Financing College | Print |
College Planning Center - Financing College

Thanks to NCFS' College Assistance Program, asking for a 70-year advance on your weekly allowance isn't a student's only option for paying for college.


Financing education is not a pleasant topic. Many parents probably wish that it was not a consideration at all. Unfortunately, each year many students face limited choices because of lack of financial planning for college. In order to best prepare for the future, families need to understand college costs and financial aid. The following descriptions provide a brief overview of financing college costs.   

Financial Aid   

Financial College Cost: Financial aid makes up the difference between what families can afford and educational costs. The belief is that students who can’t afford the full cost of education should still have the chance to go. In the past, financial aid was synonymous with grants and scholarships, also known as “gift aid.” Today, education loans are the main source of financial aid. The recent shift in financial aid, from grants to loans, raises much concern. Now, college graduates will be paying off the cost of their education for many years to come. Unfortunately, there doesn’t seem to be much hope for change in the near future. It isn’t just students who have been forced to borrow. Parents are also borrowing money to meet their share of the costs. 

Types of Assistance  

Financial aid consists of three kinds of assistance: grants and scholarships, work-study loan programs, and student loans. Grants and scholarships are only a small part of the available funds. Work-study loan programs give students the chance to earn money while they’re in school. Most financial aid comes in the form of student loans. 

Merit Scholarships  

Some students receive merit scholarships for outstanding achievement, athletic skill, special talents, or academic record. They are awarded without regard to a family’s ability to pay. The idea is that outstanding accomplishments, within and outside of the classroom, deserve recognition. However, less than 5 percent of all financial aid is in the form of merit scholarships. A Scholarship Search will help locate possible scholarship opportunities.

Often, colleges offer these awards to attract certain students, for instance, to recruit players for a specific team. Many parents and players are unrealistic about the availability of these well-publicized awards. Athletic scholarships are quite rare and it is only unusually gifted athletes who receive them. Unfortunately, coaches in youth leagues often raise unrealistic expectations about this.

Scholarships are also given to students with other talents. Any student with unique skills in a specific area, such as music, might find a college interested in recruiting him or her through merit-based awards. Students should realize that colleges offer even fewer of these scholarships. On the other hand, the number of academic scholarships seems to be increasing. There are probably more of these than any other form of merit-based aid, but still not many are available. 

Many colleges, including some of the most selective, are opposed to merit-based assistance. These colleges only give need-based aid. They feel that only students who demonstrate need deserve assistance. Their concerns that merit awards reduce the money available to help those who really need it.

Need-Based Assistance Programs  

Colleges award most of the available funds through need-based assistance programs. To determine eligibility for need-based aid, the family contribution is subtracted from the total cost of attending college. The difference is the family’s need for assistance. Therefore, the need increases as the total cost goes up. The total cost varies from one college to another. For example, private colleges are generally more expensive than public institutions.

A Financial Safety School  

Students should always apply to a financial safety school. This means applying to a less-expensive alternative, such as a state college or university, where the costs tend to be lower. At the same time, students should still be encouraged to apply to more expensive private colleges.

Low-Income Families   

Lower income (under $25,000) are eligible for assistance. Families should communicate this to their children so that they do not assume they cannot afford college. As an example for their children, parents might consider putting spare change in a coffee can labeled college fund. The amount saved may not make a dent in the total cost of college, but sends a powerful message about the importance of education.

Middle-Income Families   

Middle-income families should understand where they standing relation to others applying for financial aid. Income alone can be deceiving. Family size, number of children in college, unusual expenses, savings and other assets will also be considered. Currently the statistical middle class consists of the 3 out of 5 families with incomes between $25,000 and$70,000. These families usually qualify for financial assistance, but they will also be expected to make a significant contribution. This may require a number of sacrifices and a possible change in lifestyle. Going out to eat may become a rare luxury and these families should probably get accustomed to driving the same car for awhile.

High-Income Families  

Those families with incomes above $70,000 make up one-fifth of the population in the United States. These families appear to be in the best position to contribute towards their children’s education, but even they may struggle to meet college costs. These families should begin long-term financial planning as early as possible.

In conclusion, it is important for all families to have a better sense of what their expected contribution might be. Taking the time to secure a realistic estimate of college costs will help families plan more effectively.