Paying For College

How to pay for college

The affordability of Post-Secondary Education continues to be on the rise. According to the National Center for Education Statistics, the yearly cost to attend 2-year or 4-year institutions has increased approximately 5 percent annually. Unfortunately, students and their families face the daunting task of finding a way to pay for these increases in educational costs. Even the students whose parents decided to do a pre-paid college plan or college fund might still face challenges with the steady increases in the cost of receiving advanced education. Once the typical student decides to attend higher education, applies to an institution and is accepted, he/she begins to ponder how they will afford the cost. Grants, Scholarships, and Students Loans are three major forms used by students to pay for higher education. In this article I will explore the different options to pay for college and provide advice on the options available.

Grants

This is the best option when it comes to paying for college. Grants are considered "free money" because they are given to a student for tuition but repayment is not required. Grants are often need-based, so the criteria for receiving a grant are derived from your parents’ financial status. Institutions determine your need by using the Free Application for Federal Student Aid (FAFSA), so completion of the application is mandatory for every student. Although most financial aid offices and the federal government do not place an emphasis on completing the FAFSA as soon as possible, early submission is the key to receiving the highest possible aid. Since grants are mostly need-based and the criteria are not particularly difficult to meet, money gets allocated early on and available funds decrease over time. Everyone who is eligible receives money, but the goal is to receive the maximum amount at your institution.

One of the most common grants given to students that fill out the FAFSA and considered to have financial need is the Federal Pell Grant. The Federal Pell Grant is awarded to students that have not obtained a bachelor's degree. Of course the Federal Pell Grant has a maximum allotment a student can receive, set by the Federal Government. The maximum amount set for the 2015-16 school year is $5,775 for the year. The amount you can receive is affected by your enrollment status (full-time, part time), cost of attendance, attendance for academic year, and financial need. Financial need is calculated by using the difference between Cost of Attendance (COA) at a school and your Expected Family Contribution (EOC). If your EOC equals zero and you fill out the FAFSA early you’re likely to receive the maximum amount. Recently, the federal government added a stipulation that sets your EOC to zero automatically: if your parent or guardian served in the U.S. Armed Forces and died in military service performed in Iraq or Afghanistan after 9/11 and at the time of your parent's or guardian's death you were less than 24 years old or enrolled in higher education at least part time. One of the benefits of the Federal Pell Grant is that its award amount is not affected by the amount of any other student aid for which you qualify. Meaning that in addition to the Federal Pell Grant a student can be awarded other grants to help pay for their education.

One such grant that can be awarded in conjunction with the Federal Pell Grant is the Federal Supplemental Educational Opportunity Grant (FSEOG). Students who receive the Federal Pell Grant and have the most financial need will receive the FSEOG funds first. The major difference between the Pell Grant and the FSEOG is that this program is administered directly by the financial aid office at each participating institution. It is imperative for you to first check with the financial aid office of the school you plan to attend to see if they participate in the program. Even though the maximum amount a student can be awarded annually is $4,000, many factors play a part in you receiving that amount; your financial need, when you apply, the amount of other aid you get, and the availability of the funds at your school. Once again the main document used to determine your eligibility is the FAFSA. If your school participates, each year their FSEOG fund receives an allotted amount from the U.S. Department of Education. Your school then awards those funds to students with financial need. Once all funds are allocated, that will be it for the entire year.

I have so far mentioned two grants that are based on financial need and there is no obligation attached to receiving the funds other than filling out the FAFSA form and attending higher education. The Teacher Education Assistance for College and Higher Education (TEACH) Grant works differently. The difference between the TEACH Grant and the Pell Grant is this grant requires that you take certain kinds of classes in order to get it, and then actually teach in a certain subject area. The penalty for not fulfilling your obligation is that the grant turns into a loan and once deemed as loan you will be obligated to pay interest on the money borrowed from the initial award date. In light of this steep penalty, I suggest you only decide to pursue this grant if you intend to fulfill the requirements set forth. The TEACH Grant program provides up to $4,000 a year to its participants. If you decide to accept the TEACH Grant you will have to sign an agreement at the financial aid office and attend a counseling briefing making you aware of the requirements set forth each year. Among the many requirements to receive this grant is the condition that you work in a high-need field at an elementary, secondary, or educational service agency that serves students from low-income families for at least four academic years within the first eight years after receiving your degree. The school also sets academic achievement requirements to this grant but to get the specifics on these requirements you should contact your specific financial aid office.

The last grant that I will discuss is the Iraq and Afghanistan Service Grant. This service grant ties into the Pell Grant, because you may be eligible to receive it if you're not eligible for a Federal Pell Grant on the basis of your EOC, but meet the remaining Federal eligibility requirements and your parent or guardian was a service member and died in Iraq or Afghanistan after 9/11 and you were 24 years old or enrolled at least part time at the time of their death. The maximum grant awarded is equal to the amount of a maximum Federal Pell Grant for the award year but cannot exceed your cost of attendance.

Scholarships

When people think about attending higher education and start exploring options of paying for college with their families, scholarships are usually at the top of the list. Scholarships are another form of aid that is considered "free money" so they are definitely worth pursuing. The major difference between grants and scholarships is that scholarships tend to be merit-based unlike grants which are need-based. Some institutions offer scholarships that are based on both need and merit but usually they attach requirements such as maintaining a minimum GPA to retain eligibility. Unlike grants, scholarships tend to come in all shapes and sizes just like people. The variety of scholarships available to any particular student is dependent upon the student’s factors ranging from a certain G.P.A or future degree to ethnicity or gender. With all the variety of scholarships available, you have to expand your approach to searching. Many students tend to seek out the larger scholarships such as full academic or athletic scholarships, completely missing the smaller demographic ones. Collecting many little scholarships can add up to cover your higher education costs.

Finding and applying for scholarships can be difficult and stressful, especially when the major component in receiving one is writing a sufficient essay. The great news is that you can typically reuse the main parts of your essay for one scholarship application on another, because the essay topics are usually similar. The trick in applying for these scholarships is doing the work early in regards to finding the most possible scholarships available to you and keeping track of all the info needed during the application process. Unlike when filling out a FAFSA, it is unlikely that a scholarship provider will track you down for information that is not submitted. Instead it's normal practice for the application to find itself in the trash.

When looking for a scholarship the typical place to start is with your guidance counselor of your high school, but I urge you to not stop at that destination because if you do you will miss out on a multitude of opportunities. The next step would be to contact the financial aid office of the institution you plan on attending. Some colleges are starting put more information on their websites about available scholarships awarded at their institution. Furthermore, some of the best places that are sometimes overlooked by many candidates are local businesses in the community. While they may not give large awards, picking up a couple hundred dollars toward your education from a few sources can add up to a significant amount of aid and hopefully prevent you from having to seek loans.

Student Loans

We all dread this phrase when we look into paying for college because we all know we will have to pay back the money borrowed and in most cases it will include interest. Now there are some loans that are better than others, even though we want to avoid loans as far as possible. Though sometimes it becomes a necessity to receive them, loans should be the last ditch effort on your behalf to get all your financial needs meet. I will explore the different loans that are available to most people and give you advice on the better options.

The three types of loans that are most popular amongst students are federal subsidized, federal unsubsidized and private loans. If you are stuck with feeling you need to accept a loan for college, the one you most want to seek is the federal subsidized loan such as the subsidized Federal Stafford Loan and the Federal Perkins Loan. These loans are based on financial need are the most desirable loan option because the federal government pays the interest on the loan during the periods that you are considered to be in deferment: when you’re still attending school and taking the required credit hours or for a grace period just after graduation. Also, you might be awarded deferment due to financial hardship. The second best loan option is the unsubsidized loan. The federal unsubsidized loan works similar to the subsidized loan except that they are not need-based and the interest incurred during the time in school is attached to loan, which means that amount becomes your responsibility. Subsidized and unsubsidized loans may differ in other ways as well, such as differences in interest rates and loan limits. A private loan should be your very last resort as they can carry higher interest rates, don't typically provide deferment and almost always require a cosigner. There are quite a few creditors that offer private student loans including most banks and credit unions. Popular options include Sallie Mae and a good play to start when searching is the SimpleTuition website.

Work-Study Program

The work study program is provided by most colleges and it has its pros and cons. The best thing about the work study program is that the financial aid office awards you money that is put into account for you. The stipulation is that you find an approved campus job. What the financial aid office will often not share with you is that some jobs on campus make more than others because they work on a technical pay grade. If you are taking classes towards a medical degree and thus have the required skills, working in a science lab as an assistant would pay more than a clerical job. Another great thing about work-study is that you might be able to land a job that aligns with your degree which can help you explore your career options, leading to future employment after you graduate. Since work-study does not pull from the department’s financial budget, depending on the employer you tend to be given some leniency with studying at work and getting time off. The disadvantage is that students are limited in how much they can earn each year.

Helpful financial aid tips

The best thing to do is to complete your FAFSA as soon as possible and contact your financial aid office to ask about grants that may be available to you and their additional requirements. Here’s a tip that comes from personal experience: don’t wait on the completion of the current year’s tax return to fill out your FAFSA application. Even though I needed the tax return for my application to be complete, I would submit my FAFSA with a "guestimation" based on the previous year’s tax return. Once the current tax returns were done, it was easy for me to submit them and adjust the numbers on my FAFSA. Using this trick, I noticed an increase in my award amount. Awards are never guaranteed but the goal is to give yourself the best chance at receiving the most "free money” possible!

I encourage you not to be too critical on the requirements when deciding for which private scholarships to apply. In my experience they tend to put more weight on the essay and my motto is “what can it really hurt?” The most you lose by applying is a stamp and paper, but the potential gain is worth it even if you receive a scholarship for a hundred dollars. One of the drawbacks of receiving third-party scholarships is that they could decrease the amount of aid you can receive from other sources say for instance that the college applies the award to your account in such a way that it decreases your eligibility for loans and work-study programs.

Lastly, if obtaining grants and scholarships didn’t work out for you, I suggest that turn down loans as much as possible when you’re looking at paying for college and instead try asking your financial aid officer to increase your work-study allotment for the year. Maintaining a job while enrolled in college courses may seem daunting but it is a lot less so than being faced with repayment of thousands of dollars in student loans.

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