How and When to Pay for College

UCPG 92017-08-23T20:05:56+00:00

In the previous chapter of the Ultimate College Prep Guide, we discussed the process of filling out college applications. We went over all the resources your student will need to complete their applications and gave advice on what to do if your student doesn’t get the response they expect the first time around.

In this chapter we’ll tackle the part of the college application process the extends past the actual application — how to pay for college. Higher education in the US is undeniably expensive, especially if your student is planning to go to a private institution. But there are quite a few options that you and your student can explore to help pay this cost and get the college experience they want most.

Here’s what you’ll learn in this chapter:

How Do You Know If You Qualify for Financial Aid?

To start the process of applying for need-based financial aid, you will first need to fill out one or two forms: the FAFSA and/or the CSS Profile. Most colleges and universities only require the FAFSA, but about 200 colleges also require the CSS Profile.

  • The FAFSA (Free Application for Federal Student Aid) is the application for obtaining federal loans, grants, and work-study. It is used by schools both public and private in determining how federal aid (and some state aid) is disbursed.
  • The CSS Profile is usually required by private colleges and universities to determine eligibility for non-government financial aid such as the institution grants, loans, and scholarships.

Once these forms are submitted, they’re used to calculate your family’s Expected Family Contribution (EFC) towards the cost of college. The EFC is then subtracted from a college’s total cost of attendance to determine whether a student qualifies for need-based financial aid.

To estimate your EFC, you can use this Quick Reference Table. The intersection of the number of dependent children you have and your AGI (aggregate gross income) will give you an approximate of your federal EFC based on parental income only.

EFC Table

Keep in mind this table doesn’t take into account any parent or student assets which may bring up your EFC. Your EFC will also be split equally if you have more than one student in college.

Your EFC will determine one of two possible outcomes:

  • Your child qualifies for need-based financial aid. This means they are eligible for need-based grants, scholarships, work-study or student loans as part of their financial aid package. You’ll have to wait and see exactly what your child is offered by the university.
  • Your child does not qualify for need-based financial aid. This usually means your EFC is higher than the cost of attendance. But while your EFC may exceed the cost of attendance, you’ll never have to pay more than that cost, which varies by school.


Grants are awarded according to financial need and do not require repayment. Grants can be awarded from a variety of different sources:

  • Federal Government Grants. These grants are all funded by the federal government. To determine federal grant eligibility, students need only fill out and submit the FAFSA.
    • Federal Pell Grant. This is the most widely used grant program in America. It has been helping students fund their college educations since 1972.
    • Federal Supplemental Educational Opportunity Grant (FSEOG). This grant is designed to give financial aid to undergraduate students with extreme financial need. Students must apply through their college of choice, and grants are awarded on a first come, first served basis.
    • Federal TEACH Grant. This grant is an award-for-service program. The grant provides Federal funding to students who agree to take up a teaching position in a high-need field, or critical shortage facility, following graduation. Recipients must sign a contract agreeing to a predetermined time of service. Students who fail to fulfill their teaching obligations will have their grant revert to a student loan and will be responsible for the full repayment, plus interest, of that loan.
  • State Government Grants. These grants are regulated by the Department of Higher Education in each state. They are typically funded by state and local taxes, and/or state lottery funds. These grants aim to address financial needs of low-income students, as well as encouraging and supporting women and minority students to pursue higher education. Grant programs vary widely by state, but you can take a look at what your state might offer.
  • College or University Grants. These grants are funded by the private endowments given to colleges by individuals or businesses. Eligibility requirements are often high and tend to target specific types of students, including women and minorities. Make sure to do a search and see if the college your student is interested in offers any grants.
  • Professional Association Grants. These subject specific grants are sponsored by a variety of sources, including Federal and state governments, corporations and professional associations.
  • Student-Specific Grants. There a variety of grants that specifically target specific subsets of students.


There are two general types of loans your student could get: Federal Loans and Private Loans.

Your student can apply for Federal Loans by submitting the FAFSA. The money is provided by the federal government and students are required to pay back the loan with interest over time. These loans tend to have lower fixed interest rates and come with flexible repayment plans that can be modified based on your needs.

  • Subsidized Federal Loans. With these loans, the federal government pays the interest on the loan while the student is still in college. Not every student will qualify for a subsidized loan. This amount is determined by the school and will not exceed your financial need.
  • Unsubsidized Federal Loans. Almost any student can get an unsubsidized loan, but the student will be responsible for repaying any interest that accumulates during their time in college. However, your student will likely be able to defer payments until shortly after they graduate or leave college to give them some time to get on their feet.

The amount of money students are eligible for is dependent on their year in college, whether they are a dependent or independent student, and whether their parents are able to obtain PLUS Loans.

PLUS Loans

Students should only consider taking out a Private Loan if they’ve maxed out the Federal Loan. Often these loans come with high fees that can significantly increase the cost of the loan. FinAid’s Loan Analyzer Calculator may be used to generate an apples-to-apples comparison of different loan programs.

There are a number of other loan options that parents or students can take out to help pay for college including mortgage and home equity loans, intra-family loans, and 401k loans. Each comes with different risks and methods of repayment. If possible, we recommend sticking with the safest method of taking out a loan — the Federal Loan.


Scholarships are typically awarded based on academic, athletic or artistic achievement or extracurricular performance. The best way to find which scholarships your student may qualify for is to use Scholarship Search. This allows you to filter your search depending on interests, age, grade level, etc.

To give you a brief look at how many different types of scholarships are available, we’ve compiled a list. Just a few of the categories scholarships fall into include:

The list goes on and on. Take the time to see what scholarships your student may qualify for — there’s likely more than you might think.

Save Some Money

The thought of dishing out thousands of dollars to pay for college is enough to send a shiver down anyone’s back. But it doesn’t have to be as scary as it might initially seem. Take the time to fill out applications and do your homework on what options are out there to help make paying for college as painless as possible.

The best way to maximize your chances of receiving aid or scholarships is to stay organized and not miss any deadlines. To help with this we’ve put together this deadline chart for you to record important dates and stay on top of everything your student is applying for:

Financial Aid Deadline Worksheet [Free Download]

Download your Financial Aid Deadline Worksheet to keep track of every way you can save money on college.


In the next and last chapter of the Ultimate College Prep Guide, we address some of the things international students should know about how to apply for university in the US. We also provide resources they might need to help them successfully apply and attend university in the States.