Paying for College

When it comes to covering all the costs of college, depending on how much money you’ve saved beforehand, you will probably want to investigate one or more of the following options:

• Jobs: There are a number of paid work opportunities for college students, ranging from work study to on- and off-campus jobs and internships. If you have the time to commit to working while you’re in school, it’s worth investigating all of them.
• Free Application for Federal Student Aid (FAFSA): This free application requires students to answer questions regarding their background and personal finances in order to find out how much financial assistance they might qualify for. The financial assistance comes in the form of government loans, grants, work study, or scholarships. Financial aid will be discussed in greater detail later in this module.
• Student loans: Students can apply for subsidized or unsubsidized loans through the government. Your college determines the amount of each type of loan offered to you. Subsidized loans allow you to defer payment until six months after your graduate, while unsubsidized loans still accrue interest while you’re in college. Students may also obtain private loans through their banks. However, these types of loans are typically subject to more interest. Check the U.S. Department of Education website for information on applying for different types of loans.
• Grants and scholarships: Grants and scholarships do not need to be paid back. Students can look for grant and scholarship options through the government, their schools, and their communities. Scholarships may be awarded on the basis of financial need, academic merit, or talent. You can visit your guidance counselor or financial aid office for listings of available grants and scholarships, or conduct independent research at sites like College Scholarships.

Types of Financial Aid: How to Pay for College

The true cost of college may be more than you expected, but you can make an effort to make the cost less than many might think. While the price tag for a school might say $40,000, the net cost of college may be significantly less. The net price for a college is the true cost a family will pay when grants, scholarships, and education tax benefits are factored in. The net cost for the average family at a public in-state school is only $3,980. And for a private school, free financial aid money reduces the cost to the average family from $32,410 per year to just $14,890.

If you haven’t visited your college’s financial aid office recently, it’s probably worth taking the time to talk with them. You must seek out opportunities, complete paperwork, and learn and meet criteria, but doing so can save you thousands of dollars.

Applying for Financial Aid, FAFSA, and Everything Else

The federal government offers a standard form called the Free Application for Federal Student Aid (FAFSA), which qualifies you for federal financial aid and also opens the door for nearly all other financial aid. Most grants and scholarships require you to fill out a FAFSA, and they base their decisions on the information in the application.

This free application asks students questions about their background, personal finances, and college, and provides information about what loans, work study, and other types of aid students might be eligible for. You may be unaware of factors that affect how much financial assistance you are eligible for, such as changes to your parents’ income or your job status, or having a sibling start college. These changing factors explain why it is important to fill out a new FAFSA application annually.

The FAFSA only requests financial aid for the specific year you file your application. You will need to file a FAFSA for each year you are in college. Since your financial needs will change over time, you may qualify for financial aid even if you did not qualify before.

You can apply for a FAFSA through your college’s financial aid office or at studentaid.gov if you don’t have access to a financial aid office. Once you file a FAFSA, any college can gain access to the information (with your approval), so you can shop around for financial aid offers from colleges.

Maintaining Financial Aid

To maintain your financial aid throughout your college, you need to make sure you meet the eligibility requirements for each year you are in school, not just the year of your initial application. The basic requirements include being a U.S. citizen or eligible noncitizen, having a valid Social Security number, and registering for selective service if required. Undocumented residents may receive financial aid as well and should check with their school’s financial aid office.

You also must make satisfactory academic progress, including meeting a minimum grade-point average, taking and completing a minimum number of classes, and making progress toward graduation or a certificate. Your school will have a policy for satisfactory academic progress, which you can get from the financial aid office.

What to Do with Extra Financial Aid Money

One expensive mistake that students make with financial aid money is spending the money on non-education expenses. Students often use financial aid, including student loans, to purchase clothing, take vacations, or dine out at restaurants. Nearly three percent spend student loan money on alcohol and drugs.^[1] While using the money for non-education purposes seems like fun now, these non-education expenses are major contributors to student loan debt, which will make it harder for you to afford a home, take vacations, or save for your retirement after you graduate.

When you have extra student loan money, consider saving it for future education expenses. Just like you will need an emergency fund all your adult life, you will want an emergency fund for college when expensive books or travel abroad programs present unexpected costs. If you make it through your college years with extra money in your savings, you can use the money to help pay down debt.

Tips for Applying for Financial Aid

Applying for financial aid requires planning and organization. Below are steps you can take to increase your chances of getting help paying for college.

Make Sure Your FAFSA Information Is Accurate

Although it can be a chore to track down exact amounts (and it is so much easier to estimate things like your parents’ or your income), failure to provide accurate numbers can mean that you may not qualify for all the financial assistance you’re actually eligible for. Before you fill out the FAFSA form, be sure you have collected and have handy all the important information you’ll need. This includes your (and your parents’) tax forms, social security number, and income statements. The U.S. Department of Education’s Site for Federal Student Aid has more tips on how to effectively fill out your application.

Ask Your High School and College

If you’re still in high school or if you’ve recently graduated, ask your guidance counselor about grants and scholarships you could apply for. Your college will also be a good resource, since most institutions have their own scholarships and awards that are available to their students.

Ask Your Community

Check to see if your employer, place of worship, clubs, or volunteer organizations have any grant or scholarship opportunities. Although these sources may not offer as much as federal loans or college scholarships, they may help you cover the costs of books and/or supplies.

Check Due Dates

Whether you’re filling out the FAFSA or applying for scholarships, most organizations will have deadlines that you must meet—they are not flexible dates. These deadlines help ensure that if you are eligible, you will receive your financial assistance in time for the upcoming school year. If other people are helping you with your application—for example, teachers writing letters of recommendation for you—be sure to inform them of the deadlines and give them plenty of notice. The more time you give those helping you, the more time they’ll have to write good recommendations.

Write Strong Essays

Many scholarship applications will have an essay component. You can assume that the other students applying for a particular scholarship also meet the basic requirements (a certain GPA or above, certain demographic criteria, etc.), so often it isn’t enough to just have good grades or be eligible for a scholarship: the essay can be what really sets you apart. When you write application essays, make sure you take the time to write multiple drafts. You should also have family, friends, or teachers provide feedback as you go through revisions.