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Californians have some of the best colleges in the country in-state, but we also have some of the highest-priced choices in our backyard.

With so many schools, it is important to understand options for financing your student’s degree.

Government aid: Both federal and state governments give aid based on data provided on the FAFSA. The Federal government awards grants and loans.Grants such as the Pell and FSEOG are based on financial need. Although the government determines your eligibility and amount, funds are dispersed by the school. There are four types of federal loans which have lower interest rates and repayment advantages compared to private loans. There is a maximum to the amount students can borrow each year. PLUS loans are available to parents to cover the difference in your unmet financial need, up to the institution’s cost of attendance.

In California, middle-income students may be awarded a Middle-Class Scholarship to UC or CSU, based on FAFSA information. This scholarship can vary from school to school. Residents also need to submit a GPA verification form senior year to the California Student Aid Commission to be eligible for the Cal Grant, which can be applied at UC, CSU, community college, and eligible private institutions.

Institutional aid–who gets it and how: Institutional aid is grant or scholarship money given by a college. It does not need to be repaid and is applied toward the cost of attendance after factoring in federal and state grants, and in some cases, your reported outside scholarships. Different colleges have different budgets and awarding formulas for institutional aid based on their enrollment goals, so the amount your student receives will vary. Colleges award aid based on financial need, merit, or a combination of both. The amount of aid offered is rarely reflective of your student’s achievements alone–colleges use institutional aid as a lever to enroll the students that best help them meet their enrollment targets.

Some colleges will be transparent with their merit awards (posting academic criteria on their website for scholarship tiers), and others evaluate holistically and make determinations behind the scenes. Some highly selective colleges in California do not offer merit-based awards, but commit to meeting your family’s full financial need if your student is admitted. Often, your FAFSA and admission file will serve as the application for institutional aid. However, in California, many private institutions also require the CSS Profile. UC and CSU institutions award very few merit scholarships (most aid comes from the government), and typically have supplemental application processes for named scholarships. I recommend keeping track of what is required for each school in terms of deadlines and materials.

It is important to check whether the institutional aid you are offered is renewable for four years, or if it is one-time. It’s also important to note that aid offered above the cost of tuition can be considered taxable.

Out of State Discounts: Californians are in high demand out of state. Because many UC and CSU campuses are impacted and there is more demand than space for students, public institutions out of state offer competitive rates to California residents. Some programs can be as high quality and as affordable, or cheaper, than options in the state, especially factoring in four-year graduation rates.

The most comprehensive program is the WUE tuition savings program, which can be applied at participating public schools in 15 states outside California. Tuition is capped at 150% of in-state rates. You need to meet the school’s admission criteria, apply by certain deadlines, and choose an eligible major. Some institutions are limited in how many WUE discounts they offer, so apply early to be competitive!

Outside Scholarships: Money your student earns through scholarship websites, essay contests, local employers, and grant programs are a great way to incrementally save for college. Helpful websites can guide your student’s search. This aid varies in the way it is dispersed. Sometimes the provider will pay you directly, and other times, the funds will be sent to your college of choice. It’s important to keep good records of awards you receive. colleges require you report outside scholarships and will subtract them from your cost of attendance. Get clarity directly from the financial aid offices about their processes.

Private Loans: Consider private loans for undergraduate education as a last resort, such as an unexpected extra semester. Interest rates on private loans are much higher than federal loans, and repayment terms can vary. If you go this route, borrow only what you need. With so many affordable options in California, including a robust community college system and transfer pathways, a quality education should be in reach for your family without a private loan.

Laura Reisert Kalinkewicz is a higher education professional with over a decade of experience. She oversaw undergraduate admissions at Pepperdine University and completed doctoral coursework at Azusa Pacific University. Her career has focused on counseling students, parents, colleges, and enterprise companies on admissions, financial aid, technology, talent, and workforce development. Visit Laura Reisert Kalinkewicz's profile.