Introduction to Financial Aid and Saving on College Costs

Earning a college degree is more important than ever, as employers are looking for a minimum of a bachelor's degree, and many positions now require a graduate degree. However, a college education is also more expensive than ever. The average cost of tuition and fees is over $9,000 at public universities and over $30,000 at private nonprofit colleges. That doesn't even take into account the cost of room and board, which averages nearly $10,000 per year.

The typical household will find it nearly impossible to pay for four years of college without help. Even if you started saving when your child was born, you still probably wouldn't have enough. Let's say you saved $1 per day for 18 years and earned 10% interest on this savings. By the time your child enters college, you will have saved just shy of $18,500. Currently, this is almost enough for one year of tuition, room, and board at a public university, but just for the first year. It doesn't even cover half of the first year at a private nonprofit college. And of course, you need to remember that college costs are likely to continue their rapid increase.

Thankfully, there are many sources of financial aid to pay for the cost of college. Most students apply for and receive at least some financial aid. Federal grants go to about one-third of students, with over $4,500 being the per year average. More than half of students take out loans, averaging just over $7,000 per year. State and institutional grants also play a large part in paying for college. This money adds up quickly, and many students are surprised to learn how much financial aid they are qualified to receive.

Navigating the process of getting financial aid probably feels like a daunting task, but this guide is here to help you. It will walk you through your options for federal student aid, scholarships, and state aid. You will be pleased to learn that one application, the FAFSA (Free Application for Federal Student Aid), is all you need to get the largest and most common grants and student loans. In addition to learning about financial aid, you will also learn about options to invest and save for college, and how to get tax credits and deductions for college expenses.

Another angle this guide will teach you is how you can decrease the costs of tuition, room, and board. For example, if you can test for credit or start in community college, you can significantly reduce your costs by limiting the number of years you will attend an expensive college or university. Understanding a few simple tips and tricks can give you helpful strategies for cutting your college costs.


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