Financial 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, we encourage students to maximize the following options that don’t 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.


Scholarships 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 various websites 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.


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:

  • federal and state governments
  • 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, consider savings plans to help pay for school.

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Education Savings Accounts (ESAs) in which annual contributions can grow tax-free and those earnings can then be withdrawn when needed for the beneficiary’s education expenses.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

529 College Savings Plan

Section 529 Plans are state college savings programs, including pre-paid tuition plans, that allow funds to grow tax-free. 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, make sure to review the details of your state’s 529 Plan.

Tip: Always consult a qualified professional or tax advisor.

Custodial Savings Accounts

Parents or relatives can easily establish a custodial 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.

Work Study Programs

Funded by the government, work-study programs provide need-based employment for students who need money to meet education costs. The program allows students to work part-time on campus or with an approved off-campus employer.

As part of the financial aid application process, you will know if you are eligible for work-study.

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