Even if you haven’t been able to save all the money you need for college, several alternatives exist to help you make up the difference.

Financial assistance comes in many shapes and sizes – from scholarships and grants, which do not need to be repaid, to federal loans, which carry very favorable interest rates and terms, but must be repaid eventually. The following are a few of the most popular sources of financial assistance:

Calculating Financial Aid

Usually due before January 1, the standard federal Free Application for Federal Student Aid (FAFSA) determines how much, if any, financial assistance the government will award to your child. Both private and public schools use this standard form to dole out their own scholarship monies as well. Additionally, some schools now require the Financial Aid Profile for assessing the need for non-government dollars.

Working with a number of factors, a school will determine each family’s need for financial aid. From there, financial aid officers will attempt to craft a package, often combining both grants, which don’t have to be paid back, and loans, which must be repaid later, usually with accrued interest. Clearly, the better deal is the free money. Often the earlier one applies, the more of their funds will come from the “grant” side of the ledger.

Government Loans – Stafford: With a Stafford loan, the US Government either provides the funds for the loan, or guarantees the funds loaned by other institutions. The loans are available regardless of family income, but for families with incomes under $70,000, no interest accrues and no payments are required until the student leaves school.

Government Loans – PLUS: The Parent Loan for Undergraduate Students (PLUS) loans are federally funded and guaranteed loans issued through local banks, credit unions and savings & loan institutions. The maximum loan amount is defined as the total cost of college, minus the amount of financial aid received. Repayment of principal and interest begins immediately with interest capped at 9%. Loan insurance is required to qualify for a PLUS loan.

Work/Study Grants: Many colleges and universities offer work/study grants. Sometimes their earnings are deducted from tuition and other times the student earns a salary.

Americorps: This network of national service programs engages more than 50,000 Americans each year in intensive service to meet critical needs in education, public safety, health, and the environment. It is open to U.S. citizens, nationals, or lawful permanent residents aged 17 or older. Members serve full or part time over a 10- to 12-month period.

After successfully completing a term of service, AmeriCorps members who are enrolled in the National Service Trust are eligible to receive an education award. The education award can be used to pay education costs at qualified institutions of higher education or training, or to repay qualified student loans. The award currently is $4,725 for a year of full-time service, with correspondingly lesser awards for part-time and reduced part-time service. A member has up to seven years after his or her term of service has ended to claim the award.

With all the other expenses competing for your monthly income – mortgage, car payment, 401(k) plan contribution, and the like – carving out a small sum of money to save every month for college isn’t easy. However, the earlier you start the more you’re likely to accumulate.

Let’s compare two hypothetical examples. The Smiths and Jones both want to send their children to a college whose four-year total cost is approximately $40,000. The Smiths start saving as soon as Junior is born, putting away $100 per month earning 8% per year. By the time Junior is ready for college, they will have saved $48,749 – more than enough to cover the entire cost plus account for inflation.

The Jones, however, wait until Precious is 10 years of age before starting to save. Even though they can put away $250 per month, when Precious is ready for college eight years later they have only saved $34,163 – meaning they’ll have to make up any shortfalls out of pocket.

Of course, these hypothetical examples are for illustration purposes only and do not represent the return of any specific investment. Also, taxes, fees, and other costs are not considered. But the message is clear: The earlier you start, the less you’ll need to save each month and the more you’re likely to end up with by the time you send your child or children off to State U.

Fortunately, several savings and investment strategies exist to help you accumulate assets for college.

College Funding Ideas

1. Assess your needs. To determine how much to save, you need to estimate the future cost of tuition at public and private institutions. With education cost rising an average of over 8% a year for four-year institutions, you must save with inflation in mind.
2. Save early and often. The sooner you begin to set aside funds for college, the less you will have to save on a monthly basis. Allow your investments to grow along with your child.
3. Set up a systematic savings plan. Try to save monthly or quarterly, just as you would if you were paying off a car or a mortgage. (Please note, such a period savings or investment plan does not assure a profit and does not protect against loss in declining markets.)
4. Keep a separate college account. The most popular are custodial accounts. These accounts ease the tax burden by allowing parents to shift some of their assets to the child at the child’s lower tax rate.
5. Involve the family. Children are more aware of family finances and accept responsibility when they are involved. It also becomes easier for you if the child is able to contribute to the fund.

Create an incentive program with your child. Offer to match the money the child makes to his own account. Teach him or her to work and help contribute to their fund – they will value their education even more.

College funding takes discipline, effort, and planning. It’s also becoming more complex every year. Rely on our financial planning expertise to help design a program that best fits your family’s needs and situation.

The vast majority of the nation’s institutions of higher learning offer various types of scholarship, granting money to college students based on a host of criteria such as academic merit, financial need, and in some cases, racial or ethnic background.

Although the application process can be complicated and redundant between scholarships, a great deal of money is available for those who are willing to jump through the right hoops and prove their merit and/or need.

Finding Out About Available Scholarships

Your child’s high school guidance counselor should have a great deal of information on local scholarships. From there, you can consult the college’s financial aid office. Many corporations offer college tuition aid or reimbursement to their employees and some offer scholarships to their employees’ children. In addition, many religious organizations offer scholarships.

Review college financial aid books at your library. Some of them have extensive listings of sources that you can’t find elsewhere. Contact both the U.S. Department of Education and your state department of education.

Many books have been written on the application and qualification process, which can help guide you through the process, which you can also access at your local library or bookstore. Finally, search the Internet for the numerous websites offering college savings calculators and information on financial aid. Start with the website of the college or university you want to attend, as well as local and national banks offering loan programs. The College Board (www.collegeboard.com) is another valuable source of comprehensive information.

Helpful Tips

You can significantly reduce the cost of your college experience using some of these helpful tips:

• Plan to spend your first two years at a community college.
• Live at home and commute, if possible.
• Work part-time, particularly in your desired field of future employment.
• Join AmeriCorps and earn education awards in return for national service.
• Join the Reserve Officers Training Forces (ROTC); it will pay for tuition, fees, and books and also provides a monthly allowance. You’ll have to serve four years as an officer in the military after graduation.
• Work full-time at a company that offers tuition reimbursement.
• Take advanced placement courses in high school; convert them into college course credits by scoring sufficiently well on advanced placement exams.

Funding college isn’t easy, but the rewards are clear. Let us help you design a plan to fund the rising costs of higher education.