In my first article, I discussed the importance of researching the various universities you may be interested in. Furthermore, I discussed the community college path, transferring to a university, and the significant cost savings. As of 2022, more than $1.5 trillion in outstanding student loan debt is spread across over 40 million people. Moreover, the latest data highlights that students graduate with an average of $36,000 in student loan debt. Throughout this article, I will briefly cover the financial aid process and how you can cover some of your college costs.
Federal Student Loans
For many students, the costs to attend a university will be too great to pay as you go for tuition and housing, so many will turn to student loans to cover the difference. To start this process, you fill out the Free Application for Federal Student Aid (FAFSA) online at https://studentaid.gov/h/apply-for-aid/fafsa. Ensure to fill out this form as accurately as possible; your college/university will use this information to see how much federal assistance you will be eligible for. Additionally, the majority of colleges and states use this same data to determine what additional aid you may qualify for. Of note, many scholarships you apply for will require this form to be completed as part of the application process.
Once your application has been reviewed and approved, you will be notified. This notification typically comes directly from the school you’ve been accepted to, highlighting the various financial aid you can receive. If you’ve been accepted to multiple schools, you will want to compare the costs associated with each school, as tuition and room and board can vary greatly. Furthermore, if you plan to attend a school out of state, pay close attention to the costs because tuition will be much higher when compared to in-state tuition.
Once you’ve selected your school of choice and reviewed the associated costs, you will work with your school’s financial aid office to begin payments. Once school starts, the office of financial assistance will receive payment to cover your tuition, and you will be sent the remaining balance to cover your other school expenses. This is where you need to take a hard and realistic look at your costs throughout a school year because you only want to take the money you need. Will you need tuition only, or will you need money to cover your apartment and food? Will you work throughout college to help offset the expenses? You don’t have to accept the full amount of financial aid offered to you, and I recommend you don’t. It would be best only to take out what is specifically needed to pay for school. Excess financial aid is not designed to be spending money for weekend beach trips but for college-related expenses. Many students don’t realize this until it’s too late, and they graduate with $80,000 in student loans for a bachelor’s degree that should have cost $40,000.
Following graduation, federal student loans provide a six-month grace period before repayments start. This time allows the graduate to hopefully start their career and get financially organized before payments come due. The standard repayment plan is a fixed payment plan for ten years. While the 10-year plan is the typical and default plan, a few other options are available, including an extended plan and a graduated plan where you pay less at the beginning and your monthly payments ramp up in the later years. As you prepare for graduation, assess your student loan payments and work them into your budget. Following graduation, you will want an updated budget that accounts for all your new expenses to ensure you’re living within your means and meeting all your financial obligations.
Scholarships
Paying for college can be daunting for many students, and we’ve talked about student loans, but that’s not the only option. Applying for and being awarded a scholarship is another way to offset college costs. There are thousands, if not millions, of different scholarships ranging from merit-based to sport-based and everything in between. Scholarships can range from a few hundred to thousands of dollars every semester. While scholarship amounts can vary widely, so do the criteria to qualify/apply for them. Many scholarships require a specific financial need for the student to qualify, as shown by completing the FASFA form we discussed earlier. Moreover, scholarships have varying application windows, with some almost a year before starting college. You will want to start your research early to avoid missing out on any opportunities.
When it comes to searching for scholarship opportunities, there are numerous places to start. I recommend starting with the university you’ve chosen to attend, as they will be a great resource to start, and they’ll be able to discuss scholarships that may be specific to your program. Additionally, there are websites such as https://www.scholarships.com/, https://www.fastweb.com/, and https://scholarshipamerica.org/. Many scholarships have specific application requirements (i.e., gender, the program you’re pursuing, and where you’re from). These websites can significantly assist with narrowing down the scholarships you’d qualify for. Be sure not to forget some of the smaller local organizations within your hometown, such as the Veterans of Foreign Wars (VFW), Rotary International Club, and local employers. These smaller organizations and even parents’ employers are typically overlooked and could be a source of valuable funding.
For additional information on federal student loans, check out https://studentaid.gov/.
After reviewing scholarship and grant opportunities, you will likely discover a need for additional funding for tuition. As I’ve mentioned earlier, student loans are a reliable source of financing; however, many students will have the option to work part-time during their studies. Each student’s situation will vary depending on how many credits they plan to take, whether they are student-athletes or participate in extracurricular activities. According to the US Department of Education, as of 2017, over 40% of students were employed while enrolled at a university. A part-time job can be an excellent opportunity for students to offset the cost of college. Colleges and universities typically offer many part-time employed options that are very flexible to accommodate student class schedules.
Overall, there are numerous sources of funding to pay for school, and you’ll need to research to see which ones are best for you and your specific situation. Remember, student loans can be a great source of funding but can present a dangerous situation if they are used in excess and not used for essential college costs. The worst thing you can do is work hard to graduate and start your career with $100,000 in student loans bearing down on you.