Money from Home

All states maintain extensive programs of grants, scholarships, tuition assistance, fee reductions and loans. Last year, 1.63 million students received over $2.2 billion in need-based state aid and 231,734 shared in $255 million of non-need-based aid.

Eligibility for State-based Student Aid

States determine eligibility for need-based aid in one of four ways:
(1) Twenty-five states use only the federal methodology;
(2) Thirteen states use the federal methodology for most of their grants and the institutional methodology (or some other hybrid methodology) for a few other programs;
(3) Some states let the student's school make the decision regarding eligibility;
(4) Eleven states have their own system-- Delaware, Kentucky, Louisiana, Maryland, New York, Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina, and Washington.

A Summary of State Programs

Here are some you should ask about when you write to your state's Higher Education Coordinating Board. The addresses are at the end of this chapter.

Grants for In-State Study.

Every state offers need-based grants to its resident undergraduates. Most of these grants are funded with help from Uncle Sam's State Student Incentive Grant (SSIG).

Grants for Out-of-State Study.

Some states have signed reciprocity agreements with other states to offer need-based grant programs to out-of-state undergraduates.

Merit Programs.

Generally, there are three kinds of merit programs.
The first type is based on financial need; however, there is an academic threshold you must attain (such as a B average) to be eligible.
The second program is based on academic accomplishment. But you must demonstrate financial need to qualify for a monetary award, otherwise, your recognition will be honorary.
The last type of program is based solely on academic accomplishment. Your award is not affected by your financial situation.

Special Loans.

Some states offer loans that are separate from any federal programs. For all these plans, the loan money is usually secured through tax-exempt bonds issued by the state. In some cases, out-of-state students attending a school in the state underwriting the loans may benefit from the low rates.

Teaching Scholarships.

To increase the supply of teachers, many states have instituted special loan programs for students willing to become teachers, with "forgiveness" features if the students actually end up in classrooms. If the students don't go into teaching, they must repay the aid. Some programs limit their benefits to students who teach in a shortage area. This could mean a subject area like math or science. It could also mean a geographic area like rural America or the inner-city. These programs are usually in addition to the Paul Douglas Teacher Scholarship.

Special Field Scholarships.

This category covers a variety of programs designed to increase representation in other fields in which the state believes it has shortages. These fields may include medicine, nursing, special education, bilingual education, etc. Many graduate programs are included in this category.

Minority Programs.

Many states have awards for minority students. Beneficiaries must usually be African-American, Latino or Native American (Eskimo, Indian, or Aleutian).


Some states operate programs similar to the federal work-study or cooperative education programs.


Some states give benefits to state residents who served in the Armed Forces, usually during periods of hostilities.

National Guard.

Some states give educational benefits to residents who serve in the state's National Guard. These are in addition to federal benefits.


Some states give benefits to state residents who are dependents of deceased or disabled veterans, or POWs, MIAs, or police/firefighters killed on duty.

Military Dependents.

Some states let military personnel and their dependents stationed within the state's borders, attend in-state universities at in-state tuition rates.

Tuition Savings Plans.

To encourage early planning for college costs, many states allow families to purchase "Baccalaureate Bonds," the income from which is tax exempt if used to pay college expenses. A second type of savings plan is the "Prepaid Tuition Plan" in which parents can guarantee four years of tuition at any of the state's public (or in some cases, private) colleges by making a lump sum investment or periodic payments. The amount depends on the child's date of entry into college and the degree of flexibility parents desire in withdrawing funds. While sophisticated investors can probably achieve a greater return than in either of these plans, the fact is, most families are not comfortable playing investment games. They want an easy way to guarantee they'll have enough money for their children's education, and these plans do work!

Tuition Equalization.

These programs reduce the difference in tuition costs between in state public and private colleges. Examples: Alabama, Florida, Georgia, Kansas, Kentucky, New Mexico, North Carolina, Ohio, Vermont and Virginia. Last year, these states made grants worth well over $107 million.

Grant Programs I.

Most states provide special assistance to students attending private colleges in state. Such awards are need based.

Grant Programs II.

Some states provide need-based assistance to residents attending schools out-of-state. Examples: Alaska, Delaware, Maine, Maryland, Massachusetts, New Hampshire, Ohio, Pennsylvania, Rhode Island, Vermont, West Virginia, and Wisconsin.

Free Scholarship Search.

Alabama, Florida, Maine and Vermont offer state residents (free) individualized lists of potential financial aid sources.

Discounts for Senior Citizens.

Alabama, Colorado, Connecticut, Kentucky, Maine, Minnesota, Nebraska, New Mexico, South Carolina, Vermont, and Wyoming all give tuition discounts to seniors. Some states waive tuition entirely. Eligibility varies from state to state, but generally, students must be state residents aged 60+ and attend state schools. Sometimes the discount is given to students only on a space available basis.

Community College Partnerships.

Many states are creating partnerships between two- and four-year colleges to help make the transition seamless. Sometimes students are guaranteed admission to the four-year school. Sometimes they're offered additional aid opportunities (and sometimes they are just given guidance on course selection). For example, Colorado, Florida, Illinois, Kansas, Maryland, Massachusetts, Minnesota, New Mexico, North Carolina, Ohio, West Virginia and Wyoming.

Community Service Opportunities.

Many states were way ahead of the community service bandwagon. Some are tied in to AmeriCorps--Colorado, Kentucky, Maryland, Minnesota, and Vermont; others are funding their own-- Connecticut, Georgia, Illinois, Iowa, Kansas, Missouri, and North Carolina.

Innovative State Programs

Be on the lookout for these. There is a lot of action on the state level--some of which will result in important new programs (and some which will be allowed to fizzle).

New York:

Liberty Scholarships would pay the non-tuition costs of low income families who attend school in New York. Liberty Partnerships would provide them with counseling and tutoring. This program may finally get funded for 1995.


Helping Outstanding Pupils Educationally (HOPE) will ensure that every qualified (3.0 GPA or better) graduate of a GA high school with a family income under $100,000 will receive a grant to cover 45 credit hours (in-state tuition, fees and books) at any GA public school. State residents attending tech schools or private colleges in Georgia qualify for some assistance as well. The program is funded by the Lottery for Education. For more information (in Georgia), call 800-546-HOPE.


Tuition Incentive Program (TIP). Low income students can get free tuition at community colleges. Those who complete community college are eligible for a $2,000 voucher for use at any of Michigan's four year colleges.


College Savings Bonds. Illinois was the first state to encourage families to save for college expenses via tax-exempt (non-callable) zero coupon bonds. In Illinois, bond holders can also receive a Bonus Incentive Grant (BIG).


Vermont Value Loan Program reduces the principal balance on the Stafford and PLUS by 1% during each year of repayment.

Arkansas, Louisiana, Indiana, and Virginia:

In Arkansas, they're called Academic Challenge Scholarships. In Indiana, they're called Twenty-First Century Scholars. They all have similar themes: States guarantee to pay in-state tuition for low-income students who make certain commitments. For example, the student must maintain a specified GPA in college prep courses and remain drug free.


Maine residents attending out-of-state schools, and out-of-state students attending Maine schools can take out a "Super Loan" at 1% below the current Stafford rate. The program is available through 39 participating lenders.

Virginia and Texas:

Special incentive grants to induce students of one racial group to attend a state public university in which another racial group makes up a significant proportion of the student body.

Colorado, Florida and Minnesota: Colorado's Postsecondary Options Plan, Florida's Dual Enrollment Plan and Minnesota's Postsecondary Enrollment Options Act allow public HS students to take courses at no charge at any college in the state that will admit them (the Florida program is restricted to state schools). Students receive both high school and college credit for their work.

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