The Emotional and Financial Reality
Is your child going off to college soon? Do you feel overwhelmed? If so, now is the perfect time to start researching financial aid options and planning ahead for education expenses. Finding the right opportunities can feel impossible; let one of First Light’s financial advisors help you navigate the options! Today, we’ll cover some tips for applying for financial aid for your college student and talk about the importance of getting a financial advisor involved in the process.
A child preparing to embark on their collegiate journey brings with it a mix of emotions for you as a parent: pride at their accomplishments, excitement for their future, and a healthy dose of anxiety over not just your child leaving the house for the first time but the financial commitment of such an endeavor. Feeling overwhelmed is completely normal; that’s why we’re here!
College costs seem to be going up all the time: according to College Board data compiled by Credible for the 2025-26 academic year, the annual cost of in-state public college is about $30,990, while the annual cost of out-of-state public college is $50,920 and the annual cost of private nonprofit college is a whopping $65,470. The unfortunate reality is that such costs are completely unattainable for most families without significant help. Financial aid is the main tool in your toolbox to help your child attend their dream school.
Why Early Planning Makes a Difference
Tuition, housing, and books tick up the college bill quickly, not to mention the many hidden fees that schools love to leave unadvertised but throw at you out of nowhere. The earlier you plan, the more options you have to reduce costs and make smart decisions. Much like we talked about in past articles on retirement savings, investing, doing your tax returns, and more (all of which are available here!), proactive planning reduces last-minute financial stress and allows you to make informed decisions that are driven by preparation rather than panic.
The elephant in the room that we haven’t touched on is student loan debt. According to data from the U.S. Department of Education, average federal student loan debt across all borrowers in the United States was north of $39,000 as of 2025. While it may not always be possible for your child to graduate debt-free, applying aggressively for financial aid can reduce the amount of unnecessary debt burden. The more aid your child receives, the lower the bill once they graduate and the freer they will be to live their life without the financial shackle of massive debt. Since so many kids wait to apply for aid till the last minute, a proactive approach can open more doors to savings and rocket your child to the top of the list for scholarship consideration.
Understanding Financial Aid Options
I. Federal Aid
Federal financial aid for college students is the first option that many families will consider, and it remains a good choice in 2026.
The Free Application for Federal Student Aid (FAFSA) program is a free government form that students can complete to apply for financial aid. While it is primarily utilized by those seeking entrance to traditional four-year colleges, FAFSA funding is also available for vocational and trade schools in the United States. The government uses your FAFSA form to determine eligibility for grants (more on that below), federal student loans, work-study jobs, as well as state and institutional aid programs. NerdWallet has a breakdown of when to apply for FAFSA here: applications typically open in late September or early October for the upcoming academic year, with a deadline on June 30 of the award year. Schools often have their own deadlines for filling out a FAFSA form (well ahead of the federal deadline), so make sure you are familiar with the relevant dates for the specific school(s) you are interested in applying to.
When you fill out a FAFSA form, you’ll provide demographic information, financial bracket details, tax information, and parental consent if the applying student is still a dependent. Steps for filling out the form include: creating digital credentials known as your FSA ID, filling out the FAFSA form linked below, and submitting before all relevant deadlines (both federal and for your specific school as discussed above).
You can begin a FAFSA application here.
FAFSA application can grant you eligibility for federal grants, loans, or both. There’s one key difference: you don’t have to pay back grants like you do with loans – although federal loans are often provided at lower interest rates than private institutions, and are occasionally eligible for student loan forgiveness programs from the government. Federal grants and scholarships come from money allocated to the Department of Education during the federal budgeting process each fiscal year, the Pell Grant (which is funded annually by Congress and intended to help students with significant need), the Federal Supplemental Educational Opportunity Grant (FSEOG, which is distributed to schools individually and then re-disbursed to students), TEACH Grants (for students who want to study to be teachers in in-demand fields), specialized scholarships (provided by federal departments such as Health and Human Services and the Department of Defense) and more.
Work-study programs are another option coming out of FAFSA if you are interested in on-campus (research aide, library assistant, etc.) or off-campus (nonprofit, community service, etc.) positions while you go to school. Schools typically cover 25% of wages earned during such arrangements, and the government covers the rest.
After you submit your FAFSA application, you’ll receive a Student Aid Report (SAR) from the government that details your specific eligibility for the various options.
It is important to understand both financing rates and repayment terms for federal vs. private loans, so make sure to do your due diligence before applying and consult a financial advisor if you need help parsing the specifics. You can also use resources like this one to compare and contrast before applying to a specific loan program.
II. Scholarships
There are far too many private scholarship options to cover in one article, so get started as soon as possible applying to as many as possible.
The two main scholarship categories are needs-based vs. merit-based.
If you are in a uniquely challenging financial position, many scholarships have been stood up by benefactors to help you out. These simply require financial information to apply for. On the other hand, merit scholarships are available to outstanding students who have demonstrated high academic aptitude, extracurriculars, etc. Feel free to apply for both needs based and merit based scholarships! Many students are eligible for both, and can combine several scholarships at once to reduce their debt burden.
Merit scholarships are not just for academic achievements, either. If your student is talented in a specific field, like sports or music, there are scholarships for that. Beyond the generic private scholarships that apply to any school, most schools will also have scholarships available to incoming students that are talented in a specific field and willing to use those talents for the school during their collegiate tenure. There are truly endless options when it comes to applying for and combining scholarships, so get started early and be prepared to put in the work to find the best ones for your specific use case. Many students end up going to college on a completely free “full ride” just because they aggressively pursued scholarship money and were able to leverage many different options to attack tuition costs.
As a first step, put together a mini “resume” of academic achievements, any relevant awards, extracurricular activities, community service, etc. to have handy – even if you’re not quite at the stage to apply for scholarships yet. This will save time later, acting as a repository that you can add to over time with anything new that comes up.
Finally, check out local scholarships! Many towns and communities have modest funds set up specifically to benefit incoming students from their own locales, and would love to help you out.
You can find a semi-comprehensive database of private scholarship opportunities here, as well as at many different resources across the web. If your student excels in a specific field, try narrowing the search by what they are good at and interested in pursuing: violin, soccer, robotics, etc.
III. Education Savings Accounts
Tax-advantaged 529 plans and education savings accounts are also options.
The Internal Revenue Code authorizes 529 plans, which include college savings plans and prepaid tuition plans. You contribute post-tax dollars, the money is automatically invested in mutual funds or similar portfolios, and withdrawals can be made tax-free when it comes time for education expenses. These savings plans often encompass tuition and associated fees, room and board for half-time or greater students, books and supplies, computers, and sometimes even limited student loan repayment.
There is no annual contribution limit, but contributions are subject to annual gift tax rules and lifetime limits can vary by state, so make sure to check on specifics. Check out IRS Publication 970 for more information.
Education Savings Accounts (ESAs) are similar but with $2,000 per year maximum household contributions per beneficiary, and funds are generally required to be used before the beneficiary turns 30.
If you have a little extra money to set aside for your child’s future college education, these plans often make more sense than simply socking money away in the bank. You can make tax-free withdrawals for specific expenses related to higher education, all while gaining tax advantage. Speak with a First Light advisor today to see how these accounts can work for you!
Common Mistakes That Families Make
We’ve already covered the first common mistake: waiting too long to start planning! Getting your student’s resume together, applying for grants, scholarships, and loans, hearing back from your applications, and making final decisions can all take a lot longer than expected – not to mention each school has its own specific deadlines, some earlier than others. If your student is in high school, it’s never too early to start planning for the future, even if that means just putting some cash in a 529 plan or ESA. Type up that resume like we talked about, keep adding to it, and keep an eye on scholarship opportunities, even if college feels like the distant future. The National Association for College Admission Counseling recommends beginning the scholarship process in junior year of high school at the latest. If you are feeling behind or like you’re running out of time, don’t panic! Speak with a First Light advisor today to get the ball rolling: proactivity leads to peace of mind!
Many families also fall into the trap of not filling out a FAFSA application because they assume they won’t qualify for aid. Not only is the form free, but it doesn’t take that long, and it can save valuable dollars down the road. The reality is that you’ll never know what you do or don’t qualify for unless you take the time to fill out the application, and the results might surprise you and save you a good chunk of change in the future. Consider the time spent filling out the form as an investment in your child’s future!
It can also be tempting to over-borrow without a repayment strategy. While scholarships and grants can mitigate some of the cost burden, many students give up and just borrow the rest without thinking about how it will impact them in the future. It can be hard to visualize real adult life when you’re 17, so parental wisdom is key here. You can also speak with a financial advisor to set up a long-term plan. There are many considerations like what field your student will be going into (taking a look at average salaries, etc.), the trajectory of inflation and how that could make student loans feel disproportional to earnings, length of term for repayment, and more. Having a clear road map will help avoid repayment confusion and unwelcome financial surprises in the future.
Finally, while it may seem obvious, many folks don’t bother comparing the total cost of attendance between schools. Some just look at tuition and fail to factor in associated costs like room and board or books, while some just laser focus on their first choice school and don’t shop around. As with any big purchase, comparison is your best friend here. It can be worth it to attend a second-choice school at significant cost savings, or at the very least more aggressively pursue aid options to shave down the bill at your top choice. Compare and contrast! Check out online side-by-side tools like this one to start narrowing down your search. As we’ve been saying, preparation is key! You can never do too much research on such a critical decision.
Creating a Strategic College Funding Plan
It may go without saying, but align your college choice with your financial reality. You don’t have to write off certain schools just because of your tax bracket, but take a comprehensive look at what any given school will cost once you have grants, loans, and scholarships secured, and don’t overshoot what you can afford.
Parents, balance your retirement savings with your college funding. As the old adage goes, you don’t want all your eggs in one basket, but you do want to be adequately prepared for both scenarios and for anything unexpected life throws your way.
Build a clear, step-by-step action plan using all the information we’ve discussed today in tandem with consulting a First Light advisor to fill in the gaps.
Finally, set clear expectations with your student. Schedule consistent talks to help them through the process. If you’re overwhelmed with options and looming deadlines, think about how they feel! Share wisdom on your own experience with higher education if you went to college, and help walk them through their options clearly and concisely. Sometimes merely talking through a complicated process can help it become far more approachable. Open communication with your kid will never hurt, and you can tackle the big issues and make informed decisions together. It’ll also be great bonding time!
How a Financial Advisor Can Help
Throughout the course of this article, we’ve been encouraging you to speak with a financial advisor to get help with college financial aid. If you don’t think it’s necessary, consider some benefits: a financial advisor will work with you to develop a personalized education funding strategy that fits your needs and wants, they can help you apply for FAFSA and other financial aid if you’re stuck in the bureaucratic weeds, they can work with you to fit college planning into your overall long-term financial health, and can provide confidence during a big life transition like a kid going off to college. Sometimes just having someone to talk to is all you need to declutter your mind and more clearly see all your options!
If you have a child rapidly approaching college age, or if you’re a future college student reading this, don’t wait! Schedule a consultation with a First Light advisor on our website today. Professional guidance can simplify the process and add confidence to decision making during a hectic time.
Thanks for reading, and we’ll see you here next month!
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Advisors associated with First Light Financial Planning may be either (1) registered representatives with, and securities offered through LPL Financial, Member FINRA/SIPC, and investment advisor representatives of Great Valley Advisor Group; or (2) solely investment advisor representatives of Great Valley Advisor Group, and not affiliated with LPL Financial. Investment advice offered through Great Valley Advisor Group, a registered investment advisor. Great Valley Advisor Group and First Light Financial Planning are separate entities from LPL Financial.
Member FINRA/SIPC: www.finra.org/www.sipc.org
Kris Money is solely an investment advisor representative of Great Valley Advisor Group, and not affiliated with LPL Financial.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual
Prior to investing in a 529 Plan investors should consider whether the investor’s or designated beneficiary’s home state offers any state tax or other state benefits such as financial aid, scholarship funds, and protection from creditors that are only available for investments in such state’s qualified tuition program. Withdrawals used for qualified expenses are federally tax free. Tax treatment at the state level may vary. Please consult with your tax advisor before investing.