Although financial aids are meant for low income families, higher income families may also qualify depending on how much and what kind of assets they own and their expenses. The eligibility criteria for financial aid seeking student is fairly straightforward:
Financial aid is based on the financial need of the student.
Financial need = Estimated college expenses in the year - Expected Family Contribution (EFC).
Estimated college expenses include: tuition, fees, room & board charges, books & supplies, transportation to/from school, health insurance, and incidentals. EFC is based on the financial standing of the student and students family.
The federal formula for EFC calculation is mainly dependent on the following factors:
In general, assets owned by the student carry a higher weight (30%) towards the calculation of EFC compared to the weight of assets owned by the parents (12%). 
Note that balances in 529 plans are owned by parents (not the student even though the student may be a named beneficiary on such accounts. But any distribution from 529 in a given year counts $ for $ for EFC. What it means is, financial aid initially determined gets adjusted downward based on the distribution form a 529 account. Most colleges follow a federal methodology to calculate EFC but they may have their own variations to it. One key determining factor is 'Expected Family Contribution' (EFC). EFC is used to calculate to what extent a student's parental assets are counted towards paying for the college expenses.
The amount you'll be asked to pay for college is based on your family's income and assets. Savings are considered an asset. However, current financial aid formulas only "tax" about five percent of parental assets each year. That is, the formulas assume that only five percent of child's parental assets are available each year to help pay for college. An in depth calculation of EFC is available at Finaid.org . More details on this topic are also available at Free Application for Federal Student Aid .
Once a financial aid has been determined by a college for a student, the next step is to determine under what aid program the aid will be disbursed to the student. Some of these aid programs are grants (no repayment required) while others are subsidized loans. These programs are governed by US Department of Education . They include federal grants, scholarships, and subsidized student loans. Note that grants and scholarships you don’t pay back but a student loan must be returned with the interest according to the terms of the loan agreement.
There are two types of federal grants available to eligible students.
Other than loans and grants, you may also want to explore scholarships at the college of your choice and the scholarships offered by non governmental agencies. These scholarships can be based on merit, need, or both. Your high school may also have information on some of these scholarships. Your parent’s workplace may also have some scholarships. . Some companies have recently launched scholarship programs for their employees’ children. One such company, Intel, recently started a similar scholarship program with up to $4,000 per child. A good place to check such sources is at www.fastweb.com. Other popular scholarship resources include nationalmerit.org , collegescholarships.org.
To learn more on these programs visit studentaid.ed.gov. Note that in addition to above federal grants and loans, some states also have student aid programs. You can obtain the information on state programs from the colleges. Some colleges also have their own student aid programs.
In a tough economic environment, all institutions run into different challenges. Many colleges will experience not only the reduced charitable giving but also a significantly reduced endowment pool due to market conditions. Many State Universities may also experience lack of state contribution due to budget shortfalls of the state. In such a situation, it is inevitable that tuition bill for a college will go up more than the average of 6%. Unless educators take a pay cut, it is quite likely that the tuition increase may touch double digits. Since parents also have less affordability to pay the tuition, it leads to a challenging situation. The lack of access to student loans in a credit crunch situation is going to further complicate the matter.
In such an environment it may be a good idea to look at some of the prepaid tuition plans. Such plans allow you to lock the current tuition rate for a list of colleges. See more on this under Saving Plans
In order to deal with the challenges, here are a few tactics to consider:
If you are struggling with the financing of your kids' college education, here are a few things worth considering:
To be able to effectively finance college education, here is a list of steps.
Although financial aids are meant for low income families, higher income families may also qualify depending on how much and what kind of assets they own and their expenses. The eligibility criteria for financial aid seeking student is fairly straightforward:
Financial aid is based on the financial need of the student.
Financial need = Estimated college expenses in the year - Expected Family Contribution (EFC).
Estimated college expenses include: tuition, fees, room & board charges, books & supplies, transportation to/from school, health insurance, and incidentals. EFC is based on the financial standing of the student and students family.
The federal formula for EFC calculation is mainly dependent on the following factors:
In general, assets owned by the student carry a higher weight (30%) towards the calculation of EFC compared to the weight of assets owned by the parents (12%).
Note that balances in 529 plans are owned by parents (not the student even though the student may be a named beneficiary on such accounts. But any distribution from 529 in a given year counts $ for $ for EFC. What it means is, financial aid initially determined gets adjusted downward based on the distribution form a 529 account. Most colleges follow a federal methodology to calculate EFC but they may have their own variations to it. One key determining factor is 'Expected Family Contribution' (EFC). EFC is used to calculate to what extent a student's parental assets are counted towards paying for the college expenses.
The amount you'll be asked to pay for college is based on your family's income and assets. Savings are considered an asset. However, current financial aid formulas only "tax" about five percent of parental assets each year. That is, the formulas assume that only five percent of child's parental assets are available each year to help pay for college. An in depth calculation of EFC is available at Finaid.org . More details on this topic are also available at Free Application for Federal Student Aid .
Once a financial aid has been determined by a college for a student, the next step is to determine under what aid program the aid will be disbursed to the student. Some of these aid programs are grants (no repayment required) while others are subsidized loans. These programs are governed by US Department of Education . They include federal grants, scholarships, and subsidized student loans. Note that grants and scholarships you don’t pay back but a student loan must be returned with the interest according to the terms of the loan agreement.
There are two types of federal grants available to eligible students.
Other than loans and grants, you may also want to explore scholarships at the college of your choice and the scholarships offered by non governmental agencies. These scholarships can be based on merit, need, or both. Your high school may also have information on some of these scholarships. Your parent’s workplace may also have some scholarships. . Some companies have recently launched scholarship programs for their employees’ children. One such company, Intel, recently started a similar scholarship program with up to $4,000 per child. A good place to check such sources is at www.fastweb.com. Other popular scholarship resources include nationalmerit.org , collegescholarships.org.
To learn more on these programs visit studentaid.ed.gov. Note that in addition to above federal grants and loans, some states also have student aid programs. You can obtain the information on state programs from the colleges. Some colleges also have their own student aid programs.
In a tough economic environment, all institutions run into different challenges. Many colleges will experience not only the reduced charitable giving but also a significantly reduced endowment pool due to market conditions. Many State Universities may also experience lack of state contribution due to budget shortfalls of the state. In such a situation, it is inevitable that tuition bill for a college will go up more than the average of 6%. Unless educators take a pay cut, it is quite likely that the tuition increase may touch double digits. Since parents also have less affordability to pay the tuition, it leads to a challenging situation. The lack of access to student loans in a credit crunch situation is going to further complicate the matter.
In such an environment it may be a good idea to look at some of the prepaid tuition plans. Such plans allow you to lock the current tuition rate for a list of colleges. See more on this under Saving Plans
In order to deal with the challenges, here are a few tactics to consider:
If you are struggling with the financing of your kids' college education, here are a few things worth considering:
To be able to effectively finance college education, here is a list of steps.
