How To Pay For College Using Financial Aid

How To Pay For College

Finding Financial Aid to Pay for College

Figuring out how to pay for college can be one of the biggest financial burdens in a young person's life, or their parent's lives. For the student, your goal is to get an education, so you can get a good job, so you can make lots of money, right? So why is the cost the first thing you have to worry about when seeking an education, or "Where is the money coming from?" Sounds like a "catch-22", doesn't it? For parents, there are loans you can take out specifically for education expenses for your children.

For students, there are several ways to offset these college bills, and even ways to delay your bills until after you have graduated. Remember, College Financial Aid is just that; "Aid". You may not be able to pay off your entire college cost, but you can reduce the amount that you personally have to come up with. Financial Aid comes in several forms:

  • Grants
  • Grants should be your first choice of Financial Aid. You don't have to pay them back and your only risk is not qualifying. Grants are available to students.
  • Scholarships and Fellowships
  • College Scholarships and fellowships are also "free money" but you will most likely be competing with many other future students for these funds.
  • Student Loans
  • Once you've acquired all of the "free money" you can, a Student Loan can help you cover the remaining cost of your education. Student Loans can come from either Government or Private sources and you can, in most cases, delay payback of the loan until after the student has graduated. When choosing a loan, you should also factor in Loan Forgiveness and Loan Repayment options.
    • Loan Forgiveness
    • If, after college, you enlist in certain occupations or programs, the federal government will cancel all or part of your Federal Student loans. 
    • Loan Repayment
    • The Federal Direct Loan program and numerous private lenders offer several flexible repayment options. You'll typically have from 10 to 25 years to repay your loan, depending on which repayment plan you choose. You can select a payment plan when it comes time to start paying back your student loans.
  • Student Part Time Job
  • A part time job can help provide extra income for books, supplies, food and even help pay off your tuition bills.

There are many ways to pay for college available to someone who is willing to invest some time and effort. The good thing is, the more time and effort you invest, the less you may end up having to come up with, or take out a loan for, to pay for college expenses! By combining any or all of these options, you can generate a good or even substantial amount of financial aid that will pay off college education costs before you have to take out a student loan. A great resource to have in your arsenal is the Financial Aid Resource Publication from the U.S. Department of Education. Knowing what types and sources of College Financial Aid are out there is half the battle.

To say that there's an "average" cost of college expenses would be making a lot of assumptions regarding variables that the parents or attendee will need to decide on. There are private colleges, and public colleges. You may choose an "in-state" college, or an "out-of-state" college. All of these factors play into determining the cost of a college education. College tuition costs can range from $1000s per year into the $30k, $40k or even higher ranges. You should also factor in room & board, books and other supplies, and general living expenses.  According to College Board, tuition and fees for in and out-of-state colleges were up roughly 3.7 percent for the 2012-2013 school year at roughly $9200 per year for a 4 year degree.   Some Financial Aid can only be applied to tuition, but there are also sources that can help you with the other expenses.

If you want to calculate just how much college will end up costing, we recommend you use the U.S. Dept of Education's Net Price Calculator Center. The 'Net Price' is the amount that a student pays to attend an institution in a single academic year AFTER subtracting scholarships and grants the student receives.

You have to apply for grants, scholarships,  and loans. Unlike many loans, the applications for grants and scholarships are usually somewhat involved and may require several different financial items (tax returns, pay stubs, etc) in addition to the application. Many scholarship and grant applications require letters of recommendation from former teachers, community or business leaders, or others who can speak knowingly of the applicant. They may also require essays or other written pieces from the applicant as well.

(1) College Board Advocacy & Policy Center. "Trends in College Pricing 2012." College Board, 2012. .