Financial Aid Options for Middle-Income FamiliesOctober 21, 2019
It’s no secret that college comes with a hefty price tag. Every year, families have to figure out how they’re going to pay thousands of dollars in school bills. While some may have the resources to pay tuition, many just do not have that kind of money lying around. Thankfully, there are plenty of options when it comes to reducing the cost of college. We’re sharing the steps middle-income families can take to secure various types of financial aid.
If you’re looking for financial aid options, you should start by filling out The Free Application for Federal Student Aid, better known as the FAFSA. Even as a middle-income family, you may still receive some need-based aid, especially if your student plans on enrolling at a higher-cost school. Further, many scholarships require the student to fill out the FAFSA anyway. Over $120 billion are awarded through federal grants, work-studies and loans every year, so why not throw your name in the hat? The FAFSA opens October 1 every year, and you can apply as early as the year before your child’s first day of college. The earlier you apply, the more likely your child is to receive financial aid.
Perhaps the best thing your child can do is research and apply for scholarships, and it pays to go local. Many locally-owned businesses and organizations offer scholarships for graduating high school students. You or your spouse could also ask your employer if they provide any scholarships or financial aid for employees’ children. After exhausting local options, your child may want to research national opportunities. A quick web search could reveal countless free scholarships – Niche®, Fastweb®, and eCampusTours® are an excellent place to start. Just remember, scholarships are not exempt from internet scams, so do your research and make sure they’re legitimate. The FTC warns families to be cautious if the following lines are included in the application:
- “The scholarship is guaranteed or your money back.”
- “You can’t get this information anywhere else.”
- “I just need your credit card or bank account number to hold this scholarship.”
- “We’ll do all the work. You just pay a processing fee.”
- “The scholarship will cost some money.”
- “You’ve been selected” by a “national foundation” to receive a scholarship – or “You’re a finalist” in a contest you never entered.
Finally, seek out the colleges that offer the best financial aid packages. Student Loan Hero recently highlighted 50 U.S. Colleges With the Most Generous Financial Aid Packages, and yours may be on their list! If it’s not, reach out to your school’s financial aid office, and they’ll be happy to provide you with all of your options.
While you’re asking about scholarships, inquire about tuition discounts.
Sibling Discounts: Sometimes, if more than one child is enrolled at the same college or university, the school may offer a tuition discount. Often the discount is only applied to one sibling’s tuition, but it is still helpful for the family’s overall finances. These discounts can range from a flat rate to a percentage off each semester or each year. If your children are planning on enrolling at the same school, this option is worth seeking out.
Military Discounts: Colleges may also offer discounts to military veterans and their families. The Veterans Access, Choice and Accountability Act of 2014 ensures veterans and dependent family members will not be charged out-of-state tuition if they meet specific requirements. Again, check with the school’s financial aid department to see if they offer “military-friendly” discounts.
Alumni Discounts: If you attended your child’s school of choice, your child may be eligible for scholarships, discounts, or other benefits. Many colleges have legacy programs, competitive scholarships, or even special legacy tuition rates. If you have other family connections to the university like grandparents, make sure you talk to an admissions counselor about the financial aid options available.
Middle-income families are perfectly positioned to receive tax credits for college expenditures. For example, the Lifetime Learning Credit provides a 20 percent tax credit for the first $10,000 in yearly, qualified tuition expenses. Programs like this, as well as tuition savings plans, offer a few different ways for middle-income families to receive tax benefits.
If you’ve taken advantage of all your aid options and find you still have a debt to pay, it may be time to consider loans. Non-need based federal loans such as the Unsubsidized Federal Stafford Loan for students and the Federal PLUS Loan for parents can bridge whatever gap you find in your aid and your expenses. Federal education loans generally have low-interest rates or may be tax-deductible, so they’re a smart alternative to using a credit card, for example.
You may find that you still need financial assistance after exhausting all the options above. If that’s the case, private student loans may be an option. We always recommend you take advantage of grants, scholarships, and federal aid before taking out a private student loan. To learn more about ELFI’s private student loan options1, click here.
Remember that financial aid in the form of discounts and scholarships aren’t always one and done. Even if you’re getting a scholarship based on your family history or some type of local competitive scholarship, you may be required to meet certain qualifications to receive the money. Sometimes you might be required to complete a number of service hours or stay enrolled in school full-time to keep your scholarship, for example. Make sure you know any additional qualifications or requirements before applying for the scholarship or another type of aid – you don’t want to be caught off-guard.
The cost of college can present a challenge for families at all income levels. If you find yourself in that position, don’t despair. The options in this article are a good place to start searching for financial assistance. No matter what, don’t lose sight of the end goal: getting a degree and ultimately establishing a sustainable career. If you’re already looking for financial aid, you’re well on your way.
1Subject to credit approval. Terms and conditions apply.
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