Many middle and upper middle class families believe they are caught between a rock and a hard place when it comes to paying for college and obtaining financial aid.

The vast majority of people simply do not have the nearly $100,000 it costs today for a four-year college degree, so they must look elsewhere to help fund college. And yet, they believe they earn too much money to obtain financial aid.
Put the brakes on, though, because your family may qualify for more than you think.

Eligibility for federal aid for college is based on a complicated alphabet-soup formula that takes into consideration your Expected Family Contribution (EFC), the Cost of Attendance (COA), and the student’s finances.

To qualify for any federal program, students must apply fill out a Free Application for Federal Student Aid (FAFSA) form. Without that, you will not be eligible for any federal loans or grants. Even if you believe your family income is too high to obtain some federal aid, it doesn’t hurt to apply, and you may be eligible for other programs you’re not aware of.

Currently, the Congress is looking at changing the student federal aid program through a contentious bill now languishing in the Senate.  The bill, called the Student Aid and Fiscal Responsibility Act (SAFRA) would replace the Federal Family Education Loan Program (FFEL). The goal of the new bill is to make college more affordable to more students.
Basically, the bill would create an $80 billion cost savings by stopping federal subsidies for private lenders who make student loans.

SAFRA would also increase the amount of Pell Grants from its current $5350 level to $6,900 in 2019.  It all sounds good, but the bill has opposition from those politicians who claim the bill is only a government take-over and the cost-savings claimed by the bill’s supporters are unrealistic.

In the meantime, families who do not qualify for outright grants can apply for federal loans through FFEL. These loans don’t always pay for college, but often offer better terms than loans obtained directly through private lenders. The federal government also offers low-interest loans for families to cover the difference between tuition costs and the amount of the student loan.

The maximum loan given through the federal program is $10,500 per year for undergraduates and $20,500 per year for graduate programs, which, as most people who are planning for college know, won’t pay for all costs. The average college cost per year in 2009 was about $30,000 per year for private colleges, and  $12,000 at four-year public schools.

The skyrocketing cost of college is front and center, in politics and family life, so expect some changes in the near future that will hopefully benefit families sending children to college.