For most parents, figuring out a way to pay for their child’s college education can be a hair-raising ordeal. The ins and outs of the process, as well as the many different types of aid available, can be intimidating for anyone, let alone a parent trying to balance their child's college career with financial realities. Fortunately, there are literally thousands of financial aid sources out there for the people who are willing to search them out, and financial aid is available to millions of American families.

The financial aid program was designed to make up the difference between what families can afford and what it will cost to send their kid to the college. Wondering what's up with private lenders versus government grants? Here's what you need to know:  

  • Federal Aid Uncle Sam is the largest source of financial aid. Most of the federal aid is available through grant programs where you are awarded “free” money to apply toward tuition. Pell Grants are need-based grants funded by the federal government worth up to $2,340. Eligible students must be an undergraduate to receive a Pell Grant, and most of the aid is made available through the US Department of Education ( Supplemental Education Opportunity Grants are campus-based federal grants that are based on financial need and award up to $4,000 per year.
  • State Aid State funds for financial aid are also available and vary widely between the states, so it's best to contact your state’s education department to learn more.
  • Cash from Colleges School aid is also available directly from colleges in the form of need-based and non-need-based grants. Any amount of financial assistance provided to you by a college will depend on the individual school's policies. Contact the financial aid offices of the colleges your kid is interested in attending to learn more.
  • Private Aid Private sources of financial aid can come from community associations, businesses, interest groups, and other organizations. Funds from these sources generally come in the form of scholarships or loans. Many employers help put students through college through cooperative education programs or work study programs. Students alternate school semesters with work semesters or work part time during the school year. Not only does this opportunity provide for a chance to build your kid’s professional skills, but it also helps finance their education.
  • What About Loans? Federal student loans are another way to pay for college. Loans must be repaid with interest, but have options for deferment and favorable repayment terms which typically do not start until after graduation. These loans generally have low interest rates and are not based on your credit history. Many schools are now participating in the Federal Direct Loan Program where the schools rather than banks act as the lending institution and the federal government supplies the funds. Both subsidized and unsubsidized Stafford loans are available through both the Federal Family Education Loan Program and the Federal Direct Loan Program. The difference between the two is that the federal government pays the interest accrued on a subsidized Stafford Loan until a student graduates, but not on an unsubsidized loan. Federal Perkins Loans, however, are campus-based loans offering a low interest rate and available to undergraduate and graduate students who have financial need. The school acts as the lender but uses partial funds from the federal government to cover the funding of the loan.

No matter your family's financial situation, there's always a way to make college a reality for your children. It's just a matter of staying informed and being resourceful. Then all you'll have to do is say goodbye high school senior, hello college freshman!

David Rye is the author of "The Complete Idiot's Guide to Financial Aid for College."