Paying for college can be a major financial challenge for middle-income families who often earn too much to qualify for need-based aid but not enough to comfortably cover tuition and related expenses. As college costs continue to rise, these families must explore a variety of strategies — such as scholarships, tax credits, savings plans, and smart borrowing — to make higher education more affordable.
Keep reading to learn more on how middle-income families can afford college, including how financial aid works, how to calculate your need, and more.
Key Points
• Middle-class families often don’t earn enough to afford full college tuition but may qualify for significant need-based financial aid.
• Some private colleges are reducing their published tuition to reflect what students actually pay after aid.
• Published tuition costs have risen sharply, but the actual amount paid by students has decreased over the past decade.
• Understanding financial aid types and applying through FAFSA® are crucial steps for maximizing college funding.
• To pay for college, middle-class families can rely on cash savings, scholarships, grants, federal student loans, and private student loans.
Stuck in the Middle
When you look at published tuition numbers, the cost of higher education has been rising at an astonishing pace over the past 20 years. But the amount that students actually pay is less than it was a decade ago, according to the College Board’s Trends in College Pricing report.
For the 2024-25 school year, students enrolled in private nonprofit colleges paid tuition and fees of $16,510 on average. Yet the sticker price for those institutions was much higher: around $43,350. Similarly, in-state tuition and fees at a public four-year college or university averaged $2,480 for 2024-25, compared to the published price of $11,610.
Even with grants and other financial aid, many parents can’t afford the cost of college. At the same time, their earnings are too high to qualify for more need-based aid. College savings for kids can also be hampered by parents’ own federal and private student loans and other financial obligations, such as a mortgage or caring for aging grandparents.
If you’re feeling caught in the middle, know that resources are available to help make college tuition more affordable for your family. Here’s what to look for.
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The First Step: Understanding Financial Aid
To maximize the amount of tuition help you get, you need to know how and when to apply for financial aid, the different types of aid, and especially how schools award that aid.
Financial aid can come from federal and state governments, colleges, and private organizations. Some help comes in the form of loans, which have to be paid back. Grants, scholarships, and work-study programs do not have to be repaid.
Broadly, there are two types of financial aid: need-based and merit. Let’s take a closer look at both.
Need-Based Aid
Need-based aid is money students receive to help pay for college based on their financial situation.
How much need-based aid you get is largely determined by the information you submit on the Free Application for Federal Student Aid (FAFSA®). Aid provided by the state and your college or university is also largely determined by FAFSA information.
Federal need-based aid includes subsidized government loans, Pell Grants, and work-study programs.
There’s also need-based aid that colleges provide independently of federal financial aid. Many private colleges meet full financial need for admitted students without any loans. This aid is sometimes awarded to families with household incomes well over $100,000. Some colleges come very close to meeting full need, and many colleges will consider requests for more aid from admitted students.
Recommended: FAFSA Guide
How Colleges Calculate Your Need
Most colleges calculate aid based on the information you provide in the FAFSA each year. Factoring in your income and financial obligations, the government calculates your Student Aid Index, or SAI.
The SAI is the amount the government formula determines you can afford to pay for one year of college based on parent and student income, assets, number of dependents, number of children in college, and more. After you submit your FAFSA, you’ll see your SAI number in the confirmation email you receive.
Colleges use the SAI as a reference point, but are not obligated to stick to it. The colleges your student is accepted to may determine that your responsibility is higher than the SAI.
But need-based aid isn’t the only game in town. There’s also something called merit aid, or non-need aid, in the mix.
Merit-Based Aid
Merit aid consists of grants and scholarships that are awarded based on something other than financial need. It’s often given for academic, athletic, artistic, or other special interests. Merit aid does not need to be paid back, and it may or may not be renewed each year, depending on the award.
As you may guess, merit aid is far more subjective than need-based aid. During your student’s college search, it’s helpful to know these general trends in merit aid.
Which Schools Award Merit Aid?
Private and high-priced colleges usually award more merit aid than public state schools because of their larger endowments. One exception: Ivy League schools do not grant merit aid.
If your student plans to attend a public college or university out of state, you will likely face higher tuition. But attractive candidates may also be awarded more merit aid to help compensate for those extra costs.
Finally, state school honors programs can come with tuition discounts or academic scholarships.
Recommended: What a Merit Scholarship Is & How to Get One
What Is the Common Data Set and How Can You Use It?
One way to dispel the mystery around how colleges award financial aid is to understand the Common Data Set. The CDS is a standard set of data that schools collect about admissions, student demographics, faculty demographics, financial aid, academics, and campus life. Schools send the data to publications and organizations that rank colleges and universities.
The New York Times calls this data a “rich trove” about campus life and college finances. Most schools post their CDS on their website.
Not every school can meet every family’s full need for tuition. That’s where the CDS comes in: It can tell you how much need, on average, a school is able to meet and how many students receive need-based and merit aid. You and your student can then prioritize schools that either meet the most student need or award the most merit aid regardless of need.
How to Find the CDS
Most schools post their CDS data on their website. Often the best way to get to the data quickly is to type the name of the university and “Common Data Set” in your search engine. You’ll likely come up with a link to a PDF.
Try not to be overwhelmed by the length and less-than-reader-friendly format. As you scroll through, you’ll find lots of useful information on all aspects of admissions and campus life.
Why Some Schools Don’t Want You to See the CDS
You may discover in your search that some schools don’t post their CDS. That can be because they don’t want families to know they got a below-average aid offer, or they don’t want the public to know how many or few people are paying full price.
As efforts continue to encourage full disclosure and diversified, equitable student bodies across the country, the number of schools that don’t post this information is dwindling.
Other Ways Middle-Income Families Can Pay for College
Even as savvy parents exhaust all sources of need-based and merit aid, you may find that you’ll still have to pay for some college costs. Here are some additional resources that may be available.
Scholarships
Scholarships are available for all types of students in virtually every area of study. Scholarship money, which does not have to be paid back, can be found through nonprofit groups, corporations, state governments, and community organizations, to name just a few. Start your search with SoFi’s scholarship search tool.
Federal Grants
Types of federal grants include:
• Pell Grants. You do not have to pay back Pell Grants. They are awarded based on financial need to low-income families.
• Work-study grants. As the name implies, these grants allow students to work at various part-time jobs at or around campus. You do not pay federal taxes on earnings from work-study programs.
Federal Student Loans
Types of federal student loans include:
• Direct Subsidized Loans. The government pays the interest on Direct Subsidized Loans while you’re in school, during grace periods, and during periods of deferment. Interest rates are usually lower than private student loans, and there is usually a cap on how much you can borrow..
• Direct Unsubsidized Loans. Direct Unsubsidized Loans are not awarded based on financial need, but students with need often use them. Because the loan is “unsubsidized,” the principal will accrue interest while you’re in school. You may make interest-only payments during that time, but you’re not required to do so. If you don’t, the interest that accrued is added to the principal amount of your loan.
• Direct PLUS Loans. Direct PLUS Loans are fixed-interest rate loans available to parents of undergraduate, graduate, and professional degree students to help pay for tuition. They are not subsidized.
Private Student Loans
A private student loan is a type of education loan offered by banks, credit unions, or online lenders to help students pay for college-related expenses when federal aid and other funding sources are insufficient.
Unlike federal student loans, private loans typically require a credit check and may offer either fixed or variable interest rates, which are based on the borrower’s (or cosigner’s) creditworthiness. Repayment terms, interest rates, and borrower protections vary by lender, making it important to compare options carefully before borrowing.
Recommended: Private Student Loans vs Federal Student Loans
The Takeaway
Middle-class families can often feel “caught in the middle” of the college financing situation. They earn too much to qualify for enough need-based aid, but not enough to pay for all college costs.
To maximize your financial aid award, it helps to know how and when colleges award their aid. First, use the Common Data Set to help you prioritize schools that award more need-based or merit-based aid. Then, complete the FAFSA each year your student is in school. Also, make sure to search for state and private scholarships that are not tied to the FAFSA.
If you’ve exhausted all federal student aid options, no-fee private student loans from SoFi can help you pay for school. The online application process is easy, and you can see rates and terms in just minutes. Repayment plans are flexible, so you can find an option that works for your financial plan and budget.
FAQ
What income qualifies for need-based financial aid?
There’s no income cap for financial aid. Your need is determined by information you provide in the Free Application for Federal Student Aid (FAFSA) about your assets and financial obligations. Many families making six figures qualify for need-based aid.
What types of financial aid are available to middle-income families?
Middle-income families may access various forms of aid such as need-based grants, merit-based scholarships, work-study programs, federal student loans, and private student loans.
Are there specific strategies for middle-income families to reduce college costs?
Yes, strategies include considering in-state public colleges, utilizing community college pathways, and encouraging students to apply for a variety of scholarships and grants.
Photo credit: iStock/jacoblund
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