While paying for college may seem a daunting task, help is available from the state, the federal government, colleges, private scholarships and grants, and other lending sources. 
To apply for financial aid, you must first complete a “Free Application for Federal Student Aid” or FAFSA.  You can get a FAFSA through the U.S. Department of Education, colleges, libraries or on the Internet at http://www.fafsa.ed.gov.  FAFSAs are accepted for the upcoming school year any time between January 1 and June 30, but the sooner you send it in the better.  You (and the colleges you designate) will receive a Student Aid Report stating how much your family will be expected to pay toward college costs.  Colleges take that figure, determine your “unmet needs” and offer you a financial aid package. 
Every student is eligible to apply for financial aid. A study by the American Council on Education found half of all undergrads who may have been eligible for federal money during the 1999-2000 academic year didn’t receive any money because they didn’t apply.  That equates to about 8 million students who lost out on low-interest loans and free money.

College funding options 

  • Financial Aid:  More than half of all students enrolled in U.S. colleges receive some form of financial aid. According to the College Board,  57 percent of financial aid dollars awarded to undergraduates was in the form of grants, and 34 percent took the form of federal loans. The College Board also reports that the average student received a little over $13,200 to help pay for college, with $6,932 in the form of grants.
     
  • Federal Student Loans:  Federal programs are the single largest source of education loans for undergraduate and graduate students.  One of the more widely used federal loans is the Stafford loan for students, while parents often access PLUS loans.  These are low-interest, long-term loans that offer attractive repayment options, including the ability to postpone payments while in school or in times of financial hardship during repayment. 
  • Scholarships & Grants:  Scholarships and grants do not have to be repaid.  These are considered "free money" since they provide a debt-free way to fund some or all of a college education.  Private organizations, in addition to the government, often offer scholarships.  Grants are awarded based on financial need, while scholarships are awarded based on merit (grades, athletics, etc.).  The federal Pell Grant, based on need, is the largest federal grant program. 
     
  • Work-study Programs:  Aid programs can include a promise of a part-time job.  Work-study programs are those in which the student gets a campus job, usually through the college's financial aid office. In addition to helping with education costs, this program also allows students to gain valuable work experience.
     
  • Tuition Payment Plans:  Offered through college financial aid offices and private commercial organizations, tuition payment plans are an interest-free and debt-free method of spreading tuition payments over the course of several months.  Often used to cover the gap between the cost of attendance and the financial aid received, these plans may carry enrollment or participation fees.  Compare these plans to the potential cost or tax implications of liquidating an asset instead or the interest associated with a loan.
     
  • Home Equity Loans:  Some opt for a home equity loan or second mortgage because these are readily available, as long as you have equity in your home and good credit.  While the interest accrued and paid is typically deductible on your federal tax return, it's best to consult with a tax advisor before choosing this option.
     
  • Other Savings Options:  401(k) plans, IRAs, investment or other savings accounts offer a debt-free way to fund college.  But before you liquidate an asset, consider that you'll be foregoing the earnings you otherwise would recognize, as well as any fees or penalties that would apply. 
     
  • Private Borrowing:  Private borrowing is on the rise, offered through credit unions and banks to bridge any financing gap for college expenses between what you receive from financial aid and what you need to cover the cost of education.  Compare student loan interest rates, repayment schedules, and other loan terms and fees to ensure you get the loan that's right for you. 
For lots more info on financial aid and application guidance, see www.finaid.org.
Check out these pages for various sources: 
Go to the National Association of Student Financial Aid Administrators (www.nasfaa.org) for a summary of state savings plans, a guide to federal tax benefits for tuition and fees, and much more.  To apply for scholarships, check with your financial aid office or online at www.fastweb.com and www.scholarships.com.