From Morningstar:
The costs of a college education have become increasingly unaffordable for the average American family, even before the 2008 economic crisis. A report published by the National Center for Public Policy and Higher Education found that published college tuition increased by 439% from 1982 to 2007 while median family income only rose by 147% during the same time period. The average middle class family has traditionally financed the costs of college through student loans. The weakened job market, however, has made the repayment of student loans more difficult.
Fortunately, there are many opportunities for the average middle-income family to obtain the money needed to ease the burden of the rising costs of college.
Federal Grants
President Obama has made improving college graduation rates one of his top policy initiatives and as such, federal grants have accounted for 44% of the total grant money awarded to students in the 2009-10 school year, an increase from 34% the previous year. Federal grants are awarded to students that have not already earned a bachelor’s degree. While the majority of federal grants are awarded to students with annual household incomes below $20,000, students with household incomes below $50,000 are eligible. To qualify for this grant, one has to fill out an application on the Free Application for Federal Student Aid website. The most important thing to note is that eligibility for federal grants is based on family income, and thus, it is important to avoid artificially inflating income through bad timing of capital gains and bonuses, especially in the two years before you register for FAFSA. Even if you are unsure of your child’s eligibility for the federal grants, it is always useful to register for FAFSA because universities use that database to determine financial aid awards as well.
College Scholarships
Always contact your university’s financial aid office to request information on any scholarships that it may offer. These scholarships are typically merit-based and will help to cover the costs of education that are not covered by federal grants. Private universities, with larger endowments than their public counterparts, traditionally offer more financial aid to students. The decline in state appropriations the past few years have also affected the amount of scholarships that public universities have been able to give out. However, one should balance the costs of attending a private university with a comparable in-state public university. At public four-year universities, the average cost per year (including room and board) is $16,140, compared with $36,993 for private four-year institutions.
Other sources of funding
There are many private organizations like Microsoft, the Gates Foundation, and Google that offer need-based merit scholarships to undergraduate students. Very often, there are stipulations on the field of study, with an emphasis on technical majors like computer science or engineering. Technically inclined students should look into applying for these scholarships because they tend to be more generous than federal grants. In addition, every university participates in the federal work-study program, which allows undergraduate and graduate students who have completed the FAFSA and are eligible for financial aid to work during the school year in both on- and off-campus jobs. Not only do these jobs help students pay for college, they also provide valuable work-related experience.
Source: Measuring Up 2008 The National Report Card on Higher Education, The National Center for Public Policy and
Higher Education; Trends in Student Aid 2010, The College Board; Trends in College Pricing 2010, The College Board.
