View Full Version : Types of Free Financial Aid

08-22-2011, 02:51 PM
Types of Free Financial AidFinancial aid is money that helps you cover the total cost of your education. And the free kind of financial aid is the best kind to help lower college expenses. From scholarships to grants and more, students are encouraged to take advantage of the following options that do not need to be paid back:

Sources of Free Money
To help reduce the overall cost to attend college, students are encouraged to research and apply for as many scholarships and grants as possible. These types of financial aid represent sources of money that do not need to be paid back.

ScholarshipsScholarships may be given to students who demonstrate or show potential for excellence in a certain area or discipline. Financial need and academic standing are not always part of the criteria for receiving scholarships. There are thousands of scholarships available through colleges, your state, and various companies, organizations, and clubs.

Most colleges automatically consider you for a college-based scholarship when you apply for admission. If you qualify, your school's admission office will notify you. As for the other types of scholarships, they won't find you – you have to find them. Search the Web and seek recommendations from friends, family, and academic advisors.

Student Scholarship Search provides students and parents with a FREE searchable database of college scholarships and grants. No registration is required and scholarships are updated daily.

GrantsUnlike scholarships, student grants are awarded to students who demonstrate a financial need based on formulas established by federal and state governments, or the school. Common sources of student grants include the following:
<LI class=boxes>federal and state governments <LI class=boxes>colleges and universities
public and private organizations

As you progress through the financial aid application process, you will know if you are eligible for a student grant and how much will be awarded.

Savings Plans Help Lower College Costs
In addition to basic savings accounts, you can also tap into the following savings plans to help you pay for school once you've exhausted free sources of financial aid such as scholarships and grants:

Coverdell Education Savings Account (ESA)*To encourage savings for future education expenses, Congress created Coverdell Education Savings Accounts (ESAs) in which annual contributions can grow tax-free and those earnings can then be withdrawn when needed for the beneficiary's education expenses. Contributions to an ESA can be made on behalf of a child under age 18. Contributions are not tax deductible but withdrawals can be made tax-free if used to pay for eligible education expenses. For more information, visit www.irs.gov (http://www.valuemd.com/thirdparty.asp?nexturl=irs).

529 College Savings Plan*Section 529 Plans are state college savings programs, including pre-paid tuition plans, that allow funds to grow federally tax-free for the purpose of paying for certain future post-secondary education expenses. Plan funds may be used to pay for tuition, fees, supplies, books and certain room and board costs. Withdrawals taken from 529 Plans for educational expenses are free from federal income tax. Since plans differ from state to state, review your state's 529 Plan details and ways to enroll online.

Custodial Savings Accounts*A custodial savings account is an account that you establish for your child and retain control of until your child reaches the legal age of either 18 or 21, depending on the state in which you live in. Parents or relatives can easily establish an account under the Uniform Gift to Minors Act (UGMA) or the Uniform Transfer to Minors Act (UTMA). By limiting the child's access to the account, funds are “secure” until the child is able to withdraw them. At that point, your child has complete control on how the money is spent. Since the money in a custodial savings account is considered an asset, it will impact his or her financial aid eligibility, making a Coverdell ESA or 529 plan more attractive.

08-25-2012, 04:27 AM
Nice thread..

11-01-2012, 02:26 AM
Nice sharing :)

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