Youth and Money
Making College Affordable
Did You Know?
• About 29% of students attending four-year colleges pay about
$4,000 in tuition and fees per year (?)
• Almost 70% of students attending four-year colleges pay about
$8,000 in tuition and fees per year (?)
• Only 8% of all students attend colleges where tuition and fees
total $24,000 or more per year (?)
Source: The College Board www.collegeboard.com
While the sticker price for college can be enormous, as the statistics show, many students do not pay full price. The best way to save money on college is to start early and plan ahead. In fact, starting early in many ways can be the key to making college affordable.
Begin to research schools, scholarships, and grants well before it’s time to apply to the school of your choice. Apply for financial aid as soon as you can to beat deadlines. Considering how much college costs, the time you invest in finding ways to cut expenses for yourself or your child will pay off substantially.
Financial Aid
Financial Aid (FA) can come in the form of loans, grants, or work-study programs. The first step in applying for financial aid is filling out the FAFSA, the Free Application for Federal Student Aid, as close as possible to January 1st of the year you plan to enroll in school. FAFSA, online applications are available on www.fafsa.ed.gov; paper applications are available at any college campus FA department. This information is used to calculate the all-important Expected Family Contribution (EFC), or the amount the students and/or their families are expected to contribute toward the cost of their education.
Financial aid is based on financial need. While you may have a different idea about how much you need, in terms of school financing, financial need is the difference between your school’s cost of attendance (including living expenses), as calculated by your school, and your EFC.
After your FAFSA is processed, the Department of Education will send you a Student Aid Report (SAR), based on your FAFSA. The schools you are interested in will also receive a copy of those results, which they will use to prepare a financial aid package tailored to you.
While the majority of financial aid comes through federal sources, the school you’re attending may also offer what’s called “institutional” aid, and can provide information on other financial aid programs available through the school. Be sure to arrange an early meeting with the Financial Aid office to find out what additional aid is available to you.
Loans: Student loans make up the majority of most students’ aid packages. There are several different types of student loans. Some come directly from the federal government, while others are made available through individual lenders.
One major difference between loans is whether they are subsidized or unsubsidized. With subsidized loans, the government pays the interest while you are in school, up until the grace period ends. With an unsubsidized loan, interest begins to accrue when the loan is disbursed. In this case, you can choose to make those interest payments right away or wait until your grace period ends. The longer you wait, the more expensive it will be. Whether or not you will be eligible for a subsidized loan depends on your financial need.
With federal loans, you have a “grace period” before you must start repaying them. This gives you nine months after you graduate, leave school, or drop below half-time status before you must start repaying your loans. Again, if the loan is unsubsidized, you will start accruing interest right away. If you have multiple student loans, you may want to look into consolidating them into one loan with a lower payment and interest rate.
PLUS loans are available to parents with a good credit history. There is no grace period on these loans, and interest will start accruing immediately. They can, however, be a good way for parents to help their children fill in the financial gaps. You can also look for private lenders that offer loans to students and their parents.
Warning! Many students are graduating with unmanageable levels of debt. Don’t assume that student loans will be easy to pay off once you graduate and start working full time. In fact, the payments may be difficult to juggle with full-time living expenses.
If you can’t make your student loan payments you can go into default, which can be expensive and damage your credit rating. It’s also extremely difficult (if not impossible) to discharge student loans in bankruptcy, and the payments can stretch out for decades under some repayment options. If you decide you are not going to work in your chosen field of study or drop out of school, you are still responsible for repayment of your student loans. So think very carefully before you borrow!
Grants: If your EFC is below a certain number, and you meet eligibility requirements, you may be eligible for a Federal Pell Grant, or a Federal Supplemental Educational Opportunity Grant (FSEOG) for undergraduates with exceptional financial need. Grants are attractive because they do not have to be repaid. These types of grants are only available to students who have not yet earned a bachelors degree.
Scholarships: Scholarships may be available from a variety of organizations, and can target either students in need or those with special talents or interests. It can take some time to ferret out the possibilities, but again, it is worth the research. High school guidance counselors, public libraries and the Internet can be useful. It can also be helpful to talk with family members’ employers; community, civic and religious organizations you or they belong to; and professional associations for the field you want to enter.
