Ways To Pay For College
Thank you for choosing Higher Calling as your source to learn how to pay for college. There are hundreds of financial aid sites giving you information and links to lenders. They're not always accurate and some don't have a true connection with clients. I'll try to check each link before publishing, but let me know if you find something that is not right.
When families are paying 35% or more of their annual incomes for their students to attend public college in Illinois, New Jersey, and Pennsylvania (see chart), it's important to understand the cost of higher education (Hechinger Report).
COST OF ATTENDANCE
Many news outlets discuss the cost of college using ONLY tuition. You should know that the annual cost of attendance (COA) includes room, board, fees, transportation, books and tuition.
The average bachelor's degree is 120 credit hours and the average cost per credit hour is $594. This means the average tuition is $71,280. Since you also need to consider room, board, fees, transportation and books, you need to know what resources are available to you.
Every student is eligible for some form of financial student aid (merit aid, scholarships, grants, loans). To get started, this infographic will help you determine your eligibility for federal student aid.
FEDERAL AID RESOURCES
FAFSA – Free Application for Federal Student Aid - You will complete this form beginning October 1 (for free) during your senior year of high school and every year you are in college (watch this how-to video). You will use your most recently completed IRS tax information to receive your Student Aid Report (SAR). Your SAR will let you know if you qualify for grants (need-based aid) and let you know which government loans you're eligible to receive. Lynn O'Shaughnessy shared that grants come from the federal government (44%), colleges (36%), state government (9%), and private sources (6%).
Federal Student Aid – U.S. Department of Education - This official government site will guide you through the financial aid process including budgeting, managing student loans, responsible borrowing, and repayments.
College Scorecard - Online college comparison tool, with data on costs, graduation rates, debt, post-college earnings, etc.
U.S. Department of Veterans Affairs - If you or your parents are veterans, you can get specific information here. Thank you for your service to our country!
Check out this video about renewing Financial Aid from UMASS Boston.
STATE AID RESOURCES
A report by the Knight Commission revealed that the top college football programs are spending more than $200,000 per player! Since public universities receive a large bulk of their support from state tax dollars, they have to decide where to invest those dollars. As a whole, athletic programs do not generate a profit. So to counterbalance athletics, students are charged more for tuition and fees. This makes it tough for students who need help to pay for college - even at an inexpensive public university!
Students who are not eligible to receive federal financial aid, may qualify for financial aid from your state. Use this resource to contact your state grant agency. Check with your state's higher education website for information regarding state resources.
Parents with younger students would benefit the most from a college savings plan. Learn about the 529 College Savings Plans in your state.
TIPS TO ACCEPTING (and USING) FINANCIAL AID
Student Aid shares how to accept financial aid (free, earned, borrowed) when preparing paying for college. Read the three tips and the descriptions below.
First, accept free money (merit aid, scholarships, grants).
MERIT AID
The best way to pay for college is with merit aid! Merit aid is distributed by each college based on your academic performance in high school (GPA) and on your standardized tests (SAT, ACT). Improve your scores to qualify for more merit aid using test prep and tutoring! What are you waiting for?
The Domestic Undergraduate Need-Based Aid and Merit Aid chart by Jennie Kent and Jeff Levy from EducateAbroad (2017) shows you how each college distributes merit aid. Public schools offer around $5,000 in merit aid while private schools offer around $15,000. Actual aid is determined by the individual college based on the students GPA, test scores, and other factors (in some cases).
SCHOLARSHIPS
Don't fall in the "guaranteed trap!" Authentic scholarship search websites will not guarantee a scholarship since the winners could be selected at random, be 1 of 14,542 entries, or by popular vote of students with curly hair. They will not charge you an entry fee for a scholarship search. They do not have exclusive rights or secret money left by your ancestors in a cave.
So finding and applying for scholarships is your responsibility. Through your junior year, bookmark and save the scholarships you want to apply to as a senior. Then you can work toward meeting the recommendations. Christopher Penn, Chief Media Officer of Edvisors, recommends that you "set your expectations by the rule of 10 - for every scholarship you are awarded, you have to apply for 10. For every scholarship you qualify and apply for, you'll need to research 10 opportunities." So starting in August of your senior year, apply for 3-5 scholarships a week. Consider this a part-time job. When you are awarded a $500 that you spent a few hours applying for, you just saved 50 hours of real work! So don't overlook or dismiss the small dollar offers.
With so many scholarship search engines available, start with CareerOneStop, Scholar Snapp, Scholly, Student Scholarship Search, Chegg, Cappex, Fastweb, and FinAid. You'll need to create a profile but the search is free (Scholly has a small fee). Some will offer scholarships that may not be listed on another site. Some will sell your personal information, so read the fine print. You can also search for scholarship opportunities on a general search engine (Yahoo, Bing, Google) and social media (Twitter, Facebook, Tumblr, Pinterest).
GRANTS
While some colleges have grants, there are typically two types of federal grants: the Pell Grant and the TEACH Grant. Similar to scholarships, grants are one-time offers that must be renewed.
Some students qualify for Pell Grants. Federal Pell Grants usually are awarded only to undergraduate students who display exceptional financial need and have not earned a bachelor's, graduate, or professional degree.
A Teacher Education Assistance for College and Higher Education (TEACH) Grant is different from other federal student grants because it requires you to take certain kinds of classes in order to get the grant, and then do a certain kind of job to keep the grant from turning into a loan.
You can search using many scholarship categories: academic, athletic, institutional, private, local, and regional. For more ideas, read my blog about finding obscure scholarships.
Next, accept earned money (work study).
WORK STUDY
Some students are given the opportunity to participate in work study through the college. This allows you to work on campus for a designated amount of money. If you marked work study on your FAFSA, it should be a part of your award package. When you register for college, visit your school’s financial aid office and sign up. Don’t procrastinate. The best jobs fill up quickly. Some jobs give you the opportunity to work in your field of study; many are in service areas such as at the library, in the cafeteria, or admission office.
BONUS EARNED MONEY TIP: Learn how to become a Resident Assistant (RA). Colleges will compensate you (including free room costs!) to live and work on campus.
Last, accept borrowed money (loans).
LOANS
In 2010, Consumer Finance reported that, 67% of bachelor's degree recipients used loans to pay for their education. Loans don't have to be a part of financial aid. Loans help you fill in the gap of your need-based aid and merit-based aid. But you need to consider them a temporary solution that is repaid quickly. To read more about student loan statistics, visit Student Loan Hero.
There are many loan sources: institutional, federal student, federal parent, state, and private educational loans. Federal Loans include: Federal Perkins Loan (<$5,500), Direct Subsidized Stafford Loan ($3,500-5,500 - no charged interest while in school), Direct Unsubsidized Stafford Loan ($6,000-20,500 - interest charged while in school, begin payments immediately), Direct PLUS Loan for parents (up to yearly cost of attendance - begin payments immediately). You should also use this loan calculator to estimate your potential repayment schedule.
Consider federal loans first before selecting state loans, institutional (college) loans or private loans. And read the fine print!
Two companies that provide information about private financial aid loans are Edvisors and College Raptor.
REPAYMENT PLANS
Income-driven repayment plans – like Income-Based Repayment, Pay As You Earn, and Revised Pay As You Earn – cap your federal student loan payments at a percentage of your income.
One more tip, learn how to set up (and use) a budget.
BUDGETING
You may not have considered budgeting for college yet. Some families work with a financial adviser, local banker, or software to create a budget. Here are a few tools that will help you think through the college budgeting process.
When families are paying 35% or more of their annual incomes for their students to attend public college in Illinois, New Jersey, and Pennsylvania (see chart), it's important to understand the cost of higher education (Hechinger Report).
COST OF ATTENDANCE
Many news outlets discuss the cost of college using ONLY tuition. You should know that the annual cost of attendance (COA) includes room, board, fees, transportation, books and tuition.
- Public (4 year) = $21,617 (2017) with a projected increase to $30,742 (2025)
- Private (4 year) = $47,716 (2017) with a projected increase to $65,302 (2025)
The average bachelor's degree is 120 credit hours and the average cost per credit hour is $594. This means the average tuition is $71,280. Since you also need to consider room, board, fees, transportation and books, you need to know what resources are available to you.
Every student is eligible for some form of financial student aid (merit aid, scholarships, grants, loans). To get started, this infographic will help you determine your eligibility for federal student aid.
FEDERAL AID RESOURCES
FAFSA – Free Application for Federal Student Aid - You will complete this form beginning October 1 (for free) during your senior year of high school and every year you are in college (watch this how-to video). You will use your most recently completed IRS tax information to receive your Student Aid Report (SAR). Your SAR will let you know if you qualify for grants (need-based aid) and let you know which government loans you're eligible to receive. Lynn O'Shaughnessy shared that grants come from the federal government (44%), colleges (36%), state government (9%), and private sources (6%).
Federal Student Aid – U.S. Department of Education - This official government site will guide you through the financial aid process including budgeting, managing student loans, responsible borrowing, and repayments.
College Scorecard - Online college comparison tool, with data on costs, graduation rates, debt, post-college earnings, etc.
U.S. Department of Veterans Affairs - If you or your parents are veterans, you can get specific information here. Thank you for your service to our country!
Check out this video about renewing Financial Aid from UMASS Boston.
STATE AID RESOURCES
A report by the Knight Commission revealed that the top college football programs are spending more than $200,000 per player! Since public universities receive a large bulk of their support from state tax dollars, they have to decide where to invest those dollars. As a whole, athletic programs do not generate a profit. So to counterbalance athletics, students are charged more for tuition and fees. This makes it tough for students who need help to pay for college - even at an inexpensive public university!
Students who are not eligible to receive federal financial aid, may qualify for financial aid from your state. Use this resource to contact your state grant agency. Check with your state's higher education website for information regarding state resources.
Parents with younger students would benefit the most from a college savings plan. Learn about the 529 College Savings Plans in your state.
TIPS TO ACCEPTING (and USING) FINANCIAL AID
Student Aid shares how to accept financial aid (free, earned, borrowed) when preparing paying for college. Read the three tips and the descriptions below.
First, accept free money (merit aid, scholarships, grants).
MERIT AID
The best way to pay for college is with merit aid! Merit aid is distributed by each college based on your academic performance in high school (GPA) and on your standardized tests (SAT, ACT). Improve your scores to qualify for more merit aid using test prep and tutoring! What are you waiting for?
The Domestic Undergraduate Need-Based Aid and Merit Aid chart by Jennie Kent and Jeff Levy from EducateAbroad (2017) shows you how each college distributes merit aid. Public schools offer around $5,000 in merit aid while private schools offer around $15,000. Actual aid is determined by the individual college based on the students GPA, test scores, and other factors (in some cases).
SCHOLARSHIPS
Don't fall in the "guaranteed trap!" Authentic scholarship search websites will not guarantee a scholarship since the winners could be selected at random, be 1 of 14,542 entries, or by popular vote of students with curly hair. They will not charge you an entry fee for a scholarship search. They do not have exclusive rights or secret money left by your ancestors in a cave.
So finding and applying for scholarships is your responsibility. Through your junior year, bookmark and save the scholarships you want to apply to as a senior. Then you can work toward meeting the recommendations. Christopher Penn, Chief Media Officer of Edvisors, recommends that you "set your expectations by the rule of 10 - for every scholarship you are awarded, you have to apply for 10. For every scholarship you qualify and apply for, you'll need to research 10 opportunities." So starting in August of your senior year, apply for 3-5 scholarships a week. Consider this a part-time job. When you are awarded a $500 that you spent a few hours applying for, you just saved 50 hours of real work! So don't overlook or dismiss the small dollar offers.
With so many scholarship search engines available, start with CareerOneStop, Scholar Snapp, Scholly, Student Scholarship Search, Chegg, Cappex, Fastweb, and FinAid. You'll need to create a profile but the search is free (Scholly has a small fee). Some will offer scholarships that may not be listed on another site. Some will sell your personal information, so read the fine print. You can also search for scholarship opportunities on a general search engine (Yahoo, Bing, Google) and social media (Twitter, Facebook, Tumblr, Pinterest).
GRANTS
While some colleges have grants, there are typically two types of federal grants: the Pell Grant and the TEACH Grant. Similar to scholarships, grants are one-time offers that must be renewed.
Some students qualify for Pell Grants. Federal Pell Grants usually are awarded only to undergraduate students who display exceptional financial need and have not earned a bachelor's, graduate, or professional degree.
A Teacher Education Assistance for College and Higher Education (TEACH) Grant is different from other federal student grants because it requires you to take certain kinds of classes in order to get the grant, and then do a certain kind of job to keep the grant from turning into a loan.
You can search using many scholarship categories: academic, athletic, institutional, private, local, and regional. For more ideas, read my blog about finding obscure scholarships.
Next, accept earned money (work study).
WORK STUDY
Some students are given the opportunity to participate in work study through the college. This allows you to work on campus for a designated amount of money. If you marked work study on your FAFSA, it should be a part of your award package. When you register for college, visit your school’s financial aid office and sign up. Don’t procrastinate. The best jobs fill up quickly. Some jobs give you the opportunity to work in your field of study; many are in service areas such as at the library, in the cafeteria, or admission office.
BONUS EARNED MONEY TIP: Learn how to become a Resident Assistant (RA). Colleges will compensate you (including free room costs!) to live and work on campus.
Last, accept borrowed money (loans).
LOANS
In 2010, Consumer Finance reported that, 67% of bachelor's degree recipients used loans to pay for their education. Loans don't have to be a part of financial aid. Loans help you fill in the gap of your need-based aid and merit-based aid. But you need to consider them a temporary solution that is repaid quickly. To read more about student loan statistics, visit Student Loan Hero.
There are many loan sources: institutional, federal student, federal parent, state, and private educational loans. Federal Loans include: Federal Perkins Loan (<$5,500), Direct Subsidized Stafford Loan ($3,500-5,500 - no charged interest while in school), Direct Unsubsidized Stafford Loan ($6,000-20,500 - interest charged while in school, begin payments immediately), Direct PLUS Loan for parents (up to yearly cost of attendance - begin payments immediately). You should also use this loan calculator to estimate your potential repayment schedule.
Consider federal loans first before selecting state loans, institutional (college) loans or private loans. And read the fine print!
Two companies that provide information about private financial aid loans are Edvisors and College Raptor.
REPAYMENT PLANS
Income-driven repayment plans – like Income-Based Repayment, Pay As You Earn, and Revised Pay As You Earn – cap your federal student loan payments at a percentage of your income.
One more tip, learn how to set up (and use) a budget.
BUDGETING
You may not have considered budgeting for college yet. Some families work with a financial adviser, local banker, or software to create a budget. Here are a few tools that will help you think through the college budgeting process.
- If your child is still in elementary school or even middle school. consider a 529 College Saving Plan in your state. Joseph Hurley and Brian Boswell of SavingforCollege.com wrote this great guide, Family Guide to College Savings
- The Mint shows you whats left each month after you select a starting salary of a job that interests you minus housing expenses, cell phone plans, car payments/insurance, savings and more.
- Rachel Warbelow, Director of College Access at Equipo Academy (NV), created an earnings expenses calculator. After you select your education goal (dropout through professional degree) and select from a variety of living expenses (housing, food, transportation, entertainment, fitness, family, savings and more), you will learn why higher education is important.
