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Financial Aid


College Costs and Financial Aid

There's no escaping the fact that college costs are rising. On average, most students and their families can expect to pay between $112 and $1,190 more for tuition and fees this year than last year, depending on the type of college.

The good news is that there is over $135 billion in financial aid available, and, despite all of these college cost increases, a college education remains an affordable choice for most families.

Here are some financial aid basics that you should know.

The Truth about College Costs

"Sticker Price" vs. Affordability 
Although some of the college price tags you hear about can be discouraging—$30,000 or more for yearly tuition and fees—most colleges are more affordable than you might think.

For example, did you know that about 60 percent of students attending four-year schools pay less than $6,000 a year for tuition and fees?

The net price the average undergraduate pays for a college education is significantly lower than the published tuition and fees, once grants are taken into consideration. Remember, financial aid will further reduce the amount your family will actually pay.

Financial Aid Makes College Affordable for You
Financial aid is intended to make up the difference between what your family can afford to pay and what college costs. Over half of the students currently enrolled in college receive some sort of financial aid to help pay their college costs.

The financial aid system is based on the goal of equal access: anyone should be able to attend college, regardless of financial circumstances. The system is designed so that…

  • Students and their families contribute to the cost of college to the extent that they're able
  • If a family is unable to contribute the entire cost, financial aid is available to bridge the gap

The EFC Works in Your Favor
The amount your family is able to contribute is frequently referred to as the Expected Family Contribution, or EFC. The figure is determined by the entity awarding the aid—usually the federal government or an individual college or university.

The federal government and financial aid offices use need formulas that analyze your family's financial circumstances (things like income, assets, and family size) and compare them proportionally with other families' financial circumstances.

Most families can't pay their EFC out of current income alone. The formulas assume that families will meet their contribution through a combination of savings, current income, and borrowing.

Because financial aid is limited, the formulas measure a particular family's ability to pay against other families' ability to pay.

Don't Rule Out Colleges with Higher Costs
Let’s say that your EFC is $5,000. At a college with a total cost of $8,000, you'd be eligible for up to $3,000 in financial aid. At a college with a total cost of $25,000, you'd be eligible for up to $20,000 in aid. In other words, your family would be asked to contribute the same amount at both colleges.]

Current Average College Costs

2006-2007 Average College Costs Per Year

  • Public, two-year: $2,361
  • Public, four-year: $6,185
  • Private, four-year: $23,712

College may look like it costs too much for you to afford, but consider these facts about financial aid.

  • $135 billion in financial aid was awarded in 2008.
  • About 60% of students attending public four-year colleges pay less than $6,000 annually for tuition and fees.
  • 44% of all students attend two-year colleges, and receive financial aid that reduces their tuition to about $400 on average.
  • About 60% of all college students are awarded grants. Grant awards in 2004-05 averaged $1,800 per student at two-year public colleges, $3,300 at four-year public colleges, and $9,600 at private, four-year colleges.

Lots of Financial Aid Options

Financial aid is any type of assistance based on financial need that is used to pay college costs. There are lots of options available to finance your college education. Here’s a brief look at the main types of financial aid.

For additional information, including websites designed to help Latino and other minority students with financial aid and college admission preparation, check out our resource links page.

The U.S. Department of Education’s Federal Student Aid (FSA) programs are the largest source of student aid in America. These programs provide more than $80 billion a year in grants, loans, and work-study assistance. Learn more about FSA and how to apply for this aid at

The first step in seeking financial aid for higher education is filling out the Free Application for Federal Student Aid (FAFSA). Fill out the FAFSA online at

The National Association of Student Financial Aid Administrators offers a range of resources to help students, parents, and counselors navigate the college financial aid process. For information, visit the website at

Grants and Scholarships

Also called gift aid, grants don't have to be repaid, and you don't need to work in order to earn them. Grant aid comes from federal and state governments and from individual colleges. Click on these links to find out if you're eligible for a Federal Pell Grant or Academic Competitiveness Grant.

Scholarships are usually awarded based on merit. To search for scholarships, please visit our scholarships page, or visit


Student employment and work-study programs help students pay for educational costs, such as books, supplies, and personal expenses. Work-study is a federal program that provides students with part-time employment to help meet their financial needs. Students get work experience while serving their campuses and surrounding communities.


Most financial aid (54%) comes in the form of student or parent loans that must be repaid. Most loans that are awarded based on financial need are low-interest loans sponsored and subsidized by the federal government. No interest accrues until you begin repayment after graduation. There are many different types of loans, both for students, and for parents to take out on behalf of their children.

Following are the basic types of loans for students and parents.

Federal PLUS Loans
The Parent Loans for Undergraduate Students (PLUS) Loan program is the largest source of parent loans. Parents can borrow up to the full cost of tuition minus any aid received. Repayment of the loan begins 60 days after money is paid to the college.

Private Parent Loans
A number of lenders and other financial institutions offer private education loans for parents. These loans usually carry a higher interest rate than PLUS Loans.

College-Sponsored Loans
A small number of colleges offer their own parent and student loans, usually at a better rate than PLUS Loans. Check each college's financial aid materials to see if such loans are available.

Perkins Loans
Perkins Loans are need-based loans and are awarded by the financial aid office of a college to students with the greatest need. The interest rate is very low (an average of 5%), and you don't make any loan payments while in school

Subsidized Stafford Loans
Subsidized Stafford Loans are need-based loans with interest rates ranging from 4% to 6%. The federal government pays the yearly interest while you're in school.

Unsubsidized Stafford Loans
Unsubsidized Stafford Loans aren't based on financial need and can be used to help pay the family share of costs. You may choose to pay interest on the loan while you’re in school or you may choose to capitalize the interest and pay nothing on your loan until after graduation. The disadvantage of choosing this option is that the interest accumulates and is added to the loan, meaning that you will repay more money to the lender over the life of the loan.

Grad PLUS Loans
Grad Parent Loans for Undergraduate Students (PLUS) Loans are sponsored by the federal government and unrelated to need. Generally, students can borrow Grad PLUS loan amounts up to the total cost of education, minus any aid received. The advantage of this type of loan is that it allows for greater borrowing capacity.

Private Student Loans
A number of lenders and other financial institutions offer private education loans to students. These loans are not subsidized and usually carry a higher interest rate than the federal, need-based loans. The College Board private loan program is an example of a private education loan for students.

Additional Loan Programs
In addition to scholarships, some private organizations and foundations have loan programs. Borrowing terms may be quite favorable.  Ask your guidance counselor for information about available loan programs.