The Financial Aid Game: How to Pay For College

This is the second of an exclusive daily series that takes a look at the college experience, from how to choose what school and course of study is right for you to finding innovative ways to pay the bills.

For most high school seniors the question is not, “where am I going to college?” but rather, “how am I going to pay for it?”

And, for good reason.

The College Board reports that for academic year 2005-06, the average in-state tuition at a four-year public college was $5,491, while a four-year private college averaged $21,235.

Those prices, however, could look like bargains in a few years as the average cost continues to rise at about 10 percent a year, according to the Labor Department.

Before you panic, think of these as "published prices," in the same way you wouldn't expect to pay the published price of a new car.

There's wiggle room in the price of a college education. The trick is to try to find and take advantage of it.

Video: Jenna's Dilemma Part 2: It's Her Life

Jenna Patterson of Monroe, N.Y. is heading off to college soon, but Jenna and her parents have yet to decide on the best college for Jenna, and are struggling with how they will pay for it. In the second installment of the FOX series, Jenna's mom says that Jenna may have to help pay some of the costs herself.

For Jenna's Dilemma Part 1, click on the video box above.

The first places to look are college aid programs, such as merit-based aid, athletic scholarships, and financial aid in the form of grants and loans. has done some of the homework for you and has put together a five-point primer for funding higher education:

Lesson One: Know the Lingo

• Merit-based scholarships: Awards to offset tuition for students who demonstrate specific academic talents.

• Need-based financial aid: Awards based on a family’s demonstrated financial need, which is determined by a government form, the Free Application for Federal Student Aid (FAFSA).

• Need-blind admission: Admission to an institution is in no way affected by a student’s need for financial assistance.

With terminology in hand, it's time to start researching.

Four Ways to Pay for College

Innovative Ways to Pay: College Money You May Not Know About

Merit-based scholarships basically are offered by colleges as enticements to attract highly qualified students — think of it as the "brains discount." Chances are if you're in the top 5-10 percent of your high school graduating class, you can qualify for some amount of merit-based aid. Check with a college's admissions office to find out what criteria are used in awarding merit-based scholarships, or visit the college's Web site and locate the link to scholarship aid.

Need-based financial aid is determined by the amount of expected family contribution (EFC) as determined by the FAFSA review of your family's financial resources. This includes a review of the previous year's Federal Income Tax filing, as well as a detailed explanation of income and debt. While the application process can seem daunting, it often can yield an aid package — often a combination of direct financial aid and campus employment — that can offset as much as 40 percent of the published tuition and fees.

Need-blind admission (NBA) is a growing movement among colleges attempting to open their doors to academically qualified lower income students. A group of 28 colleges, mostly Ivy League and top-tier liberal arts schools, formed the "568 Group," after Section 568 of the federal Improving America’s Schools Act of 1994, and actively promote NBA standards.

In addition, the federal government offers Pell Grants , which are available to undergraduates who show substantial financial need. The amount of the grant depends on family financial circumstances and may range up to $3,300.

Statistics show that low-income students typically come from non-college attending families, and therefore have less experience navigating the college admissions and financial aid process. That lack of experience is magnified by the fact that nationwide there are on average 491 students per public high school college counselor.

“A huge burden is placed on these students, with no support system at home," said Jim Boyle, director of Corporate Membership for College Parents of America, a non-profit organization of students, colleges and corporations that assists families with advice in the college admission process.

“The best resources are not available to those who need them most," Boyle said. "Those who are least likely to understand how to attain financial aid are usually those who most need it. The answer is not on a Web site, but in a truly multi-platform way of presenting info to the students,” Boyle said.

Lesson Two: Don't Be Scared by the Price Tag — Apply

Financial aid specialists say low-income students are scared off too easily by the cost of a private education, which can have a published price tag of $45,000 a year.

Feelings of helplessness set in — especially among low- and middle-income families — without even exploring the many financial options available.

“The problem isn’t whether they are able to attend; [it is] do they even think about applying for admission because they think they cannot afford it,” said Robin Moscato, director of undergraduate financial aid at Princeton University.

Programs such as College Parents of America are trying to inform families that private institutions do not necessarily cost more than public ones, and in fact might be more affordable than they think.

“At Harvard [University], the expected family contribution for a family with under $60,000 combined annual income is zero dollars; it’s free,” Boyle said.

Lesson Three: There's Money Out There — Go Find It!

The College Board provides a search engine that it says will help you sort through more than $3 billion in scholarship aid, and best of all, it's free.

Many of the scholarships are small — for instance, there's the ARRL Albuquerque Amateur Radio Club Scholarship, which provides $500 to a high school student interested in short-wave radio — but many also go begging for applicants. Put together a few of these and you can offset the cost of books and supplies.

Look for scholarships close to home, sometimes right in your own backyard. FC Richmond soccer club in Virginia, for instance, offers its travel-team members two $1,000 scholarships, and a awards a $500 scholarship to a club recreational player.

Employees of major corporations should contact their human resources and benefits office to see what scholarship funds are available for children and spouses.

The Knights of Columbus awarded more than $1.4 million last year to 729 students — which works out to an average of more than $1,900 per student.

Bottom line: the money is out there, you just have to find it.

Lesson Four: You Can Do It Cheaper

Buying a year of college is, in many ways, like buying a car. There is room to negotiate price and options.

For instance, most colleges require first-year students to live on campus, which means you're locked into the fixed cost of a dorm room and meal plan. Often, that can combine to run more than $10,000 a year.

Students often are released from that obligation after their first year, which means you can add off-campus housing — and eating — to your list of options.

Sharing an apartment typically can cut room costs in half, and getting off fixed meal plans — many of which are not fully utilized by students — can lower food bills substantially.

Some of that room and board savings could be eaten away by added transportation costs to-and-from campus, but finding the right roommates could make that a minimal burden.

Lesson Five: Make the Grade, and Don't Give Up

College is affordable. Say that over and over... college is affordable.

Now believe it.

The old saw, "There's a college for everyone," is absolutely true. You don't, however, have to settle for just any college.

Experts say the most powerful resources a high school student can possess when beginning the college search process are good grades and activism. Whether it's playing a sport, joining a club or doing local public service work, showing a college admissions officer that you not only can be make the grade, but also can be a good citizen are bound to open financial doors.

Top-tier schools literally are fighting to get good students, which is good news for parents. It's a sellers market, with students doing the selling of their accomplishments and potential, and colleges offering attractive aid packages in a way of buying.

So, hit the books, get involved and go for it!

For more tips and tools on preparing financially for college, visit's College Planning Page.

Click here to visit's special section on college life, College 101. intern Michael Paranac contributed to this report.