COLLEGE definitely has its perks but price isn’t one of them. Tuition fees room and board and other expenses at the average four-year UNIVERSITY add up to between roughly $18,000 and $40,000 every year according to a study by the College Board. This can easily add up to a six-figure bill after four years. Whew! That’s a lot of money! But don’t worry—there are a lot of ways you can score cash for school.
Some of that financial help like federal student loans is need-based meaning that you must show that you would have trouble affording the school without help to get the money. Other financial help like many scholarships is merit-based which means it is awarded based on academic achievement or another personal achievement (such as in sports or the arts).
Doing the Math: Net Cost
“A lot of people look at the sticker price of the school see that it seems expensive and don’t know whether to even apply,” says Jacquelyn Nealon, the vice president for enrollment communications and marketing at the New York Institute of Technology. But when looking at the price of school it’s important to consider the “net cost” rather than the sticker price. The net cost is the amount of money you’ll pay for school after financial aid is taken into consideration.
Say your tuition fees and room and board cost $25,000 per year. If you get a $20,000 scholarship and $5,000 in work-study then your net cost for school is $0 ($25,000 – $20,000 – $5,000 = $0). Here are the main ways you can get money for college.
Scholarships
A scholarship is money for your education that you do not have to repay. Scholarships can be awarded for a variety of reasons. Diane Bice, the Director of Financial Aid for Kettering University (MI) says that scholarships fall in three main categories: 1) merit-based (these awards are based on academic achievement and ACT or SAT scores); 2) need-based (these awards are based on the student and family’s financial record and require applicants to fill out a Free Application for Federal Student Aid or FAFSA to qualify); and 3) student-specific (scholarships where applicants must initially qualify by student-specific factors such as gender race geography and intent to major in a certain program just to name a few).
HOW TO GET ONE:
Many colleges and universities have various scholarships available to incoming freshmen. Often college acceptance will enter you in the running for these scholarships. But don’t stop there! Look into the merit scholarships offered by your community or state as well as award money from local organizations such as clubs businesses churches synagogues and other associations.
There are plenty of free scholarship search sites including Fastweb.com; SallieMae.com/Scholarships and Scholarships.com. Make sure you answer all of the questions and provide all of the information requested as many of the optional questions help match you to even more scholarships. Talk to your high school guidance counselor about what’s available search the Internet and check your local library for scholarship listings.
To maximize your chances of getting a scholarship apply for every one you qualify for. “Be detailed on your application” says Bice. “The more you tell us the more you will stand out among the other applicants.” Finally Bice recommends that you do not miss deadlines and “make sure your application and any supporting documentation are complete and contain all the relevant information.”
Grants
Like a scholarship a grant is essentially free money as it doesn’t need to be repaid. While a lot of scholarships are based on achievement a large portion of grants are need-based and thus given to students because of their families’ financial situations rather than strictly because they made straight A’s or can kick a 50-yard field goal. (Though some grants are merit-based as well.)
Grants are usually awarded by the federal government state government or individual colleges says Curt Eley, the Vice Provost for Enrollment Management at The University of Texas at Dallas. Common grants include the Federal Pell Grant and the Federal Supplemental Educational Opportunity Grant (FSEOG) each of which is given out based on financial need. (Fill out the FAFSA to determine if you qualify.) The Federal Pell Grant (by far the largest grant program) is worth up to $5,500 per year while the FSEOG provides between $100 and $4,000 per year.
HOW TO GET ONE:
To get a grant fill out the FAFSA as soon as you can. (You can submit this form starting January 1 for the following school year.) “Ideally you will want to get your FAFSA completed and [submitted] in February,” says Eley. To do this try to get your parents to file their income taxes very early in the year since the FAFSA requires information from those tax forms. (If your parents don’t yet have their tax returns have them insert estimates from last year’s forms.)
Federal Student Loans
If scholarships grants and savings aren’t enough to fund your college tuition and expenses consider getting a federal student loan. The government lends you money to help you pay for college and in return you pay them back with interest after you graduate.
Federal student loans include the Perkins Stafford and PLUS loans. The federal Perkins loan is given out based on financial need and offers a low 5 percent interest rate. The amount of money you get is determined by your school’s financial aid office and the maximum amount undergraduate students can receive is $5,500. Interest does not accrue on the loan while you’re in school at least half time and you don’t have to start repaying it until nine months after graduation. The normal maximum repayment period is 10 years. The federal Stafford loan is another good bet. There are two types of Stafford loans: subsidized meaning that the government pays the interest on your loan while you are in school and with a lower rate (the current interest rate is 3.4 percent); and unsubsidized meaning that you pay the interest though you can defer payments until graduation (the interest rate on unsubsidized loans as of January 2013 is 6.8 percent). To get a subsidized Stafford loan you must show financial need. You do not need to show financial need for an unsubsidized Stafford loan. The federal PLUS loans are loans that your parents can take out to help you pay for school. They offer a 7.9 percent interest rate as of January 2013.
HOW TO GET ONE:
To get a federal loan fill out the FAFSA at www.fafsa.ed.gov. Submit this form as early as you can as government aid is distributed on a first-come-first-served basis.
Private Student Loans
Private loans from a bank are usually a last resort as they are often the most expensive options in terms of interest rates fees and repayment terms. Still they do make sense for some students says Eley.
HOW TO GET ONE:
You can apply directly to a bank or other lender for a private loan or through sites such as SallieMae.com. Just make sure all of the information is correct in the application says Eley. “Sometimes mistakes can reduce the amount of aid you get” he explains. If everything is correct talk to your financial aid counselor at the college and to your financial supporters (family members or others who may help you pay for college) to determine whether a private student loan is right for you he says. Bottom line: “Be careful—just because you can qualify for a loan doesn’t mean you should take it,” says Natalie Wilson, the Director of Financial aid for Carlow University (PA).
Make sure you do research online to determine which banks offer the best interest rates and repayment terms.
Work-study or Co-op programs
While in school you can earn money to offset the cost of school. Consider the Federal Work-Study Program which provides part-time on-campus employment to students so they can get a paycheck to help with college expenses. You may also want to consider a school that offers a co-op program. At Kettering University for example students spend part of their time working for a company in an area related to their degree. Not only are they getting job skills but they’re also earning money to help offset the cost of school.
HOW TO GET ONE:
Fill out the FAFSA to be considered for a work-study program. The availability of co-op programs depends on the school and department.
Though all these options can seem overwhelming your high school guidance counselor or the financial aid office at the college can walk you through all the ways you can obtain financial aid. In the end it will all be worth it. A college education is one of the best investments you can make in your future!
Catey Hill is a Los Angeles-based personal finance writer and author.
