Paying for College
Paying for college can be a daunting task—but it doesn’t have to be. Use our tips, articles to stay up to date on the best ways to pay for college, including scholarships, savings, grants, loans, and more. To make the most of available funding, it is important to understand the different types of aid as well as to realize that the financial aid office in colleges is available to help students.
Types of Funding
Grants: Money provided by the federal or state government based on a student's financial need, and possible academic achievement or other factors. Grant aid does not need to be repaid. The U.S. Department of Education offers a variety of federal grants to students attending four-year colleges or universities, community colleges, and career schools. To obtain federal or state grant every student require to complete and submit the Free Application for Federal Student Aid (FAFSA).
1. Federal Pell Grant: unlike a loan, does not have to be repaid. Federal Pell Grants usually are awarded only to undergraduate students who have not earned a bachelor's or a professional degree. Amounts can change yearly. However, the grant amount students get, depend on- their financial need; their cost of attendance; their status as a full-time or part-time student; and their plans to attend school for a full academic year or less.
Note: Students cannot receive Federal Pell Grant funds from more than one school at a time.
2.
Federal Supplemental Educational Opportunity Grant (FSEOG):
is a grant for undergraduate students with exceptional financial need. The
FSEOG does not need to be repaid. The FSEOG program is administered directly
by the financial aid office at each participating school and is therefore
called “campus-based” aid. Not all schools participate. Students
should check with their school's financial aid office to find out if the
school offers the FSEOG. Students can receive between $100 and $4,000 a
year, depending on their financial need; when they apply; the amount of
other aid they get; and the availability of funds at their school.
Each participating school receives a certain amount of FSEOG funds each year
from the U.S. Department of Education’s office of Federal Student Aid. Once
the full amount of the school’s FSEOG funds has been awarded to students, no
more FSEOG awards can be made for that year. This system works differently
from the Federal Pell Grant Program, which provides funds to every eligible
student.
3. Iraq and Afghanistan Service Grants: if a student's parent or guardian died as a result of military service in Iraq or Afghanistan, they may be eligible for an Iraq and Afghanistan Service Grant. This provides money to college or career school students to help pay their education expenses. However, Iraq and Afghanistan Service Grants have special eligibility criteria.
Scholarships: is financial award for students to further their education. Scholarships are awarded based upon various criteria, which depends on the goal and purpose of the donor. Scholarship money is not required to be repaid. Grants are often need-based, while scholarships are usually merit-based.
Common Categories of Grants and Scholarships :
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Achievement-specific: awarded to students who have a special characteristic, skill, talent, or ability and often factor in an applicant's extracurricular activities and community service record.
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Need-specific: provided to students who demonstrate financial need. Most financial aid, particularly public/ federally funded aid, is awarded on the basis of financial need determined through the college application process and in accordance with a prescribed federal formula.
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Student-specific: scholarships for which applicants must initially qualify based upon gender, race, religion, family and medical history, or other student-specific factors.
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Career-specific: scholarships a college or university awards to students who plan to pursue a specific field of study. For example, many schools in the United States give future nurses full scholarships to enter the field, especially if the student intends to work in a high-need community.
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College-specific: are offered by individual colleges and universities to highly qualified applicants. These scholarships are awarded on the basis of academic and personal achievement.
Tax Benefits: the Internal Revenue Service (IRS) provides tax benefits for education. These The tax benefits can be used by students to get back some of the money they spend on tuition, loan interest etc. Two tax credits help offset the costs (tuition, fees, books, supplies, equipment) of college or career school by reducing the amount of a student's income tax:
1. The American Opportunity Credit: allows each student to claim up to $2,500 per year for the first four years of school as the student works toward a degree or similar credential.
2. The Lifetime Learning Credit: allows each student to claim up to $2,000 per year for any college or career school tuition and fees, as well as for books, supplies, and equipment that were required for the course and had to be purchased from the school.
Educational Loans: Money borrowed by students to pay for educational expenses. Loans must be repaid with interest.
1. Federal Stafford Loan Program: are available to both undergraduate and graduate students. Stafford loans are provided through the Federal Direct Loan (Direct Loan) Program, meaning the federal government provides the funds for the Stafford loan. There are two types of Stafford loans:
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Subsidized Stafford loan: a loan for which the government pays interest while the student is in school, during grace periods, and during any deferment periods. These loans are awarded based on financial need and are only available for eligible bachelor's students.
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Unsubsidized Stafford loan: a loan for which the student is responsible for paying all the interest that accrues at any point in time. These loans have no financial need requirement and are available for all eligible students.
2. Federal Graduate PLUS Loan Program: master's, doctorate, and certificate students can use PLUS loans to bridge the gap between other financial aid and full tuition. The Graduate PLUS loan has a fixed interest rate, and repayment can be deferred until after graduation.
3. Direct Consolidation Loans: allows students to combine all of their eligible federal student loans into a single loan with a single loan servicer.
4. The Federal Perkins Loan Program: is a school-based loan program for undergraduates and graduate students with exceptional financial need. Under this program, the school is the lender.
Federal Work-Study: Are part-time job programs for students to earn money for college expenses. Undergraduate/graduate students with work-study jobs generally work part-time or on/off-campus while enrolled. Here’s a quick overview of Federal Work-Study:
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It provides part-time employment while students are enrolled in school;
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It’s available to undergraduate, graduate, and professional students with financial need;
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It’s available to full-time or part-time students;
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It’s administered by schools participating in the Federal Work-Study Program. Students should check with their school's financial aid office to find out if the school participates in this program.