Four Major Sources for College Money

In this video, you will learn about the four main sources of college money.

Before you can shrink college costs, you need to know what the major sources of college money are for undergraduates and whether your child has a chance to qualify for this money.

Here are the four main sources of scholarships and grants and a recent percentage breakdown of this money:

  • Federal government  44%
  • Colleges  36%
  • State government 9%
  • Private scholarships 6%

Many families waste a lot of time chasing the wrong kind of money. Affluent students, for instance, won’t qualify for federal grants, but in some states they may qualify for state grants. Most of them would also be eligible for merit awards from colleges themselves.


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  1. The video showed that in 2007-2008 44% of the money private schools gave out was merit aid (as opposed to need based aid). Do you know what that % is now?

  2. Hello Lynn–I’m a bit confused about merit aid. Must my son take the PSAT in the fall of junior year to qualify for merit aid from a college, or is the PSAT ONLY for the National Merit Scholarship of $2500? If the answer to the latter question is yes, then is my presumption correct that colleges will look at my son’s SAT score, grade point average, extra curricular and other submissions (such as essays, videos) in determining merit aid? Many thanks, Carol

    1. Hi Carol,

      The PSAT will be irrelevant for merit aid in probably 99%+ of admission decisions. A student must have one of the top scores in the PSAT to qualify for as a National Merit Finalist, but that’s it. As you’ll see in the lessons in this course, 89% of students at private colleges and universities receive a tuition discount either in the form of need-based aid or merit scholarship or both. About 58% of students at state schools receive a grant or scholarship from the institution.

      Schools will have different admission requirements and private schools – and in particular colleges – are more likely to look at an applicant holistically. State schools are more likely to just look at test scores and GPA and possibly class rank.

      Lynn O.

      1. Thank you Lynn! This puts my mind at ease–I am in the process of reviewing SAT test dates and am evaluating test prep options (unbelievable how expensive some of these tutoring places are in the Washington, DC area) and had a moment of panic (sort of) when I thought he might need to take the PSAT on top of everything else he is doing in the fall. I am very much appreciating this course!!!!!

  3. Hi Lynne,

    On some of the college websites I see a statement that reads “tuition at time of first enrollment guaranteed to all students for four years.” Does this mean what it says and is it available to everyone enrolling at that school?

    Mary Lu

    1. Hi Mary Lu,

      Yes there are some schools that say they will guarantee the tuition for four years. Sometimes schools boost their tuition right before their announcement. Yes, it should apply to everyone who is accepted into the school. Of course, it pays to ask questions.

      Lynn O’Shaughnessy

  4. In the video, you mentioned a link to a Brookings Institute report on state university aid policies. I don’t see the link included–please help!