After submitting college applications and celebrating your acceptance letters, it’s time to answer the big question – how will I pay for college?
Fortunately, there are a variety of alternatives for paying for college. It’s an important investment, and there are significant considerations when evaluating various forms of financial aid.
Types of Financial Aid
School based scholarships and grants – let’s face it, “University X” is lucky to have you as an applicant! They know you have worked hard throughout your academic career, applied yourself in extra curricular activities, and exhibited great leadership characteristics (your college application said so!). They understand that you are a competitive applicant and have your pick of colleges to attend next year. As such, many colleges and universities will sweeten their deal by offering school based grants and scholarships. This is usually provided in the form of a discount off tuition, room and board, and other invectives. All of these awards can add up to big money, and they represent the first and in many cases, largest “discount” off of your education. Congratulations – your hard work is already paying off!
Employer tuition credits and reimbursement plans – Many employers are motivated to invest in their employee’s education and training. As such, employers setup tuition assistance or reimbursement plans which can help offset the cost of higher education. Some employer plans are more generous than other. For example, if the student is a minor and their parents work for a University, it is likely that the University will wave some or all of the tuition for the minor to attend that college! This applies to state universities as well as private universities such as Grand Canyon University. If you are a minor, be sure to find out if your parents have such a plan at their place of work. Of course, tuition assistance and reimbursement plans are not restricted to colleges and universities! Chances are, your parent’s company (or the company you work for!) have similar plans that will help to pay for college. It’s best to understand what these plans cover before seeking out additional sources of aid.
Corporate, government, and other scholarships – Beyond the scholarships and grants your college or university may have offered, there are literally thousands of other scholarship and grant opportunities out there for you to use to pay for college. You’re reading this on an informational website about the Burger King Scholarship, and that’s a great scholarship to start with. Complete your application now that you’ve recovered from your college applications! In a short period of time, you can submit your application and become eligible for one of several awards that the Burger King foundation gives to deserving college students. Awards for the Burger King Scholarship range from $1,000 (awarded to over 500 applicants in recent years) to $5,000 and even 3 $50,000 awards for those students who demonstrated not only high academic achievement, but also demonstrated great leadership potential. Some corporate scholarships like the one from Burger King take financial need into consideration. Financial need is calculated by various methods depending on the purpose and organization. The Department of Education (DOE) prescribes one method for calculating financial need for the purpose of awarding financial aid, especially Pell Grants and federally guaranteed student loans. Many organizations have adopted the DOE’s method for calculating financial need as their own standard. Other organizations such as the Families of Freedom Scholarship Fund which provides academic financial assistance to families of victims of the 9/11 terrorist attacks, excludes certain elements of financial assets in their calculation of financial need. It’s important to read through the qualifications for each scholarship for which you plan to apply.
Family Gifts and other Assistance – After considering school based aid, employer contribution and scholarships, it’s time to consider what financial assistance may be available from parents or other relatives. Perhaps your parents set up a “529 plan” which is a type of college savings account. Parents and other relatives are often very supportive and willing to help you achieve your higher education goals. As such, often times family members are willing to contribute to your schooling.
Federal student loans – Once you have exhausted all other sources of funding for your college education – scholarships, grants, and college savings – it may be time to turn to federal student loan program. Federal student loans are based on a variety of factors including financial need. The advantages of a federal loan is that they are highly regulated, payments are usually deferred until after college, and they are relatively easy to come by. The disadvantage, of course, is that as with any loan, federal student loans will continue to accrue interest (interest will be added to the loan balance) throughout the deferment time period while you’re in school. This will cause your loan balance to increase beyond the initial amount you used to pay for school. As a result, most people with federal student loans end up paying off those loans for years after their graduation. This can impact their quality of life later on, of course, because money that could go to other things such as food, clothing, and housing ends up being paid back to the student loan program. Still, for those who need extra funds for college, the federal financial aid is a Godsend and can help students achieve their educational goals. The best way to get value from the federal student loan program is to minimize the amount borrowed, complete school as efficiently as possible (i.e. don’t waste money on extraneous courses that are not required for your degree), and focus on achieving your career goals in order to maximize your income and repay your loans as quickly as possible.
Private student loans – Most students are able to pay for college using the funding sources listed above. However, if you’re in the rare circumstance where you need more cash for college, private student loans may be an alternative. Similar to federal student loans, private loans defer payments until after graduation, however, the interest rate may be higher than federally guaranteed loans making the total cost of borrowing higher. For those who need it, private student loans are helpful, but it’s important to weigh the costs and use them as only a last resort.
Best of luck in your studies!