Financial Options Available to Help Pay for College

Special Section: Back to School 2009

Scholarships and Work Study
To find scholarship opportunities, start the search early – December or January for the next school year – and utilize a variety of resources. Begin with school guidance counselor for a list of possible resources. Check with the college financial aid office. Most state and many colleges offer scholarships. Think small as competition can be tough for large awards. Smaller awards, $1,000 and less, typically have less competition and are easier to obtain. The Internet and organization Web sites are excellent places to search. Keep in mind this information should always be free.

The Federal Work Study program gives students the opportunity to earn money for school and gain valuable work experience. It is available to both undergraduate and graduate students with financial need. The amount awarded depends on several factors – need, other aid received and availability of school funds.

Student Loans
Student loans are some of the most commonly used financial tools. Student loans are funds borrowed from a financial institution or federal or state government. Education loans must be repaid. There are at least three types of education loans.

A Federal Perkins Loan is a federal loan program administered by colleges. It is available to both undergraduate and graduate students and is based on need and the availability of government funds. The annual interest rate is five percent. Repayment begins nine months after the student leaves school or less if a half-time student.
Federal Stafford (student) Loans and Federal PLUS (parent) Loans are available through financial institutions that participate in the FFEL program or through the federal government in the direct loan program. Fixed rates are 6.8 percent for Stafford loans and 8.5 percent for PLUS loans. If the Stafford Loan is subsidized by the federal government, the interest is waived while the student attends college.

Financial institution or “supplemental” loans are for students or their parents who attend participating colleges and graduate schools. They are not based on need. Remember to consider the full range of student financial aid options available. Supplemental loans are often used to supplement federal student loans when they are not sufficient to cover the full cost of education. Many institutions offer supplemental loans where students can borrow up to the entire annual cost of attendance, minus other financial aid received, at competitive interest rates. •