| There are four ways or methods that the majority of | | | | Other states only provide a $250 grant per student. |
| parents and students use to pay the rising cost of | | | | The best source for state scholarships is at |
| college. The first two come directly from your pocket, | | | | collegescholarships.org. |
| while the last two require diligence and perseverance | | | | Colleges and Universities provide most of their grant |
| to capture. | | | | and scholarship money from their endowment funds. |
| Method 1: Savings | | | | The state college systems receive most of their |
| Since the early 1980's, the United States economy has | | | | funding from the state. In turn, most student funding is |
| experienced tremendous growth and prosperity. The | | | | limited. |
| population enjoyed an ever increasing zeal to buy and | | | | Private colleges and universities are obviously funded |
| invest, yet at the same time, savings lagged. The | | | | by student tuition and the funds raised and donated by |
| United States now ranks the lowest among | | | | their graduates. Therefore, their endowment funds can |
| industrialized nations in savings. The average savings | | | | be enormous. Even though these schools tend to have |
| rate is now about 0.5% of annual income. Due to this, | | | | higher costs of attendance, due to the size of their |
| most families don't have the savings to cover even | | | | endowment funds, they can provide major discounts |
| one year of college expenses. | | | | to students that show promise. Some of these private |
| If there is any real savings occurring, it is for retirement. | | | | colleges will even pay your entire cost if your |
| Our financial advisers, investment bankers, and even | | | | Expected Family Contribution (EFC) is zero. |
| our favorite news channel constantly reminds us about | | | | There are 1.5 million private scholarships available each |
| the importance of saving for retirement. Saving for | | | | year. In 2008-2009, these provided funds totaling about |
| college seems to have become a subject of minor | | | | $1.5 Billion Dollars. Averaged out, this comes to roughly |
| importance. | | | | $1,000 each, if every scholarship was used. Most of |
| As the emphasis has been on retirement, many | | | | the awards given are usually less than $1,500. Some |
| families don't start to think about how they will pay for | | | | can be as large as $20,000 per year for four years. |
| college until their child reaches their junior or senior year | | | | The competition for these private awards is fierce |
| in high school. By then, it is too late to be able to save | | | | though, so don't plan on having your entire education |
| enough for college. For most people, paying for college | | | | paid for with just private scholarships. |
| with savings is not the answer. | | | | Method 4: Loans |
| Method 2: Income | | | | Generally by the time parents consider this method, |
| If you don't have enough in savings to cover the cost | | | | they have concluded that either their assets and |
| of college, the next place most people look is to their | | | | savings are about to be greatly diminished or the |
| income. The cost of attendance at a state college or | | | | student will be loaded down with debt at graduation. |
| university for in-state has now reached $8,000 to | | | | With the crash in lending and the economic downturn, |
| $20,000 for a year! Over a ten month collegiate year, | | | | 32 of the 35 student loans companies have gone out |
| this amounts to an average monthly payment of $800 | | | | of business. Now the Federal Government has |
| to $2,000. | | | | decided to become the chief distributor of student |
| Most parents do not have that much left to send to | | | | loans, although it will take a few years to completely |
| the colleges. What's worse, is not every school has a | | | | transform the process. |
| monthly payment plan. Many colleges want their | | | | Student Loans have been divided into two classes: |
| money in chucks at the beginning of each semester, | | | | subsidized and unsubsidized. With the former, the |
| usually in August and in January. Check with each | | | | Federal Government pays the interest while the |
| college while your student is still in the application | | | | student is in school. This interest can vary from 3.4% |
| process to determine the colleges requirements. Use | | | | to 6.8%. With the latter type, the student is responsible |
| the schools payment rules to help you choose which | | | | for all the interest which is fixed at 6.8%. |
| schools are most affordable. | | | | Often, the colleges will offer a package of loans, part |
| Method 3: Grants and Scholarships | | | | subsidized, part unsubsidized, and potentially a PLUS |
| There are four main sources of grants and | | | | loan for the parents. These are very much like a |
| scholarships. As a whole, 50% come from the Federal | | | | mortgage loan. They charge points up front and carry |
| Government, 19% from the State Governments, 30% | | | | an interest rate of 8.5%. Lastly, the parent only have |
| from Colleges, 1% from Private Sources. For the | | | | ten years to pay them in full. These loans should be |
| academic year 2008-2009, these sources set aside | | | | avoided. |
| $148 Billion dollars for undergraduates. | | | | Summary: |
| The Federal scholarships and grants are composed of | | | | Parents enter financial aid time hoping that the colleges |
| six Need-based programs: Pell, FSEOG, Federal | | | | will offer a great deal in grants and scholarships. For |
| Work-Study, ACG, SMART, and TEACH. There are | | | | the majority of parents, this is not the case. Most pay |
| also two Merit-based programs: LEAP and the Robert | | | | far more out of their pockets than anticipated, or the |
| C. Byrd Honors Scholarship Grants. | | | | kids have too much debt to contend with at |
| State Scholarship programs vary by each state. Some | | | | graduation. The way around this problem is to learn |
| states like Georgia with the HOPE Scholarship covers | | | | how the financial aid game works. Learn the rules and |
| all of the college's tuition, but it is merit-based and each | | | | strategies, so that you can position yourself for the |
| student must maintain a 3.0 GPA or looses eligibility. | | | | best deal. |