Financial Aid

The single most important thing a new college student or parent of a new college student can do to prepare financially is to make a budget. Making a budget requires knowing two things:

1) How much is college going to cost?

2) How much money do I have to cover these costs?

An education loan is a form of financial aid that must be repaid, with interest. (Scholarships, on the other hand, do not have to be repaid.) Education loans come in three major categories: student loans (e.g., Stafford and Perkins loans), parent loans (e.g., PLUS loans) and private student loans (also called alternative student loans). A fourth type of education loan, the consolidation loan, allows the borrower to lump all of their loans into one loan for simplified payment. A recent innovation is peer-to-peer education loans. More than $100 billion in federal education loans and $10 billion in private student loans are originated each year.

Undergraduate scholarships and graduate fellowships are forms of aid that help students pay for their education. Unlike student loans, scholarships and fellowships do not have to be repaid. Hundreds of thousands of scholarships and fellowships from several thousand sponsors are awarded each year. Generally, scholarships and fellowships are reserved for students with special qualifications, such as academic, athletic or artistic talent. Awards are also available for students who are interested in particular fields of study, who are members of underrepresented groups, who live in certain areas of the country or who demonstrate financial need.

According to the Bureau of Labor Statistics, the tuition component of the Consumer Price Index (CPI) increased by 8% per year, on average, from 1979 to 2001. This means that children born today will face college costs that are 3 to 4 times current prices by the time they matriculate. Parents should expect to pay at least half to two-thirds of their children's college costs through a combination of savings, current income, and loans. Gift aid from the government, the colleges and universities, and private scholarships accounts for only about a third of total college costs. Accordingly, it is very important that parents start saving for their children's education as soon as possible, even as early as the day the child is born. Time is one of your most valuable assets. The sooner you start saving for college, the more time your money will have to grow.

This area of financial aid provides information about student financial aid resources for students who are interested in pursuing careers in the military and for veterans and their dependents. This information is intended primarily for US citizens. Military student aid, such as the Montgomery GI Bill, is the main reason many people enlist in the armed forces. However, GI Bill benefits cover only about three-fifths of the average cost of a college education, and about a third of eligible veterans fail to use their benefits.