In honor of Financial Aid Awareness Month, here’s some help in understanding financial aid: what it is, how it works, and what you need to do make the most of the available financial aid to fund your education. 

Financing postsecondary education – whether as a recent high school graduate or as an adult student – can feel like the one of the most complicated and stressful aspects of the application process. But have no fear: the “Financial Aid 101” information and advice I’ve got to share is free of charge!

Make continuing education a reality.

The first thing to realize is that no matter what you’re facing, you can make continuing education a reality. I say “continuing education” because there are many choices for education; whether you are heading to a vocational, technical, community, or a four-year college, financing it is possible. In addition, I will address the importance of not becoming overloaded with student debt when you’re done so you can enjoy growing in your career versus worrying about how to pay on student loans.

We will break this down into four parts:

Fill out the FAFSA form.

Prior to attending college, unless you’re privately funded for college, you will need to complete the FAFSA. The Department of Education has made it simple to complete this lengthy application. (There is an extensive and interactive website complementary to the FAFSA at

The best way to successfully complete the FAFSA is to collect information about your income and possibly your parent’s income depending on your status (which is classified as either a “dependent student” or “independent student.” The rules vary from one school year to the next, so be ready with the information that is required. Typically you will need your (and your parents’, if applicable) previous year’s income tax information (the application can automatically import most of this data as well).

Find out if you qualify for grants.

After you submit your FAFSA to your schools of choice, you will be presented with a financial aid package of options (called awards) to pay for college. Depending on your financial situation, you may qualify for federal grants. Grants are monies that you receive and do not have to pay back. Use grants available to you to pay for tuition and school related expenses. Don’t pass up free money! The U.S. Department of Education has a certain amount of funds allocated for grants each year, so take advantage of getting an education without owing any money. There is one exception to this; if you withdraw from school after grant disbursement, you may have to pay it back, so make sure you know the rules about the grants you choose.

Carefully consider loans.

Another award option includes student loans, either subsidized or unsubsidized, depending on whether you’re an undergraduate or graduate student as well as other factors. This funding option can cause challenges for graduates, because paying back borrowed funds can really put a damper on your bank account.

Let’s do a quick breakdown.

According to the Federal Student Aid Office of the U.S. Department of Education, the federal government can take up to 15% of your annual income for student loan repayment on an income-based repayment option. There are a lot of variables to this number, but typically you can expect to pay about $6,000 a year with the average pay described earlier, which equals about $500 a month until your loans are paid.

According to Forbes, the average student loan debt is approximately $28,500 after graduation. At $500 a month, it will take about seven years to payoff. This leaves you with about $1,600 net pay per month after taxes, health insurance, and student loan payments. You can expect to pay approximately $800 in rent and another $100 in utilities. This doesn’t take into consideration living expenses such as mobile phones, Internet, transportation, and food costs – not to mention money for entertainment and leisure.

Are you scared yet?

I paint this bleak picture to make a point. Wouldn’t it be nice to have an extra $500 a month after you graduate college because you didn’t have to pay student loans? Remember this information when you are sitting and deciding on your awards from the FAFSA application. Be careful when choosing student loans and don’t fall into the temptation of taking any more extra money than you need because it hurts when reality sets in and you have to pay it back. Also note that you can’t declare student loans in bankruptcy; the federal government has the right to garnish your wages, and defaulting on a student loan affects your credit and your ability to find a job (some employers won’t consider someone who has defaulted on student loans).

Don’t forget about scholarships.

Okay, so now that the stage is set for the seriousness of taking out student loans, let’s talk about an alternative: scholarships. First of all, let’s kick some myths out of the way. Scholarships are not always awarded based on academic achievement. Scholarships generally do not have to be paid back. Scholarships do not always require a long application process. Scholarships do not always require public speaking ability.

According to Peterson’s, there is $1.5 million available scholarships, grants, fellowships, prizes, and forgivable loans available with a total dollar amount of $10 billion dollars. Scholarships are available to you if you are willing to do some research and apply. (In the Kuder Career Planning System®, there is a financial aid search feature that includes an extensive database of scholarships narrowed through various filters.)

Here is the secret to paying for college using scholarships: develop a plan and begin applying as soon as possible. Plan to apply for one scholarship a week or every two weeks. Before you know it, you will have submitted several applications and there will be many potential awards around the corner.

Searching and applying for scholarships is similar to looking for a job – you don’t just apply to one and hope you get it. You have to be selective and apply for several. Not only will you become better each time you apply, with enough work, you will receive free funding for continuing your education. Make a plan. Apply. Follow up. Be funded.

Need more help?

I hope this has provided a thorough overview on funding college and continued education. With a better understanding of grants, loans, and scholarships as well as the FAFSA, you can fund your education in a smart, practical, and informed way.

Need more help understanding financial aid and how to reach your education goals? Get personalized, qualified support from a Kuder Coach today.