Every Ivy League school claims to have a need-blind admissions policy and provide various combinations of financial aid for students. Do you need loans for college? As tuition costs rise, paying for college necessitates some degree of financial aid for students in most cases. Let’s take a look at Federal financial aid, loans for college, grants and scholarships.

College tuition isn’t merely outrageously expensive; it’s also on the rise. Tuition costs, on average, rise every year at approximately twice the rate of inflation. Ouch. How can you possibly ever save enough to afford an Ivy League college? The good news is that you have options. We’ve compiled some of the best solutions for paying for college:

Education Savings Accounts

Not financial aid in the traditional sense, these are savings and investment plans that you can create to start saving for tuition. Goes without saying that the sooner you open an account or fund, the more time you’ll have for your investment to grow.

  • 529 plans also known as qualified tuition plans, are named for section 529 of the Internal Revenue Code. You can invest long-term in mutual funds or pay future tuition costs at today’s prices. Important note: any money you withdraw from a 529 plan for purposes other than college expenses is taxed like income — and the earnings are usually subject to an additional 10% penalty tax. For more information, take a look at this IRS publication.
  • Coverdell Education Savings Account, formerly known as education IRAs. A Coverdell can be used to pay for not just college, but elementary and secondary school as well. In order to participate, though, you’ll need an adjusted gross income of less than $110,000 ($220,000 if filing a joint return). And, just as with the 529 plan, be advised that anything you withdraw from an ESA for purposes other than education expenses is taxed like income — and the earnings are usually subject to an additional 10% penalty tax. For more information, take a look at this IRS publication.
  • UGMAs/UTMAs. These custodial accounts are like trust funds, except you don’t need an attorney. The UTMA (Uniform Transfers to Minors Act) is an expansion of the UGMA (Uniform Gifts to Minors Act), and permits property other than cash or securities — such as art and real estate — to be considered gifts in most states. To set up an account, talk to your banker.

Financial Aid

This combination of loans, grants, scholarships and work-study is intended to bridge the gap between what you have saved and what you need.

  • Loans. The U.S. government offers Stafford and Perkins student loans, and PLUS Loans for parents. These, as well as consolidation loans and private student loans, are also offered from secondary markets such as Sallie Mae. Loans usually have to be paid back with interest, and repayment often starts a set time after graduation. Visit the Department of Education for their complete guide to repaying loans.
  • Scholarships/Grants. Thankfully, these don’t ever have to be paid back. All you have to do is qualify. And qualifying can sometimes be much easier than you think (playing the flute, ancestors from Scotland, almost anything and everything has a scholarship attached – trust us, you’ll be amazed!) Scholarships and grants break down into two types: merit-based (i.e. Physics or Football) and need-based (i.e. the Federal Pell Grant, which is determined by financial need factors). Grants and scholarships can come from the federal or state government, a high school, college or university, a business, an individual or even a nonprofit organization. Want to find the perfect scholarship for you? Use FastWeb’s free scholarship search to find information on more than 600,000 scholarships.
  • Work-study. Another portion of your financial aid package might derive from the Federal Work Study Program, in which schools offer students jobs that allow them to earn up to a certain amount each year. You get paid just like a normal job. And as a bonus, it keeps you out of trouble!

Applying for Financial Aid

For government aid, including grants, loans and work-study, you are required to submit a FAFSA form. Also be sure to visit the FinAid website where you will find links to forms, deadlines and helpful tips for filling out all of your applications.