The price of college tuition has become a hot political talking point because many students end up deep in debt after graduation. Also, many young people who want to go to college may not be able to because they cannot afford the cost. Fortunately, there are many financial aid options to help students pay for their education.

How to Pay for College

If a student, or their parents, cannot afford the cost of college tuition, there are several alternative ways to pay for higher education. They include:

  • Scholarships
  • Federal Grants
  • State Grants
  • Federal Loans
  • Military GI Bill
  • Work Study Programs

Scholarships and grants are considered “gift aid” because they don’t need to be paid back. However, there are many different requirements to receive scholarships or grants. For many some grants and most loans, there is an income requirement to receive them.

While most institutions of higher learning offer scholarships to students with exceptional grade point averages, there are many other types of scholarships and grants for which students may qualify. A good way to find these scholarships is to hire a financial aid consultant.

Hiring a Consultant

Many companies provide information about options to pay for higher education. Since most high school counselors are overworked and college aid offices are crowded, consultants can work one-on-one with families to help them find the best way to pay for college.

Many consultants provide help with identifying colleges that can provide the best aid packages for students, fill out applications, research and find scholarships that students may qualify for, and appeal unfavorable decisions by federal, state, or private loan offices.

Although students and parents can do most of the same services that consultants do, it requires a heavy investment of time. Also, the experience of a consultant can come in handy because all the information for aid is going to be new to most parents.

An experienced consultant may also have information on grants, scholarships, and loans of which many people are not aware. Some consultants charge more than others for their services, so find out what services are offered and how much they charge before working with one.

Financial Aid Eligibility

There are some basic eligibility requirements to receive most types of aid to pay for an education. The basic requirements for federal student aid include:

  • Be a Citizen of the United States, a permanent resident, or an eligible non-citizen.
  • A valid Social Security Number, unless the student is from the Freely Associated States, which are the Marshall Islands, Federated States of Micronesia, and the Republic of Palau.
  • A high school diploma, a General Education Development (GED) certificate, or have completed a homeschool curriculum that satisfies their states homeschool requirements.
  • Be accepted for enrollment, or be enrolled, in an eligible degree or certificate program at a college or university that is eligible for Title IV federal student aid.

There are several federal grant and loan programs that students may qualify for if they meet these basic requirements. The grant programs include:

  • Pell Grants – These grants provide money for students who have not earned an undergraduate or professional degree. Among the factors for getting a grant includes financial need and the cost of attending the school to which they are going.
  • Federal Supplemental Educational Opportunity Grants (FSEOG) – These grants go to students who have an exceptional financial need. They are administered by the aid offices at the school the recipients attend.
  • Teacher Education Assistance for College and Higher Education (TEACH) Grants – The TEACH grants go to students who plan to become teachers and agree to teach in high needs fields in low-income areas. The recipients must also agree to teach for a certain length of time.
  • Iraq and Afghanistan Service Grants – The recipients of these grants are students who had a parent or guardian die while serving in the military in Iraq or Afghanistan.

There are two main types of federal loans to help students pay for higher education. They include subsidized loans for students who can demonstrate financial need. The US Education Department pays for the interest on the loan, and there is a six-month grace period for repayments after graduation.

Unsubsidized loans are also available for students regardless of their financial situation. The students are responsible for the interest on the loans during all periods.

The federal loan program also includes specialty loans like the PLUS and Perkins loans. Graduate, professional students, and the parents of dependent undergraduate students are eligible to receive a PLUS loan to pay expenses that other financial aid options do not cover.

The Perkins loans are available to undergraduate and graduate students who have an exceptional financial need.

Application Requirements

Along with the basic requirements, there are requirements for filling out applications for federal student aid. The application requirements are:

  • Completion of the Free Application for Federal Student Aid, or FAFSA.
  • Complying with the verification requirements if a student’s FAFSA is selected for verification by the federal government or the school they plan to attend.
  • Demonstrate financial need if applicable.
  • Sign the Statement of Education Purpose that states the student is using their Title IV federal student aid to pay for educational expenses.

In addition to these requirements, male applicants must have registered with the Selective Service between the ages of 18 and 25. If they have not registered, it cannot be knowingly or willingly. There is a box to check on the FAFSA application to register with the Selective Service.

Determining Financial Eligibility

Since many of federal and state programs are for students who have financial need, it is important to understand how that need is determined. The amount of aid a student receives will depend on several factors, including:

  • What year they are in school.
  • Their enrollment status.
  • Their Expected Family Contribution, or EFC.
  • The cost of the school they are attending.

The aid office at the school to which a student is enrolled will calculate the amount of aid a student can receive. The staff in the aid office will usually start by determining the Cost of Attendance, COA, at the school. The COA can include:

  • The cost of tuition.
  • The cost of books and supplies for classes.
  • Room and board at the school or living expenses if they don’t reside on campus.
  • Costs related to a disability.
  • Child or dependent care if applicable.
  • Transportation, loan fees, and other miscellaneous expenses.
  • The reasonable costs associated with a study aboard program.

They will then subtract the EFC from the COA to determine the student’s financial need and how much aid for which they are eligible. They may also calculate how much non-need-based aid a student can receive. Non-need-based aid is student aid not based on EFC.

Non-need-based aid is based on the COA minus any student aid you receive. If your total costs are $20,000 and you receive $8,000 in student aid, then you may receive $12,000 in non-need-based aid.

Financial Planning for School

The time to determine your school needs isn’t before applying to the colleges or universities of your choice, but several years prior to that. If your parents open an account to save for your education, they can use a financial aid calculator to determine how much they will need to save.

They can open accounts like 529 plans to save for the costs of their children’s education. A 529 plan, legally known as qualified tuition plans, are authorized under section 529 by the Internal Revenue Service.

There are several advantages of 529 plans, for both parents and their students.

Tax Breaks

In many states, people who have 529 plans can deduct their contributions from their taxes. Plus, when the money is withdrawn for qualified educational expenses it is tax-free.

Extensive List of Schools

While federal student aid is only for Title IV schools, a 529 plan can be used for expenses at:

  • Universities and colleges
  • Trade schools
  • Technical schools
  • Accredited schools overseas
  • Professional schools like cooking schools.

The money can also be used to pay for room and board, fees, books, computers, and other school supplies.

No Limit on Plans

There is no limit on the number of 529 accounts that you can open. Since you can choose plans in other states, you can have multiple plans in multiple states. However, the tax deduction is only allowed on the plan you choose in the state in which you live.

Anyone Can Contribute

Parents are not the only ones who can contribute to a 529 plan. These plans allow friends and family to contribute to them to help pay for a child’s education.

Accounts do not Expire

If there is a considerable amount of money in a 529 plan, then multiple students can use it. It doesn’t expire, so if there is money left over after your children go to school, then the money can be passed onto their children. The money would still be tax-free when it is withdrawn.

This information can help you determine what type of financial aid that you may qualify for and for which programs to apply to help pay for your further education.


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