Finding Financial Aid for Middle-Income Families


Students from low-income families get need-based scholarships. Students from high-income families don't need it. But paying for college may be most challenging for those in the middle. Fortunately, there are financial aid programs designed specifically for students from middle-income families who may not qualify for need-based aid at every school. Look in these three places to find it.

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Pricey Colleges

A student who doesn't qualify for need-based aid at one school might qualify at a pricier institution, says Sally Donahue, director of financial aid at Harvard College. Since financial need is determined by a family's income and assets relative to the total cost of the college, a student who doesn't receive any financial help at a $10,000-per-year school could qualify for significant need-based aid at a $50,000-per-year institution.

"We have probably 600 families with incomes over $180,000 receiving grant aid right now, and that's usually because they have two or three students in high-cost colleges," says Donahue. "It just depends on where you go."

In addition to applying for need-based aid, regardless of your income, Donahue also recommends that students research "no-loan" schools such as Harvard that fulfill 100% of a student's determined need through nonrepayable grants, scholarships and work-study income rather than loans. A study by the Institute for College Access and Success, a higher-education think tank based in Oakland, Calif., shows that more than 50 schools nationwide have no-loans policies, though most are only offered to families with combined incomes of $50,000 per year or less. Some of the priciest institutions, including Amherst College, Vanderbilt University and Bowdoin College, offer no-loans packages to all students, while such schools as Cornell University guarantee that families with incomes under $120,000 will only take out $3,000 per year or less in student loans.

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Tap Tax Credits

For middle-income families, 2011 is the year to cash in on tuition tax credits. The American Opportunity Credit, which was recently extended through 2012, offers families a tax credit of up to $2,500, provided that they spend at least $4,000 per year on qualified expenses, such as tuition, books and supplies, according to the Internal Revenue Service. The credit applies to 100% of the first $2,000 spent on tuition, fees and course materials during the taxable year, plus 25% of the next $2,000. It's available for students in the first four years of post-secondary education who are enrolled at least half time and who come from families with combined gross incomes of $160,000 or less ($80,000 for a single filer).

Part-time students and those attending school for longer than four years can cash in on the Lifetime Learning Credit, which reimburses 20% of your college expenses up to $10,000.

"(Tax credits) don't really help you pay the bill now," says Carol Stack, co-author of "The Financial Aid Handbook." That's because to get tax credits, families still need to front the money and don't get the credit until after filing taxes. "It helps, but only a little."

Target Merit Aid

If you don't qualify for need-based aid, seek out merit-based aid instead. According to, a search engine for finding merit awards, each year schools hand out approximately $11 billion in non-need-based aid. Unfortunately, students frequently miss out because they simply don't apply.

"People think, 'I'm not a straight-A student, so I'll never get a merit (award),' but that's not the case," says Chris Long, president of Cappex,'s parent company. "Some schools only give recognition to the top-tier students, but others give merit aid for extracurricular activities, too."

Long says students can increase their merit aid eligibility by seeking out local and national awards and by narrowing their college hunt to schools most likely to hand them free money.

"One of the things schools really value is students from other parts of the country, so try to target schools that are outside of your geographic area," he says. "You should also apply to schools where you're at the upper end of the academic scale. You're going to be very attractive to those schools because they want to increase their average GPA, SAT and ACT (scores)."

"If your academic credentials place you in the top quarter of an incoming class at a private college, you're probably going to have a merit award that's equivalent to half tuition," says Ruth Vedvik, co-author of "The Financial Aid Handbook."

"At the top 100 brand institutions in the country, that's just not going to happen because those institutions give very little merit aid," she says.

Students can start the hunt for high merit aid institutions by visiting the College Navigator website and researching how much money families in their income bracket pay on average. As of October 2011, all institutions will also be required to include a net price calculator on their respective websites.

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