Understanding Financial Aid – Questions and Answers

Can only the most elite in our country attend college?

I probably don't qualify for aid. Should I apply for aid anyway?

Many parents fear that financial aid is only for the poor and that the middle-class gets left out. Is that true?

What percentage of the $68 billion is in loans?

Why can't I submit my FAFSA before January 1?

What is financial "need"?

How do I know if I qualify for need-based aid?

Is all financial aid awarded on the basis of financial need?

Do I need to be admitted before I can apply for financial aid at a particular university? 

Do I have to reapply for financial aid every year and submit a FAFSA? 

Why does the FAFSA ask applicants to list the highest level of education that their parents completed? Why is that important? 

How does that affect one's application for aid?

I have filled out the FASFA for my daughter, but the income I put in is not correct because I filed bankruptcy and my whole paycheck goes to paying back money on different obligations, which means I do not get an actual paycheck. How would the FASFA factor in this type of situation?

My 21-year-old son is currently in the Marines. When he gets out next year I know he will be able to use the veteran's bill- paying about $400per month for 36 months. That will not be enough to pay tuition and room and board. I am ready to retire and trying to see whether I will have to keep working in order to help him get through school. Are there many financial programs for him to get help - he does not have a good high school record and never took his SAT's?.

Do schools give preference to students paying full price?

When is the absolute last day that I can apply for financial aid this school year?

How does the cost of college affect financial aid?

If a college reaches a certain percentage in federal student loan defaults, can the college be stripped of all federal financial aid?

How does the PLUS loan default rate compare with the default rate on federal student loans?

Do colleges typically provide seminars to students who receive loans in an attempt to keep default rates down?

If I can afford a state school, does that mean I can't get any financial aid from a private school?

Why bother saving money for college if my family will be penalized with less financial aid?

With over $68 Billion in financial aid, do families really need to save for college?

Should parents save money for college in the student's name because of the tax advantages?

Is it true that a student won't qualify for aid if their parents have retirement funds?

I know students who didn't qualify for financial aid, so should I take the time to apply?

How do I get aid to go to graduate school part-time?

How much has tuition risen over the past 10 years?

How many parents borrow for their children's college education?
How many take out PLUS loans?

What is the average PLUS loan indebtedness?

What percentage of PLUS borrowers have multiple PLUS loans?
What percentage of students receive grants?

What percentage of community college students receive aid?

What percentage of students receive aid at four-year public institutions?

At private colleges, what percentage of students receive aid?

What is the average debt of graduating students?

Who Eligible for Federal Student Financial Aid?

What Benefits are there for Special Groups?

Is college really worth the cost in terms of family savings and student loans?

How do colleges expect middle-class families to pay or borrow $30,000 a year for tuition?

I am a high school honor student and all state soccer player and my family does not qualify for need-based financial aid. Isn’t it always cheaper to attend a public institution, even if attending one out-of-state?

Isn't it always cheaper to attend a public institution, even if attending one out-of-state?

What are my chances of getting financial aid as an independent student?

How likely am I to receive financial aid?

Are there any secrets about getting financial aid?

How much financial aid do college students receive?

Will the financial aid award cover tuition and other educational expenses?

What types of financial aid do students typically receive?
How much financial aid do students typically receive from each source?

All things equal, what factors will improve my chances on receiving financial aid?

What is the average cost of tuition and has it changed much?

Has financial aid kept up with college cost?

Do students work and attend school full-time?

How much do families really have to come up with to pay for college?

 

Can only the most elite in our country attend college? 

Not at all! Sixty-nine percent of high school graduates go to college immediately, and many more ultimately attend college. Nationally, about 20 percent -- that's one in five -- of traditional-aged undergraduates come from families with income of less than $20,000 per year. The United States leads the G-7 nations in college degree completion; 24.4 percent of Americans ages 25-64 have college degrees. 
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I probably don't qualify for aid. Should I apply for aid anyway? 

Yes. Many families mistakenly think they don't qualify for aid, and prevent themselves from receiving financial aid by failing to apply for it. In addition, there are a few sources of aid such as unsubsidized Stafford and PLUS loans that are available regardless of need. The first step in applying for financial aid is completing the FAFSA, which is free. You can obtain a paper copy at your local library or high school or you can complete the application online at www.fafsa.gov). There is no excuse for not applying. 
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Many parents fear that financial aid is only for the poor and that the middle-class gets left out. Is that true? 

Actually, there are many resources available to parents of middle-class students. With grants, scholarships, and low-interest loans, about 20 percent of families with income of $50,000 or more receive student aid each year. Over 70 billion is available to students in grants, scholarships, and low-interest loans.
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What percentage of the over 70 billion in student financial aid is in loans?

Of the over $70 billion in aid available to students, low-interest loans account for about 60 percent and grants 40 percent.
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Why can't I submit my FAFSA before January 1?

To assure that all eligible student and family resources are reported for the year. If you submit the financial aid application before January 1, it will be rejected. 
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What is financial "need"?

The federal government has defined financial "need" based upon a standard that compares different levels of relative need. Under the federal definition, financial need equals the total costs of the student's attendance at the school minus what the student is expected to contribute, based upon the student's (and, in some cases, the parent's) assets.

A standardized formula is used to determine what the student (or student and family, if the student is a dependent or is married) is expected to contribute. The "Expected Family Contribution (EFC) is calculated using factors such as the family's income, assets, the number in family household, and number of family members attending college. The school determines the financial need by subtracting the EFC from the cost of attendance. The financial need becomes the ceiling for the amount of need-based financial aid the student may receive for that school year.
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How do I know if I qualify for need-based aid?

When you apply for financial aid, your Need is defined as the difference between the total cost of education and a family's ability to pay for that cost. Evaluation criteria include income, assets, and family size.
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Is all financial aid awarded on the basis of financial need?

Financial need is not the only criteria used to determine a student's eligibility for financial assistance. Financial aid is also awarded based upon other considerations, such as merit or the ability to borrow (credit worthiness). The most common example of non-need based aid is the scholarship. If the student has excelled in academics, or has talents in other areas, such as athletics, music, debate, etc., there may be some scholarship assistance available. Students should be encouraged to contact the school for additional information. 
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Do I need to be admitted before I can apply for financial aid at a particular university? 

You can apply for financial aid any time after January 1. To actually receive funds, however, you must be admitted and enrolled at the university. 
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Do I have to reapply for financial aid every year and submit a FAFSA?

Yes. Most financial aid offices require that you apply for financial aid every year. If your financial circumstances change, you may get more or less aid. After your first year you will receive a "Renewal Application" which contains preprinted information from the previous year's FAFSA. Your eligibility for financial aid may change significantly, especially if you have a different number of family members in college. Renewal of your financial aid package also depends on your making satisfactory academic progress toward a degree, such as earning a minimum number of credits and achieving a minimum GPA. 
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Why does the FAFSA ask applicants to list the highest level of education that their parents completed? Why is that important? How does that affect one's application for aid? 

Some colleges have scholarships specifically for first-generation college students. The question does not affect the expected family contribution calculation, or the federal student aid package.
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I have filled out the FASFA for my daughter, but the income I put in is not correct because I filed bankruptcy and my whole paycheck goes to paying back money on different obligations, which means I do not get an actual paycheck. How would the FASFA factor in this type of situation?

The FAFSA asks for the adjusted gross income. In your case, you don't have much of it available. You need to communicate with the financial aid administrator at your daughter’s school, explain your situation, document it, and ask if there is anything the aid administrator can do for someone in your situation. The aid administrator will keep this information confidential. Note that each school will have its own procedures for handling special needs cases.
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My 21-year-old son is currently in the Marines. When he gets out next year I know he will be able to use the veteran's bill- paying about $400per month for 36 months. That will not be enough to pay tuition and room and board. I am ready to retire and trying to see whether I will have to keep working in order to help him get through school. Are there many financial programs for him to get help - he does not have a good high school record and never took his SAT's?.

Your son will be considered an independent student when he gets out. His eligibility won't be determined by your income--he won't even have to report it on his FAFSA. If he's accepted at a school and makes satisfactory academic progress, he should be eligible for federal student aid.
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Do schools give preference to students paying full price?

Most schools have a "need blind" admissions policy. This means they don't look at financial circumstances until after admission. Ask your schools about their approach.
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When is the absolute last day that I can apply for financial aid this school year?
There is no official one last day. In general, you should apply early--but you have to apply before your last day of classes--and well enough before that day so that the paperwork for your loan can be processed in time. See your financial aid administrator for what the absolute last day is at your particular school.
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How does the cost of college affect financial aid?

In many cases, the greater the total cost of the college, the more financial aid the student may be eligible to receive. The same expected family contribution must be used, regardless of the school the student is planning to attend.
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If a college reaches a certain percentage in federal student loan defaults, can the college be stripped of all federal financial aid?

Schools can lose their eligibility for consistently high default rates. It's incumbent on each school to help students determine how much debt they should take on and begin planning for repayment. 
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How does the PLUS loan default rate compare with the default rate on federal student loans? 
Default rates on PLUS loans historically have been lower than the default rates on Stafford loans for students. U.S. Department of Education budget data project a default rate of approximately 10 percent over the life of PLUS loans issued in fiscal 1999. For comparison, the default rate projection for Stafford loans issued during the same year is nearly 16 percent for unsubsidized Stafford loans and nearly 17 percent for subsidized Stafford loans. Parents typically have more experience managing debt and more extensive financial resources than recent college graduates. Therefore, parents are more likely to successfully repay education debt.
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Do colleges typically provide seminars to students who receive loans in an attempt to keep default rates down?

All schools are required to provide entrance counseling for new borrowers, and exit counseling for students leaving or graduating
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If I can afford a state school, does that mean I can't get any financial aid from a private school?

Private schools cost more, but they typically give out more aid to compensate. Apply where you want to go, and then compare financial aid packages.
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Why bother saving money for college if my family will be penalized with less financial aid?

When schools conduct a need assessment, they figure the family’s contribution based on only a small portion of the parents’ savings, concentrating more on current income. . Part of the formula used to determine financial aid awards from the federal government is your income and assets. Regardless of savings, most families qualify for financial aid if they still have the need for it. Also, many scholarships are awarded without regard to financial need. Look to combine financial aid with your own savings you, and your children will be better off in the long run.
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With over $68 Billion in financial aid, do families really need to save for college?

YES. Though it is true that financial aid is available for most students, increased college enrollment and ever-growing costs make it more and more important for families to save up for post-secondary education. Few students actually receive a financial aid package that covers their entire education. Because of interest, educational loans are repaid for more than what was borrowed. By starting to save early and often, families will have more money for college than they invest. That's the power of compounding interest.
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Should parents save money for college in the student's name because of the tax advantages?

Probably not. Financial aid offices expect a higher contribution from the student's savings than from the parents' savings (35% from the student's versus 5.64% from the parent's.).
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Is it true that a student won't qualify for aid if their parents have retirement funds?

Money in a retirement fund (e.g., IRA, 401k, 403b) is not included in the federal need analysis formula. Most schools also disregard it.
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I know students who didn't qualify for financial aid, so should I take the time to apply?

Every financial aid situation varies, so the only way to find out whether you'll qualify is to apply. The FAFSA is free, and most schools need it before considering you for any type of financial aid, including loans.
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How do I get aid to go to graduate school part-time? 

Your first steps should include checking out all scholarships, grants, and employment opportunities first and completing the FAFSA. You can obtain a paper copy at your local library or high school or you can complete the application online at www.fafsa.gov). Next you need to pick out a school, contact the financial aid office and find out what your eligible for in financial aid. Part-time attendance doesn't exclude you from eligibility for federal student aid. However, at the graduate level, you will most likely be considered for loans and maybe work-study, but no grants.
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How much has tuition risen over the past 10 years? 

Nationally, tuition at four-year public colleges rose by 47 percent, adjusted for inflation, over the last 10 years; four-year private college tuition rose by 43 percent over the same period. 
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How many parents borrow for their children's college education? 

Approximately one of every four parents with children in college borrows to pay higher-education expenses.
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How many take out PLUS loans?

About 44 percent of parents who borrow for college use Federal PLUS loans; 17 percent rely on second mortgages; 14 percent borrow state loans; and 11 percent use institutional loans. Some parents use more than one source of credit to pay college costs.
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What is the average PLUS loan indebtedness? 

A March 1999 analysis of 5,300 PLUS loan accounts serviced by USA Group revealed an average cumulative PLUS loan debt level of $8,732.
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What percentage of PLUS borrowers have multiple PLUS loans?
The USA Group analysis disclosed that slightly more than half of the PLUS borrowers had taken out two or more PLUS loans within three years of their first PLUS loan.
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What percentage of students receive grants?

Forty-one percent of college students receive grants each year, and the average grant amount is $2,700.
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What percentage of community college students receive aid?

At community colleges, over one-third of students receive aid, and the average amount received is over $2,000.
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What percentage of students receive aid at four-year public institutions?

At four-year public institutions, more than half of students receive aid, and the average amount received is over $5,000.
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At private colleges, what percentage of students receive aid?

At private colleges, 70 percent of students receive aid, and the average amount received is almost $9,000.
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What is the average debt of graduating students?

Between 1192-93 and 1995-96 the average debt among students graduating from public four-year colleges increased from $7,400 to $11,950. The average debt among students graduating from private four-year colleges increased from $10,190 to $14,290, and that of students from public, two-year colleges increased from $4,380 to $5,450.
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Who Eligible for Federal Student Financial Aid?

Some of the requirements to receive aid from federal programs are that you must:

Be a citizen or eligible non-citizen of the United States with a valid Social Security Number
Have a high school diploma or a General Education Development (GED)-certificate or pass an approved “ability to benefit” test;
Enroll in an eligible program as a regular student seeking a degree or certificate; and
Register (or have registered) for Selective Service, if you are a male between the ages of 18 and 25

To receive federal student financial aid you must meet the following criteria:

Depending on the type of loan for which you're applying, you must demonstrate financial need or creditworthiness
You-or your parent in the case of a PLUS loan-must be a U.S. citizen or an eligible non-citizen (have a permanent resident visa and be able to provide an alien registration identification number).

Have a high school diploma or a General Education Development (GED)-Certificate, pass a test approved by the U.S. Department of Education, meet other standards your state establishes that are approved by the U.S. Department of education, or complete a high school education in a home school setting that is treated as a home school or private school under state law. See your financial aid administrator for more information.

Be enrolled or accepted for enrollment as a regular student working toward a degree or certificate in an eligible program. (You may not receive aid for correspondence or telecommunications courses unless they are part of an associate, bachelor's, or graduate degree program.)

Be a US citizen or eligible non-citizen

Have a valid Social Security Number. If you don't have a SSN, you can find out more about applying for one at www.ssa.gov

Make satisfactory academic progress

Sign a statement on the Free Application for Federal Student Aid (FAFSA) certifying that you will use federal student aid only for educational purposes

Sign a statement on the FAFSA certifying that you are not in default on a federal student loan and that you do not owe money back on a federal student grant

Register with Selective Services if required
If you are a male 18 through 25 years of age and you have not yet registered with Selective Service, you can give Selective Service permission to register you by checking a box on the FAFSA. You can also register through the Internet at www.sss.gov

A recent law suspends aid eligibility for students convicted under federal or state law of sale or possession of drugs. If you have a conviction or convictions for these offenses, call 1-800-4FED-AID (1 -800-433-3 243) to find out how, or if, this law applies to you. You can regain eligibility early by successfully completing an approved drug rehabilitation program.

Even if you are ineligible for federal aid, you should complete the FAFSA because schools use this information in awarding nonfederal aid.

When you apply for aid from the student financial aid programs, the 
U. S. Department of Education verifies some of your information with the following federal agencies: Social Security Administration for verification of Social Security Numbers and U.S. citizenship status), Selective Service System (for verification of Selective Service registration* status, if applicable), Immigration and Naturalization Service (for verification of eligible non-citizenship status, if applicable), Department of Justice (for verification that an applicant has not been denied Federal student aid by the courts as the result of a drug-related conviction), Department of Veterans Affairs (for verification of veterans status, if applicable, for dependency status purposes. 
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What Benefits are there for Special Groups?

Veterans And Their Dependents
The Montgomery G.I. Bill provides educational benefits for those participating individuals who served on active duty or in the Selected Reserves. Benefits are also available under the post-Vietnam era Veterans Educational Assistance Program for those who entered the service after December 31, 1976 and before July 1, 1985, and contributed to the VEAP fund while on active duty or had contributions made for them by the military.

Service-disabled veterans may be eligible for vocational rehabilitation benefits from the U.S. Department of Veterans affairs. Educational benefits are also available to veterans' dependents if the veteran (spouse or parent) died or was totally and permanently disabled in service, or is listed as missing in action. There is also a Veterans Work-Study and Tutorial Assistance Program.

For more information, contact your college's veteran's affairs office, the local office of the U.S. Department of Veterans Affairs (in the phone book under U.S. Government Office), call toll-free 1-888-442-4551, or visit www.va.gov/education.

Students With Disabilities
Students with disabilities who meet the academic qualifications for a college should apply for admission and, if needed, financial aid. By law, a qualified student cannot be excluded from college solely because of a disability. All public schools and colleges, and many independent schools, provide services to students with disabilities. These services may include counseling, tutoring, readers, interpreters, note takers, special parking zones, or the loan of special equipment.

Your student budget, as calculated by the college, should include all expenses necessary to accommodate your disability. Be sure to work with your financial aid office when applying for admission so they understand your particular circumstances.

If you have a disability that impedes your ability to obtain or retain employment, you may be eligible for vocational rehabilitation services from your state. To learn more, contact your college's disabled students office, the national or local organizations serving your disability, or the nearest office of the your state's vocational rehabilitation services (in the phone book under State Government Offices).

Hearing-impaired individuals may contact the Federal Student Aid Information Center at TTY 1-800-730-8913. To request a free cassette recording on federal student aid, call 1-800-433-3243.

You may also want to read the publication, Creating Options: A Resource on Financial Aid for Students with Disabilities, produced by the HEATH Resource Center of the American Council on Education. It's available for free by writing to: HEATH, One Dupont Circle NW, Suite 800, Washington, D.C. 20036-1193; or by calling toll free1-800-544-3284.

Native Americans
Native American students who can prove membership in a federally recognized tribe or nation may receive education grants from the Federal Bureau of Indian Affairs. If you're a member of a tribe or nation, contact your state Bureau's Office of Indian Education to learn more.

Dependent Families With Children
If you're both a student and a parent, you may receive cash aid for education through the TANF program, if your child's other parent is deceased or absent from the home; if you or your spouse are physically or mentally disabled, or unemployed; or if you're working less than 100 hours a month. Contact your local welfare office for more information.

Athletes
Student athletes considering a National Collegiate Athletic Association college should contact the NCAA for information on college recruiting rules, grade point average and testing requirements, and registration requirements. Write to the NCAA, P.O. Box 6222, Indianapolis, IN 46206-6222, call 317-971-6222, or log onto www.ncaa.org/eligibility/cbsa. There's also a brochure, The Guide for the College-Bound Student Athlete, available for free by calling 1-800-638-3731.
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Is college really worth the cost in terms of family savings and student loans?

More education means higher earnings. College is usually your best investment, whether you pay from your savings or whether you borrow money to attend.
Recent figures from the U.S. Census Bureau show that, on average, college graduates earn approximately twice what high school graduates do. In 1998, individuals with earnings who held a bachelor's degree earned $43,782, compared to only $23,594 for those with only a high school diploma. Community college graduates' earnings averaged $32,468 in 1998. The average earnings for earners with advanced degrees (master's, doctorate, or professional) was $63,472.
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How do colleges expect middle-class families to pay or borrow $30,000 a year for tuition?

First of all, $30,000 tuitions represents the most expensive colleges and universities in the nation. According to the College Board, for the 1999-2000 academic year, over half (51 percent) of all full-time undergraduates at 4-year colleges and universities attended schools whose tuition's were under $4,000. Only 7% of all students enrolled in institutions whose tuition's were $20,000 and above. 
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I am a high school honor student and all state soccer player and my family does not qualify for need-based financial aid. What are our chances for getting a merit scholarship? 

Not very many students get merit scholarships. Merit scholarships are given out without considering financial need to outstanding athletes, students with special talents and to students with very good academic records. in part to attract or reward these students to a specific college. About 9% of students at 4–year public colleges get merit scholarships. Eight percent of students who attend public 2–year colleges get merit scholarships. Students at private 4–year colleges are more likely to get merit scholarships with about 23 % getting gift aid. 
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Isn't it always cheaper to attend a public institution, even if attending one out-of-state?

Yes and No. Public colleges typically charge less than private colleges. On the other hand, many private colleges have relatively more money to help students who can't afford the higher tuition. Need based awards at private colleges can dramatically reduce or even eliminate the price difference between the public and private sectors of higher education. In 1996, over 80 percent of public 4-year college students attended a school in their home state. According to U.S. Department of Education Statistics, an increasing number of students are crossing state lines to attend public colleges. Among public 4–year colleges, it is important to account for tuition differences across states. States differ in the amount they charge to attend their public colleges. There are also differences across states in the amount of student aid they offer. Some states keep tuitions high, but make up for it by providing more aid to their students. Many states have their own state grant programs. Some states offer need based grants for students attending public colleges only. These grants often help offset relatively high public tuition levels. Other states make grant funds available to state residents attending private colleges within their boundaries. What you might pay to attend a public 4–year college, will depend on what state you live in and if you can establish legal residency in the state where the college is located. Unless a college student can establish legal residency in the state where the college is located, he or she will pay an out-of-state tuition rate. Even with the additional charges, attending an out-of-state public college can be less expensive than attending a private school.
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What are my chances of getting financial aid as an independent student?

According to U.S Department of Education reports, independent students are much more likely to attend college part time than dependent students, 67% compared to 30% in 1995-96. As such, about half, 48% of the independent students received financial aid in 1995-96. 
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How likely am I to receive financial aid?

It is important to remember that most financial aid is need-based, it depends on the cost of attendance and a family’s ability to pay. When you apply for financial aid, the college will use a formula to determine how much you and your family are expected to contribute, the Expected Family Contribution (EFC). The formula involves family income and other factors. Although income is not the only factor, it is the main factor and a good general guide to your chances of getting aid. Your chances of getting aid, and the amounts you actually get, will vary from other people within your income group. 

Family Income Level and the Percentage of Students Who Received Aid

SOURCE: U.S. Department of Education, National Center for Education Statistics, National Postsecondary Student Aid Study: 1995–96.
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Are there any secrets about getting financial aid?

There are no secrets, but many students do not get financial aid simply because they fail to apply. It's probably not widely known, that the vast majority of all aid applicants receive financial aid. In 1995–96, approximately one-third of all financial aid received by full-time, dependent students was distributed without regard to financial need. The majority of this aid was in the form of unsubsidized loans where the borrower incurs interest charges while in school. The following table shows the percentage of full-time college students who applied for financial aid by family income, and the percent of those who applied who received some form of financial aid.

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How much financial aid do college students receive?

Again, it is important to remember that most financial aid is need-based, it depends on the cost of attendance and a family’s ability to pay. The amount of aid you actually receive will vary from institution to institution and from other people within your income group. 
The following table provides the range of financial aid awards received by most aid recipients within the middle half a given range of family incomes. One-quarter of aid recipients received less and one-quarter received more than the indicated range.

                              Family Income and Typical Aid Awards

SOURCE: U.S. Department of Education, National Center for Education Statistics, National Postsecondary Student Aid Study: 1995–96.
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Will the financial aid award cover tuition and other educational expenses?

The following table shows the percentage of financial aid recipients who receive enough aid to pay all of their tuition bill, and the typical ranges of financial aid left over to cover other educational and living expenses. 

Percentage of Financial Aid That Fully Covers Tuition and the Range of Funds Remaining After Paying Tuition by Family Income Levels

SOURCE: U.S. Department of Education, National Center for Education Statistics, National Postsecondary Student Aid Study: 1995–96.
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What types of financial aid do students typically receive?

Most often students get a combination of different kinds of aid in their financial aid package – grants, loans, work study. The following table indicates the percentage of students who received various types of financial aid packages according to their family income group. 
Combinations of Financial Aid Received by Students by Family Income Levels

SOURCE: U.S. Department of Education, National Center for Education Statistics, National Postsecondary Student Aid Study: 1995–96.
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How much financial aid do students typically receive from each source?

Again, the amount and type of financial aid varies. The following table shows the typical range of financial aid and the percentage for the middle 50% of students who received a given type of aid. One-quarter received less and one-quarter received more. 

Average amounts of grant, loan, and work-study aid received

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All things equal, what factors will improve my chances on receiving financial aid?

Federal financial aid sources are most need-based. As such, lower family incomes increases the likelihood of aid. In general the lower the family income the higher the level of financial assistance. Generally speaking, the more expensive the college, the more financial aid one qualifies for. In some cases, going to a more expensive college, may actually cost less in actual out of pocket expenditures. This is because many expensive colleges have more funds to help students. Having other family members in college places more burden on the family’s expected contribution, thus making creating more financial need. Being from a large family with many dependent family members also reduces the family’s expected contribution. Above average state or local taxes are factored in when awarding financial aid. Although, every family should be encouraged to save for a college education, real circumstances do not always make this possible. Families with little accumulated wealth or savings are more likely to qualify for financial aid or receive more aid. Most families with incomes less than $20,000 are expected to pay less than $800, while most families with incomes greater than $100,000 are expected to contribute more than $18,000 to their child's educational cost. Since the bulk of most aid is in the form of loans, this additional assistance most likely will be in the form of loans, in essence reverse savings that are more expensive. Unusual expenses, such as medical bills or special financial circumstances such as the lost of a job, with appropriate documentation may increase your eligibility for aid. 
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What is the average cost of tuition and has it changed much?

Since the 1995-96 academic year and the 1999–2000 academic year, tuition has increased 17% at public 2–year and 4–year colleges. During the same time period, tuition increased 24 percent at private 4–year colleges. The 1999-2000 average tuition at different types of institutions is provided in the following table.

Average College Tuition by Type of Institution, 1999-2000

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Has financial aid kept up with college cost?

Financial aid appears to be keeping up. The most recent financial aid estimates are for the 1998–1999 academic year. Since 1995–96, financial aid per student has been increasing at roughly the same rate as college tuition. Both loan and grant aid are increasing. The amount of financial aid per college student increased 15% between 1995–96 and 1998–99. Tuition increased 12 to 18 %. 

In addition to increases in financial aid, new federal tax credits have been established that allow many families to claim federal income tax credits. Recent changes in the federal tax laws have also made it easier to save for college by establishing education IRAs and allowing parents to use funds in their retirement accounts to help pay for college. Many individual states are also establishing assisted savings or prepaid tuition programs that help families better prepare for college. According to a 1999 U.S. Census Bureau Report, more money was made available to families between 1995 and 1998, when median family income increased from $40,611 to $46,737, or 15 percent before taking inflation into account.
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Do students work and attend school full-time?

Yes. Somewhat surprisingly, a substantial number of college students work while attending college.

SOURCE: U.S. Department of Education, National Center for Education Statistics, National Postsecondary Student Aid Study: 1995-96.

It is of note that a recent study by the U.S. Department of Education, National Center for Education Statistics found that students who worked up to 20 hours a week were no less likely to finish their bachelor's degree than students who did not work at all, but those working more than 20 hours were less likely to finish their degree within 5 years. Most 4–year college students who work, work less than 20 hours.
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How much do families really have to come up with to pay for college?

This is almost an impossible question to answer in general terms. Each families represents a different set of financial dynamics coupled with the cost of education at each school and financial aid. One consistent key is the Expected Family Contribution (EFC). The EFC is calculated from information provided on the FAFSA and is the way a family’s ability to pay for college is calculated. The EFC is always the same regardless of the cost of the school the student will attend. 

The following table shows a general idea of a family’s typical ability to pay (EFC): 

Expected family contribution (EFC)

SOURCE: U.S. Department of Education, National Center for Education Statistics, National Postsecondary Student Aid Study: 1995-96

The EFC table shows that families of modest economic means are expected to contribute less to their children's college education than wealthier families. These typical figures do not mean that this is what you will have to pay. What you end up paying for college may turn out to be quite different than the EFC for a number of reasons. Your daughter or son may receive merit scholarship(s), attend a college that is priced less than your EFC, rejecting a portion of your financial aid awards (especially loans), the college may not be able to meet the financial need of all their aid financial aid applicants or they did not apply for financial aid. To figure out your own EFC, you have to fill out the Free Application For Student Aid (FAFSA) form and submit it. You can also make the calculation yourself using computer software that will provide personalized EFC estimates for prospective college students. Both Sallie Mae www.Salliemae.com and College Board www.collegeboard.org offer these estimates.
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