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Article: Paying for a College Education

(ARA) -- A record number of students are attending college today, many of them trying to figure out how they are going to pay for that college degree. They need help covering the cost of tuition, books, room and board and more. Financial aid to meet a student's educational expenses is available in four basic categories: scholarships, grants, work study and education loans. Most students finance their education through a package combining aid from several categories.

1) Scholarships are awarded based on special ability, academic achievement, religious affiliation, ethnic background or special interest and they don't have to be repaid. Scholarships come from many sources, but you may have to do some detective work to uncover them. There are many graphic design scholarships as well as other types of scholarships. Most states and many colleges offer scholarships, so don't forget to inquire about them. College financial aid officers and high school guidance counselors can help direct you to resources outlining programs and requirements. Web sites are great places to look. This information should always be free. U.S. Bank, for example, offers a free search engine at usbank.com/scholarshipsearch.

2) Grants are awarded based on need and, like scholarships, they don't have to be repaid. In addition to state and institutional grants, there are two federal grants for which students can apply:

• Federal Pell Grants are awarded to part-time and full-time undergraduate students who show financial need.
  
  
• Federal Supplemental Educational Opportunity Grants are a supplement to Pell Grants.

3) Work Study is a federal program offering part-time jobs both on and off campus. The amount that can be earned is based on several factors, including need, other aid received and availability of school funds. Work study funds don't have to be repaid because work is traded for hourly wages.

4) Education Loans are funds borrowed from a financial institution or federal or state government. Education loans must be repaid. There are at least three types of education loans:

• Federal Perkins Loan is a federal loan program administered by colleges. It is available to both undergraduate and graduate students and based on need and the availability of government funds. The annual interest rate is 5 percent and repayment begins nine months after the student leaves school or drops below half-time.
  
  
• Federal Stafford (student) Loans and Federal PLUS (parent) Loans. They are available through financial institutions such as U.S. Bank that participate in the FFEL program or through the federal government in the direct loan program. Currently rates are as low as 2.82 percent for Stafford loans and 4.22 percent for PLUS loans, with maximum annual interest rates of 8.25 percent and 9 percent respectively.
  
  
• Financial institution (or "supplemental") loans are for students (or their parents) who attend participating colleges and graduate schools. They are not based on need.

U.S. Bank offers a number of supplemental loans where students can borrow up to the entire annual cost of attendance, minus other financial aid received, at competitive interest rates.

So how can you obtain financial aid?

In order to receive financial aid, you must apply each year that you are in college. Scholarships and grants are the best types of financial aid, because the money never has to be repaid, so you should try to get them first. Check with a high school guidance counselor or the Internet to find out about organizations offering scholarships.

Next, complete and submit a Free Application for Federal Student Aid (FAFSA) from the college, your local high school or the U.S. Department of Education's Web site at www.fafsa.ed.gov; the online FAFSA is quickest. It determines how much money you and your family must contribute each year toward college costs, as well as the types and amounts of financial aid for which you are eligible. (Some colleges also require their own institutional application to determine financial aid eligibility. Check with the college to verify the requirements.) The financial aid package awarded will include one or some combination of federal, state or institutional grants, scholarships, work study, or education loans.

Finally, if grants, scholarships, work study, and government loans don't cover expenses, you may apply for a low-interest private education loan from a financial institution such as U.S. Bank. It offers a number of non-federal, or supplemental education loans, for students who attend participating colleges and graduate schools. This type of loan can be used as a supplement or replacement for Federal loans. More information on the U.S. Bank's supplemental education loans can be found on the web at usbank.com/studentloans or by phone at (800) 242-1200.

Luckily, virtually anyone who wants to go to college can go, regardless of family income. The key is to apply for as many scholarships and grants as possible and apply for financial aid as early as possible, since most financial aid is awarded on a first-come first-serve basis. One last thing -- even if you think you won't qualify for financial aid, try anyway. There may be more options than you think.