From helping you score a job when you graduate to offering cool classes like glass blowing, chemistry and everything in between, 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 are between $21,000 and $42,000 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.
Each year, billions of dollars in scholarships, grants, loans and other financial aid are given to college students. That means “many college students don’t pay full sticker price,” says Matthew T. Russell, author of “College Planning 101.” And while the sheer number of these college-funding options may seem dizzying upon first glance, this guide will help you navigate the financial maze of paying for your college education.
Here are the three main ways to get money for college.
SCHOLARSHIPS
A scholarship is money given to you from an organization, company or school to help cover tuition or college living expenses. The best part: It never has to be paid back (free money, yay!). “Generally, scholarships are given to students with special qualifications or interests, such as academics, athletic or artistic talent,” says college funding advisor Beatrice Schultz. “However, all scholarship sponsors have different criteria.”
Scholarships can be merit-based, such as for academic achievements or other special talents, or need-based due to finances. The Free Application for Federal Student Aid (FAFSA), www.fafsa.ed.gov must be completed to determine need-based eligibility for financial aid.
HOW TO GET ONE: Many colleges and universities have various scholarships available to incoming freshmen. Often an admission application and subsequent 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 those from local organizations such as clubs businesses churches synagogues and other associations.
There are also many free scholarship search sites including Fastweb.com, SallieMae.com/Scholarships and Scholarships.com. “Use at least two of them to get the best options” says Mark Kantrowitz the publisher of Fastweb.com and FinAid.org. You should also make sure you fill out all of the questions the site asks you as many of the optional questions help match you to even more scholarships he says.
Schultz adds that it’s important that you talk to your high school guidance counselor about what’s available and check your local library to see if they have scholarship listings.
To maximize your chances of getting a scholarship “apply for every scholarship you qualify for” says Schultz. It is also important to provide the company organization or school offering the scholarship with the information they want exactly as they’ve requested it and to meet all submission deadlines. “Although this sounds simple remember that it is very easy to overlook something and very important to follow the rules and requests precisely,” she says.
LOANS
If scholarships and savings aren’t enough to fund your college tuition and expenses it’s time to consider getting a loan. With a loan the government or a bank lends you money to help you pay for college and in return you pay them back with interest after you graduate.
The least expensive loans you can get are typically from the federal government and include the Perkins Stafford and PLUS loans. The Perkins loan is given out based on financial need and offers a low 5 percent interest rate. The Stafford loan is another good bet and doesn’t require showing financial need. The current interest rate is 6.8 percent. However if you can show financial need you can obtain Stafford loans at an interest rate currently at 3.4 percent. The PLUS loans are loans that your parents can take out to help you pay for school and they currently offer a 7.9 percent interest rate. If these loans plus scholarships and grants don’t fully fund your education then you may have to get a private loan from a bank though these are a last resort as they tend to be the most expensive options in terms of interest rates fees and repayment terms.
It’s also important that you try to borrow as little as possible as “every dollar you borrow now costs about $2 by the time you pay it back,” says Kantrowitz. In effect: That $30,000 you borrow today could end up costing you $60,000 by the time you finally finish paying it off. “Live like a student while a student to make sure you do not have to live like a student after you graduate,” says Schultz.
HOW TO GET ONE: To get a federal loan you will need to fill out the FAFSA. Aim to submit this form on or around January 1 (for the following school year) as “government aid is distributed on a first-come-first-served basis so it will help to be first in line,” says Schultz. Also don’t worry if your parents don’t yet have last year’s tax returns which are required on the form says Kantrowitz. Instead you can have them help you put in tax estimates (based on W-2 and 1099 statements) so that you don’t delay the process and miss out on any funding he says.
Ideally you’d like to score a scholarship or grant to fund your education as you don’t have to pay these funds back. But if you do end up getting a loan look for a government- issued loan like a Perkins or Stafford loan before resorting to private loans.
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 given to students because of their families’ tough financial situations rather than strictly because they made straight A’s or can kick a 50-yard field goal.
Common grants include the federal Pell Grant and the Federal Supplemental Educational Opportunity Grant (FSEOG) – each of which are given out based on financial need (you’ll need to fill out the FAFSA to determine if you qualify). The Federal Pell Grant (this is 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 you will need to fill out the FAFSA. “Fill this out as early as possible—some grants are given out on a first-come first-served basis,” says Kantrowitz. (You can submit this form starting January 1 for the following school year.) Note that some grants are available at the state level (e.g. the Colorado Student Grant) as well as from individual colleges businesses and nonprofits. Also once you’ve picked a major you may be eligible for industry-specific grants such as one offered by the National Society of Accountants.
One other thing to consider is the Federal Work-Study Program which provides part-time employment to students so you can get a paycheck to help with college expenses.
All those forms you have to fill out and questions you have to answer to apply for scholarships grants or loans can seem totally overwhelming at first. But with a little planning (and an early start!) you’ll be on you way to paying for college in no time!
Catey Hill is a New York City-based personal finance writer and author.
