-of-Pocket Cost: The difference between a school's cost of attendance and the need-based financial aid package. It indicates the amount the family will need to pay out of savings, income, and loans. Out-of-pocket costs can vary greatly between colleges, depending on how much need is met with grants versus loans. Families should evaluate financial aid awards using the out-of-pocket cost of attending each institution

Parent PLUS Loan: A federally guaranteed loan program that lends credit-worthy parents funds to pay for educational expenses. These loans have a fixed, 7.9% interest rate.

Pell Grant: A form of federal financial aid available mostly to undergraduate students, which does not have to be repaid. Grant amounts depend on student need, school costs, and other criteria, up to a maximum of $5,500 per academic year.

Selective Service Registration: Males ages 18 to 25 must register for the military draft in order to qualify for federal financial aid.

Scholarship: A form of financial aid that does not have to be repaid. Scholarships are often restricted to students in specific courses of study or with academic, athletic, or artistic talent. Schools, non-profit organizations and private entities award them.

Stafford Loan: A federal loan available to undergraduate and graduate students attending college at least half-time. These fixed rate loans, are the most common and one of the lowest-cost ways of paying for school.

Student Aid Report (SAR): The official summary of your FAFSA information, indicating your eligibility for financial aid. The FSA sends the SAR via email a few days after you complete the FAFSA, or by mail within 10 days of filing.

Student Contribution: The amount of money the federal government expects the student to contribute to the cost of education. This amount is included in the EFC and may include a portion of student savings and student work earnings.

Unmet Need: Schools can't always provide each student with the difference between their ability to pay and the cost of attending the institution. When schools award less financial aid than the student needs, the gap is called "unmet need."

Variable Interest Rate: A loan rate that can fluctuate during the life of the loan, but usually only up to a set amount within a certain period of time.

Work Study: A federal program that provides part-time jobs for students, allowing them to earn money to pay education expenses.

Additional Information

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