When it comes to paying for college, the questions of “how?” and “where do I begin?” are similar to asking “how do I stay healthy?” or “how do I learn another language?” There is no single solution that works better than any other. Rather, mapping out a tailored strategy that combines different funding sources is often the best approach for most students and families. When creating your plan, consider which forms of financial aid make the most sense given your individual circumstances. Also, prioritize how you want to allocate funds.
To help guide you in forming a successful payment strategy, here are some important tips:
1. Submit your FAFSA
Submitting your Free Application for Federal Student Aid (FAFSA) is an absolute must if you are hoping to qualify for financial aid. It does not matter what kind of education you are pursuing. It is believed that submitting your FAFSA puts you in the running to potentially receive various forms of financial assistance. It includes federal grants, work-study opportunities, student loans, and state or school-based aid. The earlier you submit your FAFSA application, the better. Many forms of aid are distributed on a first-come, first-served basis. It is also important to be aware of any additional requirements that individual colleges may have beyond the FAFSA.
They may require submitting a CSS profile. To ensure that you receive the best possible financial aid package, don’t just submit your FAFSA as soon as possible. Be sure to read up on any other requirements for individual institutions. This will give you the best chance of obtaining the money you need to pursue your educational goals. This has been an important reminder to ensure you receive the best possible financial aid package. Don’t forget to submit your FAFSA and read up on any additional requirements that individual colleges may have.
2. Consider searching for scholarships
Searching for scholarships doesn’t have to wait until you’re a senior in high school. It might be beneficial to start searching earlier. Early application is important, especially for programs like the Evans Scholars Foundation which awards full-ride scholarships to hundreds of golf caddies each year. However, you must have been caddying for at least two years before applying. It means you would need to start caddying during your sophomore year of high school to be eligible by the time you apply at the beginning of your senior year.
It’s important to remember that scholarships, unlike student loans, do not have to be paid back. There are thousands of different scholarship opportunities available. A great place to start looking for scholarships is the Department of Labor’s Scholarships Finder. Many scholarships require you to submit your FAFSA. But usually, there will also be an additional application that must be filled out to qualify for the scholarship. Doing some research ahead of time can help you maximize your chances of qualifying and receiving a scholarship.
3. Choose an affordable school within your budget
Attending college can be an expensive endeavor, so it’s important to take costs into account when selecting a school. Start your search by looking at community colleges, trade, or technical schools for their reasonable prices. You could also consider traditional four-year universities. But make sure to focus on the net price instead of the sticker price. This price is the cost to you after grants and scholarships have been deducted. You can use each school’s net-price calculator to get an estimate of how much you’ll need to pay.
Even if one school may appear less expensive, this doesn’t necessarily mean it will be more affordable for you. To maximize your chances of financing your college education, look for schools that are generous with their aid. If a more expensive school offers you substantial financial aid, then it could be more beneficial to attend than somewhere with a lower sticker price. Taking these funding options into consideration. They can help make paying for college an easier and less stressful experience.
4. Use grants you are eligible for
The Class of 2021 lost a staggering $3.75 billion in federal Pell Grant money by not completing their FAFSA. Don’t be another statistic! As long as you fill out and renew your FAFSA each year, you will receive the financial support you need to attend college if you are eligible.
In addition to Pell Grants, the federal government provides other types of grants that you will not need to pay back. Furthermore, many states have their own grant programs. Research your state’s grant offering using the Education Department’s state education contacts and information locator. Then apply for those that you qualify for. It can be difficult to keep track of all the available grants. But taking the time and effort to research potential funding sources can make a huge difference in covering educational costs. With a little bit of work, you can ensure to receive your fair share of the money set aside for college students.
5. Consider getting a work-study job
For college students with financial needs, the federal work-study program offers a great opportunity to gain an income, valuable work experience, and even useful connections. To find out if you’re eligible, fill out FAFSA. If approved, this will be reflected in your financial aid award as ‘work-study’. But remember that just being eligible doesn’t mean you automatically get the money. You’ll need to find a work-study job on your campus and then work enough hours to earn all your aid.
6. Tap into your savings
Realistically, you or your parents will likely have to use some of your income and savings to cover tuition, room and board, and other college-related expenses. According to Sallie Mae’s 2022 How America Pays for College study, the typical family covers 43% of college costs this way.
If you or your parents have saved money in a 529 plan, which is a state-sponsored tax-advantaged college investment account, you can access the funds by getting in touch with the plan’s administrator. This could be an excellent source of funding for your university costs. You should definitely take it into consideration. You may also want to consider other options such as grants, scholarships, or student loans as other means of paying for college.
7. Consider taking out federal loans if necessary
When it comes to paying for college, taking on every offer of financial aid isn’t necessarily the best option. This case is especially possible when it comes to student loans. As a general guideline, try and make sure that the payments you take won’t exceed 10% of your estimated post-tax monthly income in your first year after graduation.
If borrowing money for college is your only option, consider taking out federal student loans rather than private ones. Federal loans come with a range of benefits that private loans don’t. These benefits can be access to income-driven repayment plans and loan forgiveness programs. These can make them much more attractive than taking out private loans and can potentially leave you in a better financial situation once you’ve completed your studies.
8. Keep private loans as your last resort
If you must take out private student loans, make sure to thoroughly compare your options before selecting a lender. Do some research and find the lender that can offer you the most generous borrower protections. The protections can be flexible repayment plans or even the option of putting your loan in forbearance if you’re having difficulty making payments. Additionally, look for a lender that can offer you the lowest possible interest rate. This way you’re not stuck paying more than necessary. A little extra effort now could potentially save you a lot of money in the long run.
Private loans
For those seeking to take out private loans, the requirements are often much stricter. Whereas federal loans don’t require a credit check or detailed information on your finances, many lenders will use these criteria as an indicator of whether you can pay back a loan. Having good credit and strong finances will help you secure better interest rates and repayment terms. It makes it easier to pay back the loan. On the other hand, if you have bad credit or no income, there are still private student loans available that are designed specifically for borrowers in that situation.
Final takeaway
It’s important to keep in mind that once you graduate, any money you borrowed must be repaid. Most student loans (apart from federal subsidized loans) will accrue interest while you’re still in school. This means you’ll end up paying back far more than the original sum. If you want to get an idea of what your total repayment costs might be, you can use a student loan calculator to estimate your future payments. This will help you plan ahead and budget for when it comes time to start paying back the loan.
