Paying for college 101.

• Author: Bautsch, Brenda

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Financial aid programs can be a powerful tool in making college affordable in tough economic times.

"The cost of attaining a liberal arts degree at the University of North Dakota has nearly doubled in the last six years," says Representative Corey Mock of North Dakota. "For many students and families, financial aid is the only way college can be affordable."

The federal government provides a significant amount of financial aid. And although federal aid has increased over the years, it has not kept pace with increased tuition costs, making state financial aid programs essential for college affordability.

THREE TYPES OF AID

The three main types of financial aid states offer are need-based, merit-based and mixed programs. Need-based aid is awarded to students based on family income, while merit-based aid is awarded to students who meet certain academic requirements. States also are using mixed-aid programs that combine both.

In the 2007-2008 academic year, 48 percent of state undergraduate grant aid was based on need, 19 percent was based on merit, and 14 percent was based on a combination. States spent about $5.7 billion on undergraduate need-based aid. Nine states--California, Illinois, Indiana, New Jersey, New York, North Carolina, Pennsylvania, Texas and Washington--account for almost 70 percent of all state need-based aid.

"Families in North Carolina," says Representative Tricia Cotham, "depend on financial aid, and our state has made great investments here to ensure college access for all students."

New York's Tuition Assistance Program is the nation's largest need-based aid program. Considering the amount of need-based aid available for full-time undergraduates, New York is at the top with $1,049; the national average is $440. In fiscal year 2006, New York awarded about 15 percent of the total amount all states spent on need-based aid that year.

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REPRESENTATIVE

COREY MOCK

NORTH DAKOTA

Although need-based aid is the largest type of tuition assistance, merit-based aid has been growing proportionately faster in the last decade. From 1998-2008, while tuition at public four-year colleges doubled, need-based aid grew by 110 percent, and merit-based aid increased by 267 percent. In 2007-2008, states spent $2.76 billion on undergraduate merit-based aid.

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REPRESENTATIVE

PATRICIA COTHAM

NORTH CAROLINA

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