How To Pay For College
Author: Ron Johnson
How to Pay for College
There’s no question that college is an expensive proposition. The tuition alone can be a shock. In the 2007-2008 academic year (the most recent year the government has statistics for), the average annual tuition at a four-year public university was $11,441, while the average tuition at a four-year private school was $26,489. At a two-year public college, the average tuition was $6,334. That doesn’t include more school fees, room and board, books, travel, shampoo – or Friday pizza money.
You’re not on your own, though. Organizations are looking for the right matches to hand out scholarships. The U.S. government offers loans at below-market rates. Some colleges even claim to meet the full demonstrated need of every student. Check out this list: http://www.usnews.com/usnews/biztech/articles/060910/10need.pfc.html
Source Scholarships
Since scholarships don’t have to be paid back, think of them as free money. Obviously, they should be your first choice of funding. They’re not all need-based, and they’re not just for valedictorians. You might be surprised at what’s out there. You can qualify based on criteria, such as where your parent works, your ethnic background, career goals or extracurricular interests. A scholarship for left-handed students? Sure. Money for aspiring journalists from your hometown? That exists, too. You don’t have to have a perfect GPA to get a scholarship, but most funders ask that you excel in some way. Maybe you do a lot of community service, or you can write an impressive essay about civics. You can find a web page about scholarships for “average students” here. (http://www.finaid.org/scholarships/average.phtml)
Several web sites (such as www.fastweb.com, www.brokescholar.com and www.scholarships.com) have lists of scholarships and allow you to search them for free. You can sign up, create a profile, search the database and receive reminder e-mails when due dates for suitable scholarships are approaching. But beware of services that promise to connect you with scholarships for a fee.
Applications for some scholarships can be simple, but others can be daunting. They may require essays, transcripts and letters of recommendation. So plan ahead to make sure you have the materials and the time you’ll need to put together a strong application.
Apply for Financial Aid
Even if you land a scholarship or two, chances are that you or your parents will need to take out one or more loans to pay for the rest. You’ve got plenty of company, since about 65 percent of college students graduate with debt.
The federal government has a user-friendly web site at www.studentaid.ed.gov with comprehensive information about government-backed grants and student loans. Another valuable site is www.finaid.org, which also includes information on private loans.
The first step toward getting financial aid for college is to fill out a Free Application for Federal Student Aid (FAFSA). To do this, you’ll need to collect a lot of information about your family’s financial situation, such as tax returns, annual income, and the value of assets like a home and investments in stocks and bonds. The FAFSA is a federal government form used by just about every two- and four-year school in the U.S. when they calculate the aid package they can offer. You can fill out the form online here (http://www.fafsa.ed.gov/). You can even save an incomplete application if you don’t finish it all in one sitting.
Get Government Grants
Grants are a lot like scholarships. If you receive one, you don’t have to pay it back. The government sponsors Pell Grants for students with demonstrated financial need (this is calculated based on the FAFSA, by the way). The maximum Pell Grant award in the 2007-2008 school year was $4,300. The amount awarded is based on need and the cost of attendance at the student’s school.
The government also provides additional grants for students with exceptional financial need, high academic performance and majors in the sciences. Information about all of these grants is available at the government’s web site. (http://studentaid.ed.gov/PORTALSWebApp/students/english/grants.jsp)
Check Out Other Types of Student Loans
The PLUS loan is a federally subsidized loan made to parents. About 10 percent of parents of college students take out these loans. The government sets interest rates below what most banks would charge for a loan and provides the funding. (Interest rates are kind of like a fee you pay a lender for letting you use their money. If the interest rate is lower, you’ll pay less over the life of the loan.)
Students can get a lower interest rate, though, by getting the loans in their own names. The government sets interest rates for Stafford and Perkins loans that are lower than the PLUS rates. These are both considered federally backed loans because the government provides the funding for the loans and subsidizes the interest payments on the loans during college for students with demonstrated need. The maximum Stafford loan to an incoming freshman is $3,500. The Perkins loan maximum is $4,000 per year. Repayment of these loans doesn’t have to start until after college.
The average student loan debt load of someone right out of a four-year college is about $20,000. Because Stafford and Perkins loan amounts are capped, you might need to take out additional loans that aren’t secured by the government. Shop around for competitive student loan rates from private lenders. They’ll almost certainly have higher interest rates, so make sure to take out as much as possible from the Stafford and Perkins loans before you look elsewhere.
This all may sound overwhelming, but the people at your school’s financial aid office are there to help you. You might as well make friends with them as soon as possible; you could be seeing them a lot since you will have to apply for loans each academic year. Also, the amount of money you get from scholarships may affect how much financial aid you are eligible for. You need to communicate with the financial aid office every time you win additional scholarships to make sure your records are updated.
Calculate Your Family’s Contribution
Your FAFSA provides your school with an idea of what your family can afford to pay for your education (although your family might disagree with the number). The school’s financial aid package will include an “expected family contribution” (EFC). To avoid a big surprise, you can use a calculator to estimate what the EFC will be. Here’s one: (http://www.bankrate.com/brm/calculators/college/finaid/need.asp). The government offers a “FAFSA4caster” here. (http://fafsa4caster.ed.gov/)
The college financial aid package also figures in a contribution from the student, which is usually about $4,000 per year. It includes working a few hours each week during the school year and full time during the summer.
Don’t Forget Foreign Students
Foreign students aren’t eligible for U.S. government-sponsored financial aid. Many scholarships exclude non-U.S. citizens, as well. But there are some resources.
Some private companies maintain lists of financial aid for international students. Check out www.finaid.org/questions/international.phtml and www.internationalstudent.com/scholarships/search.shtml.
The Foundation Center has compiled a book of foundation grants for individual applicants, which includes a section called “Grants to Foreign Individuals.” They’ve put the same information into a searchable database online. You can access the database for one month for about $10 at www.foundationcenter.org/findfunders/fundingsources/gtio.html
There are also colleges that provide their own aid to international students. The nonprofit Overseas Association for College Admission Counseling has put together a list of them. (www.oacac.com/docs/IntFinAid.pdf)
Some foreign students living in the United States are eligible for federal financial aid. They may include: persons with legal status as lawful permanent residents (LPR), refugees, persons granted asylum, conditional entrants, persons paroled into the U.S. for at least one year and Cuban-Haitian entrants. You can find a PDF from the government about eligibility here. (www.ifap.ed.gov/sfahandbooks/attachments/0506Vol1Ch2.pdf)
San Diego State University also has a page (link to http://www.sa.sdsu.edu/scholarship/resources-links.html) that collects many web links and names of resources worth checking out for both citizen and non-citizen students.
All of these resources might also be useful to undocumented immigrants, who are not eligible for federal financial aid programs.
Look at the Long TermOnce you add up the tuition, fees, room and board and all other costs of attending school, the sum can be staggering – even if you try to reduce expenses by living at home or cooking all your meals. You might even ask yourself if it’s worth it. The answer is almost certainly yes. A student loan is considered wise debt. According to the College Board, someone with a bachelor’s degree earned on average about 62 percent more in 2003 than someone with just a high school diploma. The Census Board estimated the difference at almost $1,000,000 over someone’s working life.
Examville.com staff writer
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About the Author
Ron Johnson is a staff writer at Examville.com
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