Understanding Financial Aid for College

By Stacey Crooks

Your child has made a big commitment by choosing to go to college. Likewise, you are putting a large commitment in your child by agreeing to pay for college. But many parents, like yourself, can’t help but wonder, “how the heck am I going to pay for this?”

The sticker price on a college education can no doubt lead to shock. If you see that number and wonder how to pay for college with no money, know that there are options available. Most families these days don’t pay the sticker price published on a college website. Financial aid can greatly reduce that number to something that is affordable for your family. The amount of financial aid you are eligible for is directly related to your family’s personal circumstances, including income, assets, number of children, age of parents, etc. The formula used to determine how much aid you will qualify for is called the“Federal Methodology.” Some colleges also use an “Institutional Methodology” for awarding their own institutional funds. The federal methodology is put to work when you submit a FAFSA. Submitting this form as soon after January 1 as possible – and definitely before your school’s deadline – is essential to receiving federal and state-based student financial aid.

There are four major types of financial aid and none of them require up-front payment from you. These four types of aid are characterized into two categories: gift-aid and self-help aid. Gift aid is exactly that – a gift to you. It doesn’t require any investment from you and doesn’t need to be repaid. Grants and scholarships fall into this category. Self-help aid, while it doesn’t require up-front payment, does require an investment from you and/or your child. Student loans and work-study are forms of “self-help aid”.


The best type of financial aid to get, hands down. If you submit your financial aid forms (including the FAFSA, and if your school requires it the CSS Profile), by your school’s deadlines, and they determine you are eligible for a grant, they will simple add it to your financial aid package. Federal grants come in the forms of Pell Grants and FSEO Grants. States offer grants as well. For example, in Rhode Island, you will be considered for a Rhode Island State Grant as long as you submit your FAFSA before March  1. Institutional grants are provided by the school itself and they will include them in your financial aid award if you qualify.


Scholarships are much like grants in that they don’t need to be repaid, but they sometimes have requirements you must meet in order to renew them, or they require that you send in a separate application for the scholarship, in addition to the FAFSA and CSS Profile. If the scholarship is awarded by the school itself, you may need to get your application materials in earlier than normal to be considered. For example, in order to qualify for the University of Rhode Island’s Centennial Scholarship, you must have your application in by December 1 and meet a host of other requirements.

If the scholarship is being awarded by an outside organization, you will need to spend a considerable amount of time searching for opportunities. Just keep in mind you can’t complete a scholarship search in just one day, and you don’t need to be a straight-A student to get one. They are available to some based on financial need, or for other qualities. A great place to start your search is at your high school guidance office, or  sign up forRIScholarships.org to search an online database of local scholarship opportunities.


Work-study is a federal program that sets aside dollars for a student to earn while working at an on or off campus job. The only difference between this program and a regular part-time job is where the funds come from. By providing work- study funds, the federal government simply opens up more job opportunities to students. So, if this is included in your financial aid award, it is money that will help your child pay for everyday and living expenses, but they must do the work to get it. Just don’t expect it to reduce your tuition bill because this money is only paid as it is earned and is not awarded up front.


Student loans are a form of financial aid that helps you pay up front tuition costs, but needs to be paid back. Student loans come in a variety of forms: federal, state- based and private. Federal student loans include the Federal Direct Subsidized and Unsubsidized Loans (Stafford), Federal Perkins Loans, Federal PLUS Loans (this one is for parents). State-based loans are offered through a network of nation-wide lenders, such as Rhode Island Student Loan Authority, and often offer very competitive rates and fees. Private loans vary widely from lender to lender and you must be careful to investigate the details of these loans (as with any loan!) before signing the note.

So, you don’t have money set aside for college? That’s okay – you are not alone. Just remember there are billions of dollars in financial aid available out there to help.

Stacey Crooks, The College Planning Center of Rhode Island

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Avatar About the Author: The Rhode Island Small Business Journal is a printed monthly magazine and an online resource for the aspiring and start-up entrepreneur and small business owner.

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