How to Get the Most Financial Aid

If saving for college isn't an option, financial aid will  start to look pretty appealing.
If saving for college isn't an option, financial aid will  start to look pretty appealing.
© 2009 Jupiterimages Corporation

There's no doubt a college education can end up costing quite a bit of money, but chances are excellent it'll more than pay for itself over a lifetime. According to the College Board, if students enter a public university after high school and graduate with a degree four years later, they'll typically recoup the full cost of their education -- and the money they would have made working during that time period -- within 11 years [source: The College Board]. But better than that, as of 2005, graduates with a four-year degree working throughout their lifetimes will typically earn more than 60 percent more money than someone with only a high school diploma [source: The College Board].

Since not everyone has the spare money on hand to pay for college, many take advantage of financial aid to help foot the bill. Most kids shouldn't hold out too much hope that they can get a free ride through financial aid alone, but many can significantly defray the cost of their education with smart financial planning.


Some of the things financial aid can help pay for include tuition and fees, room and board, books and computers, supplies and transportation, and even childcare for dependents if there are any. Potential resources run the gamut from federal, state and local governments to a multitude of private sources and the colleges themselves.

These institutions offer a variety of grants, scholarships, fellowships and work-study programs -- four closely related terms that often overlap in form and function depending on the source -- so it pays to spend some time reading about everything that's offered. Chances are, it'll be pretty easy for potential students to narrow down the field once they start reviewing the requirements for each option. Additionally, students can consider routes like student loans, parent loans and the Reserve Officers' Training Corps (ROTC).

On the next page, we'll look at some of the steps students can take to help keep the cost of their college education under control.


Start the Search: Financial Aid

A couple of good scholarships are a smart way to lighten the load.
A couple of good scholarships are a smart way to lighten the load.
© 2009 Jupiterimages Corporation

There are two basic ways to break down the world of financial aid: need-based awards and merit-based awards. The former are generally geared toward people with financial issues, while merit-based awards are typically reserved for students who excel in some academic, artistic or athletic area.

Regardless of which type of award you're after (or if you hope to receive both types), it's a good idea to start tracking down potential financial aid opportunities early, before crucial deadlines slip by. High school students, for example, should begin the search during the spring semester of their junior year. There are lots of online databases with scholarship listings, and guidance counselors and libraries can also serve as good jumping-off points. Scholarships and grants can be awarded for any number of factors including financial need, academic or athletic excellence, first-generation college students, minority status, enrollment in a specific major, and certain community or religious affiliations.


Different grants, scholarships, fellowships and work-study programs not only have highly variable deadlines -- they also have limited amounts of funds -- another reason students should start checking around as soon as possible to maximize what they can receive. One good way to avoid pitfalls like these is to register with free databases like FastWeb or, which allow students to fill out detailed questionnaires and receive personalized lists of applicable financial aid opportunities. They also offer services like e-mail updates when new opportunities are posted or when deadlines are approaching. Then it's time to start filling out applications and crossing fingers.

At the end of the day, if students still lack necessary funds after collecting aid, loans remain a possibility. The federal government offers loans, such as the Stafford and Perkins Loans (for students) and the PLUS Loan (for parents). Federal loans are widely recommended as the first and best choice, followed by private loans offered from banks.

Some students and their parents can also explore other avenues like applying for tax credits such as the Hope Scholarship Tax Credit and the Lifetime Learning Tax Credit. Depending on whether they're eligible and what their circumstances are, some money may be subtracted from the amount they owe in taxes.

On the following page, we'll cover the next major step you'll want to take while applying for scholarships, grants and a whole lot more.

Filling out the FAFSA

Student loans can help tie up any loose ends.
Student loans can help tie up any loose ends.
© 2009 Jupiterimages Corporation

Once future students have waded through the first steps and explored the arena of potential grants, scholarships and the like, it's time to hit up other big sources of financial aid. The first step is filling out an online Free Application for Federal Student Aid (FAFSA) form. If students plan to start school in the fall of 2010, for example, they can begin filing their FAFSA forms starting anytime after Jan. 1, 2010 -- ideally after their 2009 taxes are complete -- and the cutoff isn't until June 30, 2011.

But don't think that means it's a good idea to procrastinate. FAFSA reports aren't just used to determine federal grants, work-studies and loans. Most states, schools and even many private scholarship organizations want to see FAFSA forms, too, and their deadlines are rarely so lenient. For prospective students looking to make sure they take full advantage of funds, there's no dawdling on FAFSAs.


The essential purpose of FAFSA forms is to determine families' EFC, or Expected Family Contribution. Once the forms are processed, students work with their schools' financial aid administrators to discuss financial aid packages (including potential school, state and federal assistance) to help them meet all the upcoming expenses that fall above their EFC. Keep in mind though, state governments and school financial aid offices may also require additional forms beyond the FAFSA before they award financial aid, so it's important to do an early investigation of those avenues, or students may find themselves scrambling to collect everything they need to qualify in time.

For more information about preparing for a secondary education, pay a visit to the links on the next page.

Related HowStuffWorks Articles


  • "2008 Federal Education Tax Benefits Guide." National Association of Student Financial Aid Administration. Jan. 10, 2009. (1/5/2010)
  • Clark, Kim. "10 Tips for Getting More Financial Aid." U.S. News and World Report. June 16, 2009. (1/6/2010)
  • "Education Pays." College Board. 2006. (1/5/2010)
  • FastWeb Web site. (1/5/2010)
  • Federal Student Aid Web site. (1/4/2010)
  • "Financial Benefits to the Individual." College Board. 2007. (1/4/2010)
  • FinAid Web site. (1/4/2010)
  • Web site. (1/4/2010)
  • The ACT Web site. (1/4/2010)
  • U.S. News and World Report Education Center Web site. (1/4/2010)