You Can Afford It; How to Pay for College

The first question that most people ask about attending college is, "How much will it cost?" Schools are sometimes reluctant to post tuition costs because they are afraid of discouraging potential students. In fact, many students will qualify for financial aid and scholarships that greatly reduce the cost of higher education. There are three sources of financial aid: (1) federal and state government grants and loans, (2) grants that come directly from the school and (3) outside scholarships from private organizations. For millions of Americans, these sources of aid have made college affordable. You must attend an accredited school to receive federal and sometimes state aid. However, non-accredited vocational schools may offer private assistance or help you secure private grants or loans. And if you are unemployed or have recently been laid off, you may qualify for free or subsidized jobs training. Check with the school or your local employment office. Also check with Sallie Mae about its low-interest Career Training Loan program (888-272-5543) for technical training or trade school, online courses and other education programs. You can take up to 10 years to repay.

About 70 percent of college financial aid comes from the U.S. government, most of it through student loans. You don't have to start making payments on a student loan, with its relatively low interest rate, until you complete school. The federal government also offers a variety of grants, including the Pell Grant, the Supplemental Educational Opportunity Grant (SEOG), the Academic Competitiveness Grant and the SMART grant. In most cases a school or college will have a financial aid department to help you fill out any necessary forms. The federal government also funds a work-study program. In addition, most states offer grants, scholarships and loans to residents. Good news: In 2006 Congress passed a law that allows students who attend schools that offer most of their courses online to receive financial aid (previously only students who attended schools that offer most of their courses on a campus were eligible). This is expected to increase enrollment in online schools considerably.

The first step is to fill out the Free Application for Federal Student Aid (FAFSA), which you can complete online at fafsa.ed.gov. You cannot fill out the form before January 1 of the year you plan to attend school. So if you plan to start in September, you cannot submit a FAFSA until after the previous January 1. The federal filing deadline is June 30; if you file online, processing usually takes about a week. It's best to complete this form as soon as you can; most schools want to see the forms by late January or mid-February. Once your FAFSA is processed, you will receive a report that shows your Estimated Family Contribution (EFC), which is also sent to the school or schools you hope to attend. For private scholarships, check out online services. Another great source for information about government grants is Students.gov.

If you are still a dependent on your parent's tax return, you will need their financial information to fill out the FAFSA. However, you will not need this information if you are independent, which includes those who are older than 24, enrolled in a graduate program, married or serving in the armed forces.

Typically the school you plan to attend will provide other forms to determine if you qualify for institutional grants or state funds. Each state has its own application deadline.

Finally, there are scholarships that come from outside the government and school; those you apply for and get on your own. A good place to start your search is CareerStop, which is sponsored by the Department of Labor. We also recommend registering with the free search service Scholarship Experts. If you are in the military, make sure you look into educational grants and loans -- about a third of veterans never use them. Military.com offers a free guide to military education benefits. You also will want to investigate 529 plans that allow you to save for college tax-free. See Saving for College for more information.

For more details about financial aid and scholarships, visit our college-guide bookstore.