One of the biggest dilemmas families and individuals face when deciding to go to college is determining how to pay for it. With the cost of obtaining a college degree steadily rising, it is often difficult, if not insurmountable, to simply pay tuition, fees and other expenses out-of-pocket. Fortunately, higher education institutions can offer various forms of financial aid to students that help to make the cost of attendance more affordable.
Federal financial aid is administered by the U.S. Department of Education and can be awarded as grants, loans or a combination of both to students who wish to attend any institution in the United States that has been federally approved to participate in Federal Student Aid programs. Students do not have to reside in the state where the school is located in order to receive this form of funding either. Obtaining federal financial aid starts with completing the Free Application for Federal Student Aid (FAFSA), which can be accessed online. This free application takes about 20 minutes to complete. FASFA opens on Oct. 1 of the year prior to the academic year for which the student is applying, which means that the FASFA for next year is open right now. Federal financial aid awards are need-based, meaning that award amounts are based on the student or family’s income and ability to pay in relation to the cost of attendance for the schools they are choosing. While this is the most widely used means of financial aid, it was surprising to learn that many don’t take advantage of the funding that is available to them. A recent study conducted by the National Center of Educational Statistics concluded that about 25% of those who are eligible for federal financial aid never apply, mostly due to believing their family may be ineligible or may not qualify for financial aid.
Financial aid from the state is similar to federal financial aid but is administered by a state governmental agency and can only be used at institutions located in the state by college students who are also residents of that state. In our case, state financial aid funding is overseen by the Indiana Commission for Higher Education (CHE). Like federal financial, state-based financial aid in Indiana is also need-based. The CHE’s two financial aid programs are the Frank O’Bannon Grant and the 21st Century Scholarship, Indiana’s early promise program. Students must sign up for the 21st Century Scholarship while they are in middle school to be eligible for this funding when they attend college. Although every student who signs up for the 21st Century Scholars program is accepted, less than half of those who are eligible actually apply, essentially leaving free money on the table that could help pay for college.
Institutional aid can be scholarships or grants awarded by the institution from funds they collect through donations to the school. Institutional grants are typically need-based, while scholarships can be need-based or merit-based. As the name implies, merit-based scholarships are earned and based on a student’s levels of achievement in areas such as academics, athletics, performing arts or other special disciplines. In both cases, applying for institutional aid may require completing a separate financial aid application.
Consequently, the prospect of paying for college can be daunting to consider. However, federal, state and institutional financial aid are readily available at most colleges and universities to help defray the expense. Students and their families must be vigilant in making sure that they are taking advantage of the funding that is available to them. In many cases, students do not receive financial aid because they simply do not apply. If you have questions or just don’t know where to begin, start by contacting the college or university’s Office of Financial Aid for help and information.
Dr. Sean Huddleston is president of Martin University, Indiana’s only predominately Black institution (PBI) of higher education.