Better Trades Schools: Cost & Loans

A high-end college can cost $35,000 or more for yearly tuition and fees. But statistics show that 56 percent of college students attend an accredited four-year institution with annual fees of $9,000 or less. About 38 percent of full-time students enrolled in public four-year institutions pay annual tuition and fees between $3,000 and $6,000.

The good news is the amount of financial aid available to students and their families exceeded $143 billion in 2008. Financial aid is intended to make up the difference in the amount of money a family can afford to pay and what the college education costs. More than half the students currently enrolled in school receive some sort of financial aid.

The amount a family is expected to contribute is referred to as the Expected Family Contribution or EFC. The government uses formulas to analyze a family's financial circumstances, like income, assets and family size.

There are three main types of financial aid available: grants and scholarships, loans, and work.

• Grants and scholarships are gifts that don't need to be repaid. These come from the government and from individual schools and are awarded on merit. One of the most common of these is a Pell Grant, a government grant based on financial need.
• Loans must be repaid. Most are based on financial need and sponsored by the federal government. The loans typically come due until after graduation. Most federal loans come with a low interest rate.
• The Perkins Loan is awarded to students with the highest need. It offers a low interest rate (around 5 percent) and students can borrow $5,500 a year, with a maximum of $27,500 overall.
• The Stafford Loans (subsidized) are also based on need and carry a fixed interest rate of 5.6 percent. Undergraduates may borrow up to $3,500 as a freshman, with the limit rising as they move through school.
• The Stafford unsubsidized loans are sponsored by the government, but aren't based on financial need. The interest rate is fixed at 6.8 percent and an undergraduate may borrow up to $5,500, minus the amount of the subsidized Stafford.
• Parent PLUS loans are sponsored by the government, but not based on need. Parents can borrow up to the total cost of education, minus any aid received. This is the largest source of parent loans. The Parent Plus loan is available for an interest rate of around 8.5 percent.
• Work study helps students pay for education costs like books, supplies and personal expenses. Students receive part-time employment to meet their needs and give them experience.