Paying for College: How to fund the next few years of your life
So, you've made it through the college admissions process. Once all the celebrating comes to an end, it’s time to start planning how you’ll pay for your education. Before you start to stress, let’s review the steps you can take now to help ensure that financing your education is a breeze.
Savings
Before getting into the details of securing scholarships, financial aid, and more, let’s start with the trusty savings account. Did you know that the right savings account can help make your money work harder for you?
Look for a savings account that allows you to earn interest on your balance. Then, start setting aside a little cash into the account each month. Even a little bit can start to add up when you put compound interest to work for you. You can use money in your savings account for tuition or other expenses like books, meals and other expenses.
The FAFSA
The next thing you should do after opening a savings account is fill out your Free Application for Federal Student Aid (FAFSA). FAFSA holds the key to the largest source of scholarships, grants and other financial aid to help you pay for college based on your family’s financial position. Submitting a FAFSA is free and only takes a few days to process, but only 57% of graduating high school students completed the FAFSA in 2021, leaving billions in unclaimed aid.
FAFSA connects families with “need-based” financial aid, which can look different for everyone depending on their income and assets. Just remember, you’ll need to reapply for FAFSA annually to reevaluate how much financial aid you’ll be eligible for the following school year.
Non-Government Scholarships and Grants
You’d be surprised at the amount of free money out there available to college students, regardless of who you are, where you come from or what you plan to study. For example, there are even scholarships for people who are left-handed!
Whether at local, state or national level, there are tons of scholarships available from community organizations, professional associations, businesses and more. Many of these require students to complete an application, which may include a letter, essay or video. To find scholarships you may be eligible for, ask your guidance counselor at school and start searching online.
No scholarship is too small. While it may seem worthwhile to only apply for high-dollar scholarships, you will be competing against many applicants. You may have less competition for smaller dollar scholarships and they will get you closer to your goal. One good strategy is to apply to as many smaller-dollar scholarships as you can in addition to some with higher amounts, since the scholarships you do receive will add up in the long run.
Grants are a lot like scholarships in that they are essentially free money awarded to students typically by larger institutions and they don’t need to be paid back like a loan. Grants can be awarded for academic achievements, community service, musical or artistic talent and more. In addition to your own research, you can search your state through the U.S Department of Education.
Student Loans
While there are billions of dollars in financial aid, scholarships and grants out there, try not to be discouraged if you don’t receive as much as you had hoped. There are plenty of other ways to help you pay for college.
Undergraduate student loans provide you the peace of mind that your education is paid for while you’re working toward getting your degree. There are two types of loans: federal and private. Federal student loans are borrowed from the government and are repaid with interest, usually after a grace period following graduation. These loans are usually eligible for federal repayment plans based on your income or participation in public service professions. Often with federal loans, there is a lower loan amount limit, which means that you may need to cover the remaining balance. Other downsides to federal loans are possible origination fees and not being able to choose your loan servicer.
With private student loans from financial institutions like banks and credit unions, there are usually fewer upfront fees, generally lower interest rates and higher loan amounts are given. With private loans, interest rates can vary depending on your credit score, so before applying make sure to check your credit report and pay off as many outstanding debts as possible. Private loans, however, are not eligible for federal payment plans and other protections. The grace period before repayment may also differ from federal loans or be nonexistent.
Summary
When it comes to financing your education, you can pull together funding from multiple sources. These options include savings, FAFSA, scholarships, grants and student loans. There are tons of free resources available to students, including experts who can help you with everything from your college application to financial questions, to help guide you through the process.
Resources:
National Student Loan Data System
Allows you to look up information about your loans.
800.999.8219
Federal Student Aid Office
Gives information on loan repayment, forgiveness, deferral and forbearance.
800.433.3242
National Consumer Law Center’s Student Loan Borrowers Assistance Project
Lays out repayment options for borrowers.
www.studentloanborrowersassistance.org