300 Part 3 Career Planning
understand how the plan works. You will be penalized if you use money
invested in a 529 plan for anything other than college expenses.
Even if your family has a 529 plan, the amount saved might not
be enough to pay for all your college expenses. Many families pay for
college using savings, current income, and loans. Parents, other family
members, and students often work together to cover the cost of college.
You might contribute money you have saved, money you earn if you
work while attending school, and money for loans you will have to repay.
There are many online college cost calculators that can help you
estimate how much money you will need to fund your education. Once
you have an idea of how much it will cost to go to college, you need to
figure out how you will pay for it. More than half the students attending
college get some form of financial aid. Potential sources of funding for
your education are shown in 14-8.
Financial aid is available from the federal government as well
as nonfederal agencies. There is more than $100 billion in grants,
scholarships, work-study, need-based awards, and loans available each
year. Some states also offer college money to attend a state school if
you have good grades in high school. Grants, scholarships, work-study
programs, and need-based awards are some examples of financial aid.
• A grant is typically provided by a nonprofit organization such as the
government or organization. Grants are generally need based, do not
have to be repaid, and are usually tax exempt. A Federal Pell Grant is
an example of a government grant.
• A scholarship may be based on financial need or some type of merit
or accomplishment. There are scholarships based on ACT or SAT
scores, grades, extracurricular activities, athletics, and music. There
are also scholarships available for leadership, service, and other
interests, abilities, and talents. It is surprising how many scholarships
and grants go unused because no one has applied for them. Don’t fail
to apply for help just because you do not want to write an essay or fill
out an application. Talk to your school counselor and be persistent if
you think you might qualify for college money.
• Work-study programs are usually part-time jobs on campus that are
subsidized by the government.
• Need-based awards are available for students and families who meet
certain economic requirements. Income and other demographics
determine if a student qualifies for this assistance.
The Free Application for Federal Student Aid (FAFSA) is the
application form used to determine your eligibility for federal financial
aid. Many institutions require the FAFSA form if you are applying for
any type of financial aid. You can file your application online at
www.fafsa.ed.gov. In addition to the financial aid application, the FAFSA
Web site has resources to help you plan for college. Visit the Web site and
click on the links under the heading Thinking About College?