Many aspiring students need help paying for college. Here are five potential options that may help paying for college.
5 financial aid terms you should know
FAFSAThe FAFSA (Free Application for Federal Student Aid) provides federal lenders (as well as some state lenders, private lenders, and colleges) with an overview of your family's financial situation, and it helps determine your EFC (Expected Family Contribution), as well as what types of financial aid your student is eligible for. It also determines whether they are eligible for grants from the state and federal government, or other institutions.
529 college savings plans529s are a great, tax-free (and tax beneficial) way to save for your child's college tuition. Money deposited into a 529 is neither taxed when it accrues interest, nor when it is withdrawn for qualified expenses. You can learn more about the benefits of the 529 College Savings Plan here.
PLUS loansPLUS loans are federal financial aid loans available exclusively to graduate students and parents of dependent undergraduate students, and they can be used to cover expenses that other types of federal financial aid typically do not. Like federal student loans, they have a very low, favorable interest rate, but your credit history may be a factor.
Work-study programsThis type of financial aid is administered through your child's college or university. A work-study program allows students to hold part-time jobs on campus or within the local community and apply the money earned toward college expenses.
Pell Grants are need-based awards offered to qualifying students who are pursuing their first bachelor's degree at an accredited college or university. The max award per school year is $5,920 as of the 2017-2018 school year. You can learn more about Pell Grants at the U.S. Department of Education's Federal Student Aid website.
NOTE: As of 2018, the IRS has amended the term “qualified higher education expense” to include a limited amount of annual expenses from a 529 Plan for tuition at an elementary or secondary public, private, or religious school. Source: www.irs.gov/newsroom/529-plans-questions-and-answers.