How to Pay for College

Paying for College

Funding College Education in 2022-23

College is one of the most exciting periods of your life. You get to meet new people, play sports, and obtain valuable education. But there are several obstacles to enrolling at the desired institution, one of which is college funding.
This article will help you solve this issue. But, first, we’ll explain how to obtain funding for college.

Best sources for college financial aid

College financial aid covers your higher education costs, such as tuition fees, books, transportation, and coursework supplies. There are various types of financial assistance from a wide array of sources, including state and federal agencies, foundations, corporations, and high schools. The amount you receive depends on institutional, state, and federal guidelines.

Regardless of the source, financial aid works according to the same principle. You must first apply for your assistance by answering questions to determine your ability to cover college expenses. You may also need to fill out other applications to obtain private financing or scholarships.

The institution awards the aid according to your application, and you can choose to accept or decline the offer. In addition, this is when you find out if you’ll need to pay back your loan.
Here are some of the best sources for college financial aid:

  • Federal and private loans
  • Scholarships
  • Grants
  • Work-study or other programs
  • Aid for military families
  • Aid for international study

FAFSA Student Loans

FAFSA student loans are one of the most popular ways of receiving funding for college. Schools use FAFSA (Free Application for Federal Student Aid) to set up their federal aid package for a year of studying. The package can include several types of aid, like college grants, work-study programs, federal loans, and state financial aid.

Applying for a FAFSA student loan requires you to complete a form. Doing so online is highly convenient and makes your search for funding much easier. Some of the information you need to present includes:

  • Your social security number and driver’s license.
  • Email addresses of your parents so they can provide their birthdates and social security numbers.
  • Permission from the family member who filed a tax return if you want to import the information from the IRS. If you don’t wish to import it, you’ll need to supply additional information:
  • Federal income tax return
  • Bank statements
  • Family investments (e.g., stocks, money market funds, and real estate)

There’s so much financial information involved because your EFC (Expected Family Contribution) needs to be determined. It’s a number your college uses to work out the amount of aid you’re entitled to. It’s calculated by considering a standard formula and your FAFSA information.

Other factors determining your eligibility include your year in college, COA (Cost of Attendance), the college you’re attending, and enrolment status. For example, if you’re enrolled for at least half a year, you can include books, tuition, transportation, and many other expenses in your COA.

Some colleges (primarily private institutions) use supplemental forms, such as the CSS (College Scholarship Service) profile. It establishes how their funds will be given out. It’s more detailed than your FAFSA and delves deeper into your finances. For example, it considers the value of your family home, grandparent-funded savings plan, or small business.

On top of that, you’ll need to pay a fee for submitting your CSS profile. The initial fee is $25, and each extra report costs $16.
The good news is that there are waivers. Undergraduate students whose family income is no higher than $100,000 can submit the form for free.
Visit this website to check out the colleges that require your CSS profile.

Other Student Loans for College

FAFSA student loans aren’t the only loan you can take out:

Federal Loans

FAFSA loans aren’t the only loans that can help you get funding for college. However, federal student loans are one of the best alternatives.

They have a fixed interest rate set on July 1 every year, which is secured throughout the life of your loan. The primary program for these loans is the direct program. It enables undergraduate students to borrow unsubsidized or subsidized loans (up to $31,000) if they’re dependent. If they’re independent, they can borrow more money (up to $57,000).

Federal student loans can be included in your college’s financial aid package. They have several benefits besides a fixed interest rate. Primarily, the government may pay back the interest if you’re eligible for financial need (the difference between cost and ability to pay).

But if you’re not entitled, you’ll need to repay the loan with interest. That’s why you should examine the terms carefully before borrowing money.
Additionally, you can expect a few requirements if you’re taking out a federal loan for the first time:

  • If you’re attending your freshman year, you’ll need to wait a month after the first day of the enrollment period to receive your money. This rule may not apply to your college, but you should check this with the financial aid office.
  • If you’re borrowing a direct unsubsidized or subsidized loan, you need to complete your entrance counseling. Otherwise, the college won’t be allowed to fund you.

Private Loans

Private loans are another popular method of college funding. Here are the main characteristics:

  • They’re credit-based: The lender approves your loan based on your creditworthiness (your willingness and ability to repay the loan).
  • Many factors affect the interest rate: Unlike federal loans, private student loans have varying interest rates. They’re determined by several factors, including your credit management and loan terms.
  • Various payment methods: Many institutions offer a wide range of payment options. For instance, you might be entitled to direct repayment while enrolled to help reduce the loan’s interest rate and total cost.
    One type of loan you may want to avoid when obtaining funding for college is a Direct PLUS loan. Here’s why:
  • In-depth credit check: If you don’t have any credit, your parents must be the co-signers. As a result, failure to repay the loan means that it defaults to your parents.
  • Higher interest rate: Direct PLUS loans have a 5.3% interest rate, making them more expensive than subsidized and unsubsidized types.
  • Extra fees: Like unsubsidized loans, direct PLUS loans charge interest from the outset. However, you’ll also need to pay an additional loan fee – about 4% of the amount borrowed.

Whether you apply for a federal or private loan, you’ll need to repay it even if you don’t graduate from college. Defaulting on your loan can negatively affect your credit rating and lower your chances of obtaining future loans.

Furthermore, make sure to monitor your loans if you’ve taken out two or more. List the types, interest rates, and principal balances. This information may help you consolidate the loans or explore an income-driven repayment plan.

Finally, always stay within your limits by borrowing a reasonable amount of money. To help you figure out how much you should borrow for college, head to the College Scorecard website. It can show you your potential salary after graduating from college to help prevent crippling debt.

Grants for College

The federal government offers another source of financial aid for college students – grants. Unlike loans, these usually don’t have to be paid back.
The ED (Department of Education) provides a bevy of grants to students enrolled in four-year colleges, community colleges, universities, or career schools.

There are two types of college grants:

  • Need-based grants: Institutions consider your economic situation to award these grants. As previously discussed, colleges generally consider your EFC to calculate the amount of aid you can receive. They also use FAFSA to obtain the necessary information.
  • Merit-based grants: Students are eligible for merit-based grants if they have admirable academic achievements, leadership skills, or commitment to community service. There are many factors in play and not just grades regarding academic achievements. Extra-curricular activities and outreach programs are also a huge plus.

In most cases, you don’t have to repay your grant. Still, there are some exceptions where you’ll need to return a part of the grant or the entire amount:

  • For example, you left the program prematurely.
  • Your enrollment status has changed and lowered your eligibility. For example, you may have switched from full-time to part-time enrollment.
  • You receive outside grants or scholarships that reduce the need for federal aid.
  • You receive a TEACH (Teacher Education Assistance for College and Higher Education) grant but failed to meet the requirements of the TEACH service obligation.

Apart from the federal government, grants can be issued by your college, state government, or nonprofit organization.

Applying for a Scholarship

Scholarships work like gifts – you don’t have to return them. You can choose from thousands of scholarships offered by colleges, individuals, private companies, employers, communities, professional organizations, and religious groups.

Some college scholarships are merit-based. They’re earned by meeting certain standards established by the institution providing the scholarship. Like grants, these are awarded according to your academic achievements, leadership skills, and special talents or interest. Other scholarships are awarded based on your financial need.

Many scholarships are designed for particular groups, such as graduate students or women. Some of them depend on you or your parents’ workplace and background. One of the most famous examples is scholarships for military families.

There are varying amounts obtained through scholarships. Some of them cover your entire tuition, while others are a one-time award of a few thousand dollars. Both types are worth considering because they help you lower the price of your studies.

You can dig deeper into your scholarships in many ways, including checking information online or in a library. You can also contact the financial aid personnel at the college you want to attend. Be sure the information and offer are legitimate. If you’re told you need to repay the scholarship, move on to another institution.

Here are some other free databases about scholarships:

  • State agencies
  • TRIO or high school counselor
  • Federal agencies
  • The Department of Labor
  • Foundations, local businesses, civic groups, and community organizations
  • Professional associations from your area of interest
  • Ethnicity-based organization
  • Your or your parent’s employer

How and When Do You Apply for a Scholarship?

Each scholarship has unique requirements. The easiest way to check them is to visit the relevant website. Then, read the conditions carefully, fill out any necessary forms, and submit the documents on time.

When it comes to the deadline, it also depends on your scholarships. Some institutions require you to apply a year before your college year starts. This means you should research and apply for a scholarship between your junior and senior years if you’re a high school student.
But even if you miss this window, don’t be discouraged. There should be many other scholarships you can apply for before enrolling in college.

Work-Study Programs

Federal work-study programs offer part-time jobs for graduate and undergraduate college students. They’re based on their financial need, enabling them to make money to cover education costs. In addition, these programs promote community work and jobs related to the student’s field of interest.

There are various types of jobs you can land under these programs. Most focus on civic education – theoretical, practical, and political aspects of being a citizen. They help you gain insight into your citizenship rights and responsibilities.

If you get a job on campus, you’ll most likely work for your college. Otherwise, your employers can be a nonprofit organization or public agency, where your job is geared toward looking after the public interest.

Some colleges have agreements with private business owners for work-study programs. These jobs are related to your studies, allowing you to make money and gain valuable practical knowledge. However, if you’re enrolled in a proprietary college, there might be restrictions on the jobs you can perform.

You can earn the amount of money in a work-study program that mustn’t be lower than the federal minimum wage. And you can make much more, depending on your work and skills necessary for your position.

Work-study awards depend on other factors, too:

  • The time of your application
  • Your financial need
  • Your college’s funding level

As for your payment scheme, it’s based on your status (whether you’re a graduate or undergraduate student). If you’re an undergraduate college student, you’re paid hourly. If you’re a professional or graduate student, you earn a salary, or you’re paid by the hour, depending on your work.

There are some commonalities between graduate and undergraduate students. Most notably, you must be paid at least once a month, and you must receive payments directly from your college.

The latter can be arranged differently. For example, you can request that the institution uses the earnings to cover tuition, room and board, fees, and other expenses.

Another thing to remember is that you can’t work as many hours as you want because your earnings mustn’t exceed the work-study award. So instead, your work hours will be assigned according to your academic progress and class schedules.

Financial Aid From College

Receiving financial aid from colleges isn’t standardized. The types of aid and requirements vary by institution. That said, all kinds of aid available from colleges have two common features. First, you need to complete your FAFSA form and apply to your school to obtain the necessary information.

Before applying for financial aid, consider contacting the college to inquire about possible grants and scholarships. You might be eligible for aid directly related to your specific major.
If your college accepts you, it will assemble a financial award letter based on your FAFSA. The letter tells you if your request has been granted and notifies you of the aid you’re entitled to.

In general, your college provides your loan money or grant in two or more payments (disbursements). They may send you the funds once per term (quarter, trimester, or semester). Colleges that don’t work under traditional terms usually send you money twice a year (at the beginning and midway through your academic program).
If your parent borrows a direct PLUS loan to pay for your college expenses, the funds are disbursed based on the same schedule.

Receiving Financial Aid for Course Materials

A common reason college students ask for financial aid from their college is to help cover the cost of course materials. There are many ways institutions can help their students in this regard. For instance, they may offer a bookstore voucher or send money directly.

If they opt for the latter, you might not use all the funds received from your college. Some of the money is used to cover your fees, tuition, or other school charges. This leftover amount is known as your credit balance. If you have one, your college must disburse it to you unless you authorize the institution to use the funds to cover future charges.

The amount of financial aid your college needs to provide differs. It’s either the same amount as your credit balance or the money necessary for supplies and books, whichever is lower. But, again, the financial office can tell you if this applies to your college.

The college must provide flexibility in its arrangement regardless of the type of aid (vouchers or direct funds). For instance, if their preferred method is to give vouchers, you must be allowed to opt out of the agreement. They should let you receive a check and obtain the supplies by yourself unless one of these exceptions applies:

  • The college can demonstrate compelling safety and health reasons for acquiring the course materials through their departments or suppliers.
  • The college can demonstrate the materials aren’t available elsewhere or accessible to you via other channels.

Here are a few other cost-effective options for your course materials:

  • Rent textbooks online or from a bookstore.
  • Leverage open-access texts and online content available on the website of your college.
  • If your college runs paid online courses, it might have negotiated more affordable access. It may also feature convenient study tools.

Emergency Financial Aid Grants (Coronavirus)

The coronavirus pandemic has made studying harder than ever. The government recognizes this need, offering various types of financial aid, including emergency grants.

Billions of dollars have been provided for emergency grants for career schools and college students. If your institution participates in this program, you might be entitled to aid covering your expenses, such as disrupted campus operations. In addition, it can help cover eligible costs, including housing, food, course materials, healthcare, childcare, and technology.

Emergency grants are paid in cash, enabling you to use them at your discretion and cover necessary expenses. Your college shouldn’t transfer the funds to your account without your authorization. They shouldn’t subtract the grant from your financial aid award or eligibility, either. Besides cash, payment methods include pre-paid cards and other electronic means.
Keep in mind that your college may not disburse funds to all students. It might have developed unique criteria for determining who can receive an emergency grant. If so, the management needs to disclose the necessary information on their website:

  • The way they’re distributing the funds
  • The number of students receiving the grant
  • The amount of money students will receive.

Emergency grants aren’t the only type of financial aid developed to respond to the pandemic. Many other options can help you with your funding for college:

Financial Aid Adjustments

Even though colleges aren’t obligated to adjust your federal financial aid award, they can consider special circumstances. Numerous pandemic-related problems may have arisen, meaning your FAFSA form is no longer accurate:

  • Layoff
  • Fewer hours worked
  • Severe illness that reduced your income and increased medical expenses
  • Death of a family member
  • Income from alimony, rental property, or court settlement that’s no longer available

If your financial situation has changed due to these events, you might be eligible for a financial aid adjustment. In this case, you’ll need to complete your FAFSA application questions about your income and tax returns. Then, submit the form and contact the college to discuss the difference in your financial situation. Don’t forget that the college’s decision is final – you can’t appeal to the Department of Education.

Restoring Loan and Grant Eligibility

If your college establishes that the coronavirus made you withdraw, you may not have to return the student aid received during the school term. Plus, the funds obtained during the period might not affect your loan or grant limit amounts. Contact your financial aid office to determine if you can restore your grant and loan eligibility.

0% Interest Period

In March of 2020, the Department of Education temporarily set the interest rates for student loans at 0%. This change benefits students who’ve taken out a direct unsubsidized loan, which typically accrues interest throughout their studies. The interest rate will be frozen until May 1, 2022.

If you can make payments in this period, you’ll pay off any loans faster and lower the total cost. But first, you’ll need to figure out if you’re eligible:

  • Navigate to the StudentAid dashboard.
  • Choose the “View Details” option.
  • Find your “Loan Breakdown” field. If the Department of Education is the lender, you’ll see the “DEPT OF ED” next to your loan. This means they’re subject to the 0% interest rate.

Once this interest period ends, you’ll continue to repay your loan under the regular interest rate. It’s based on your initial agreement when your funds were first paid out.

Discounts on Internet Services for Pell Grant Borrowers

The FCC (Federal Communications Commission) developed a convenient emergency program for students who’ve received the Pell Grant. It offers monthly discounts on broadband internet services. Here’s what it includes:

  • Discount of up to $50 per month on broadband internet services and associated equipment (modems)
  • Discount of up to $75 per month if you live in a qualifying Tribal land
  • One-off discount of up to $100 for a tablet, desktop computer, or laptop (with co-payments of $10-$50)
  • You can only apply for one discount and device per household. Use Funding for College to Achieve Your Dreams More easily even if you’re gifted and willing to learn more, you may not be able to afford to enroll at your favored college. But don’t give up just yet. We’ve presented you with a large number of ways to receive your funding for college. After that, it’s up to you to determine the most suitable finance method and figure out what you’re eligible for. Don’t forget that each means of funding affects your financial aid award, and you can’t exceed the limit. You also want to be reasonable when borrowing money. The last thing you need is enormous debt after your studies that will take decades to pay back.