In his speech last week, Obama stated, “No one should go broke because they choose to go to college.” This line received bipartisan applause from the House chamber. Obama was referring in part to plan which is intended to give relief to college graduates in low-paying jobs to work off their debt.

The statement from Obama that Monday was an acknowledgment that college tuition and fees have gone through the roof. Because of this bad economic time, college-saving accounts have toppled and government funding has dried up. And as if things weren’t already bad enough, supplemental work for students or part-time jobs for them has also dried up as older and more experienced competitors who were laid off from career-track jobs are accepting minimum-wage jobs just to survive.

Moreover, it is also difficult for colleges to offer grants and scholarships because college endowments continue to shrink. All this lead to more and more difficulties for students to obtain financial aid for their education.

So how where can you find financial aid for your education? Here are 5 tips for you:

1. Scholarships, need-based grants and loans.

The Department of Education accepts application for scholarships, need-based grants and loans on January 1 every year. You can fill out their form at their website Fafsa.ed.gov. If you have already filled out this kind of forms the previous year, you can always renew it by giving information on taxes and savings which must be updated annually.

Besides the FAFSA, the most common need-based grants and loan program is the Stafford loans which has almost better terms than any private loan for students. Under Obama’s new plan, the interest rate of subsidized Stafford loans will decline from 5.6% to 3.4% by the end of the 2011-2012 academic year.

The unsubsidized loans increase the limits of loans for freshman year to $5,500 (previously $3,500), for sophomore year $6,500 (previously $4,500) and the years thereafter to $7,500 (previously $5,500).

2. Low interest loan.

Another option is to get up to $4,000 a year student loan with low interest. Perkins loans’ fixed interest rate is 5% with the period of 10-year repayment plan. Borrowers are required to start repayment in the 10th month after they graduate or withdraw from college or fall below-half time student status. For more information about Perkins loan program, download this pdf file. Under Obama’s proposed 2010 budget, this financial aid is increased from $1 billion a year to $6 billion.

4. Scholarships

You may think that only those who have 4.0 GPA are the ones eligible for scholarship. Fortunately it doesn’t always have to be that way. If you go and search their database for college scholarships you will be able to find something where you too are eligible for a scholarship.

5. Private Loans

This option should be your last reserve. Currently banks require a high level of credit scores which is betwee 680 – 730, whereas before the credit crunch, people with a credit score as low as 620 are able to obtain a private loan.

No matter how many alternatives you have to finance your education, it is important to keep in mind to first of all exhaust your options first before finally going into debt in order to gain higher education. Try getting a scholarship and grants first, exhaust the limit of these funds if you can obtain it, and then apply for a loan if you need more financial aid.

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