Guide to Financing Higher Education

Guide to Financing Higher Education

It is almost never too early to start thinking about a college education. College tuition and other related expenses have climbed significantly over the last decade, but there are plenty of financing options available. This helpful guide will explore some of the best choices for financing higher education.

The Costs of Higher Education

College expenses can vary greatly depending on the type of institution you choose. Community colleges cost less to attend, typically averaging approximately $3,440 per year. State universities may range in price from about $9,410 to $23,890, per Big Future by The College Board, Private colleges are the most expensive with top schools charging up to as much as $60,000 per year.

As you choose your ideal college, you will need to keep the total cost of attendance (COA) in mind. You’ll need to include all expenses such as tuition, room and board, books, lab fees etc. Even though a university or private college may have a more expensive COA, they often offer scholarships to attract you to their schools. Private colleges often have large endowments that allow them to offer scholarships that other colleges may not have. They also know they have to compete with state colleges. So don’t be afraid to apply to the more expensive schools, as they may end up actually costing you less overall if you obtain a scholarship.

Determine Your Needs

One of the first things you will need to do is determine how much money you will likely need for your education expenses, including tuition, books, fees, room and board. Consider your available funds, including any college savings accounts and other sources. Next, estimate what your college expenses will be based on the college you plan to attend. This will allow you to see the amount of money you need through financial aid, scholarships, grants, or loans. In some cases, you may need to re-evaluate your choice of college and make the necessary adjustments so that you can more easily afford your education.

Financial Aid

Financial aid is available to all students. There are two types of financial aid available that do not require repayment:

  • Need-Based Aid
  • Merit-Based Aid

Need-based aid is provided based on the annual income and exposed assets of the parents and/or student. Merit-based aid is determined by various factors that may include such things as GPA (grade point average) and standardized test scores such as those from the ACT or SAT exams, leadership, talent (athletic, musical, artistic, etc.), diversity and more. Financial aid is usually paid directly to the institution and not to the student. Financial aid does not require repayment, but students must continue to meet the criteria on which the aid was based. For example, if the student drops out of college, he or she may need to repay the money that was allocated.


FAFSA, Free Application for Federal Student Aid, is the starting point for all student financial aid needs. The FAFSA application can be completed online here, or at There is usually a limited amount of federal funding allocated for financial aid, therefore, it is essential to submit your application as early as possible, which is now October 1st for the next school year. The application requires you to submit financial data from the previous two years, which can be obtained from your tax return and/or your parents’ tax return. If you use the IRS Data Retrieval Tool and connect FAFSA to your IRS data, the information will automatically be pulled in from the IRS. Once submitted, the application will be processed and you will receive a response in two to eight weeks. If you submit your application online, which is recommended, it can take considerably less time. You will be informed as to how much financial aid you will receive for the following school year from the college. The FAFSA summary will tell you if you qualify for the PELL Grant. Once you know this amount, you will be better able to determine how much additional money you will need to pay.

Scholarships and Grants

Scholarships and grants are methods of having college paid for without the need to repay the money. Scholarships and grants are similar, but there are some differences. A scholarship provides money that is to be used for college education. A student must meet specific criteria to qualify for a scholarship, which may include obtaining a certain GPA and may require you to take a certain number of course credit hours. A grant provides money that may or may not specify how it is to be used. Grants are usually offered by non-profit organizations and are established for those who meet particular requirements. They are also offered from colleges’ endowment funds.

There are thousands of different scholarships and grants that are available to students across the country. Scholarships are offered by:

  • Colleges and Universities
  • Corporations
  • Community Groups
  • National Organizations
  • Religious Organizations
  • Federal or State Government
  • Foundations

You can locate various scholarships online on websites such as, by searching for “scholarships for college”, or through the university website. There are usually very specific guidelines for submitting an application and the deadlines are often very early in the year. You should submit applications for multiple scholarships and see which ones will actually provide you with funds. Some scholarships require you to submit an essay. Keep track of scholarships you have applied for so you can follow up later.

You can similarly search for available grants by searching online for “grants for college” to find websites such as

Work-Study Programs

Work-study programs are offered through colleges and universities. These programs are designed to provide students with employment while attending the college. The programs are typically offered through specific departments and the student may need to be registered in that particular area of study to qualify. As with other college-based options, you should contact the school department or review the website to learn more about each individual program, including qualification criteria and application procedures and dates.

Student Loans

College students may be able to obtain full or partial funds needed through a student loan. There are two main sources of student loans – federal and private loans. It is important to understand the differences between these types of loans so you can make the best choice possible. All types of loans require repayment, usually with interest. There are various types of federal loans to consider:

  • Federal Perkins Loan
  • Subsidized Stafford Loan
  • Unsubsidized Stafford Loan
  • Federal Parent PLUS Loan

Each type of loan generally has some restrictions and criteria that must be met in order to qualify. In general, federal loans have a fixed interest rate which is not based on credit history. There are annual and cumulative loan limits that you will need to consider. Federal Perkins Loans are provided through the college or university while the other types of federal loans come through the U.S. Department of Education.

Private student loans are typically available for the amount of tuition and college costs less any student aid that has been provided. Private loans can be obtained through a number of banks and companies and each has its own set of requirements and eligibility requirements. Also, some private loans may require a parent to co-sign.

Repayment of money from student loans typically begins 6 months after you are no longer enrolled at least part-time in classes, regardless of whether you graduated or not. This allows you time to become employed so that you are able to make monthly payments. Before taking a loan, be sure that you understand the terms of repayment as well as the total amount of interest for which you will be responsible. Remember that just like any debt, a student loan must be repaid according to the terms of the loan contract.

Savings Plans

There are special savings plans designed for college costs. College savings plans are called 529 Plans and are governed by each state. The 529 is an investment savings plan that allows families to save specifically for college costs. 529 plans have both advantages and disadvantages, so it is best to learn about them before you decide to invest. The 529 plan was formerly called the Qualified Tuition Program. There are two types of 529 plans – the prepaid tuition plan and the college savings plan. Not all plans are offered in all states.

529 plans offer both tax advantages and withdrawals that are not federally taxed as long as the funds are used for college costs. Some plans also offer scholarships, matching grants, and tuition freezes. The main disadvantage to these types of savings plans is that it can reduce your financial aid package dollar for dollar, and if you use the money for non-college related expenses, it will be taxed. Another disadvantage is that with some plans, the money can only be used for schools in your own state, which can limit the student’s available options.

Avoid Scams

The internet offers a wide array of options for locating financial resources. However, there are also a number of online scams that must be avoided. Some scams have been associated with scholarships. It is advisable to research a scholarship opportunity before signing up for it. One of the main things to look out for is anyone requesting money for a guaranteed scholarship. Scholarships do not work that way and legitimate organizations do not request payment. The FTC, Federal Trade Commission, recommends that you report any possible scams immediately.

Getting the Help You Need

Obtaining the funds necessary for your college education can be complex. Help is often available for high school students and their parents through their high school guidance counselors or local college informational seminars. Colleges and universities offer similar meetings that allow parents and students to get answers to their college funding financial questions. Try to gather as much information as possible for your student as early as possible, before starting high school if possible, so that you have a head start in figuring out what steps to take in a timely manner.  You don’t want to miss an opportunity for apply college funding, especially the funding that doesn’t require repayment. The more options you have, the more likely you’ll be successful in fully funding your education.

DISCLAIMER: This guide is provided only for informational purposes and is not intended to be a substitute for legal or other professional advice. This guide does not contain nor is it intended to provide legal or other professional advice for any specific situation and readers should not take action or refrain from taking action, based only on the information provided in this guide. Goldberg & Osborne has attempted to provide accurate and current information in this guide, but cannot and does not guarantee that the information is accurate, complete, or up to date. This guide may contain links and/or search terms that will lead to external websites as a convenience to the reader, but Goldberg & Osborne is not responsible for the content or operation of any website other than its own website. The presence of a link or a search term does not imply and is not an endorsement by Goldberg & Osborne of the website provider or the information contained on any linked website or on any website contained in search results from a search term provided in the guide.