The lifetime payoff for people with a college degree clearly makes higher education a worthy investment, but you still have to find a way to cover those costs of earning your college degree. Once you’ve calculated the costs of tuition, books, fees, housing and other miscellany, you can start whittling away at that figure with the various kinds of financial aid that are out there.
Borrowing can be a smart way to pay for school as long as you understand how student loans work, how they’re different from other types of debt, and how long it will take you to pay them off. Then you can determine how much you can afford to borrow, based on what your eventual salary will be. One good option, if you’re going the student loan route, is to look into federal student loans.
Federal Perkins Loans are low-cost loans which don’t require you to make payments on interest while you’re still in school. Stafford loans, another federal program, are also offered with very low interest rates. Stafford loans can be subsidized (the interest is paid by the federal government while you’re in school) or unsubsidized (The interest accrues while you’re in school, but you don’t have to start payments until after graduation). To qualify for either type of federal student loan, you must fill out the FAFSA application for federal student aid.
Certain types of federal student loans can be forgiven under some circumstances. For instance, if you earn your master’s degree in education, and paid for some or all of the cost with Perkins loans, you are likely eligible for loan forgiveness if you teach at a low income school for a certain number of years.
Private student loans are also available from banks and other financial institutions. These often have different terms than federal loans, but they can help you finance your education if you don’t qualify for other aid.
529 College Savings Plans
Qualified college savings plans, called 529 plans, have tax advantages. So, if you and planning to study in a few years, and your family wants to prepare for the cost of college now, you can benefit from tax savings to help you build up your college fund. Some states offer one or more types of 529s, but the most common one is the college savings plan, which allows you to save money, tax-free, in a special account that earns a return on investments, much like a mutual fund. The money in the fund can then be spent on things like tuition, books, housing and other costs that come with attending school.
You can benefit from other education-related tax benefits, too, like the American Opportunity Tax Credit and the Lifetime Learning Credit, both of which allow you (or your parents if you are their qualified dependent) to receive a tax credit for things like tuition.
Grants are financial aid awards which —unlike loans— you won’t have to pay back. Many organizations offer grants for students in various circumstances. Federal Pell Grants are needs-based grants provided to low-income students. The amounts can vary based on your economic situation, but you can receive a maximum of $5,500 a year, which can cover quite a bit of the average tuition cost for a student.
Other grants, such as National SMART Grants and TEACH Grants can help you supplement your financial aid even further. In addition to federal grants, you can find state grants and even corporate grants to help you finance your degree.
It is always worth applying for as many scholarships as you can, because they also don’t need to be paid back. All sorts of organizations offer scholarships based on a range of different criteria, including financial need, scholarly merit, ethnic heritage and other attributes. National scholarship funds give out a lot of money every year, but you should definitely talk to your guidance counselor or the financial aid office at Strayer about local scholarships you may be eligible for.
Some employers are looking to cultivate the people in their organizations by helping them gain more education in hopes that those new skills will be useful to the company. Tuition reimbursement programs will help you cover the cost of tuition and other expenses, depending on your company’s policies. Check with your HR department to see if tuition reimbursement might be a way for you to pay for college.
Tips for Saving for College
Whether or not you get financial aid or student loans to cover your tuition costs, you can always do a bit of belt-tightening to try and save money for school. Here are a few ideas.
Live at home. A lot of people want to live the college dream of dorm life and living on campus, but it’s an expensive dream (anywhere from $8,000 to $10,000 per semester on average). You can cut out a lot of those costs by living at home. And students studying at accredited online colleges can even avoid much of their commuting costs.
Cut your leisure spending. Instead of heading to the movies every weekend, or going out to lunch every day, why not grab a movie rental and start brown-bagging it instead? You can save hundreds of dollars a month that way.
Ditch your car. Now, going without a vehicle might not be practical for everyone, but it certainly can free up a lot of money for school. The costs of lending, maintenance, gas and insurance can really be a drain on your budget. If you can get by with a monthly mass transit pass, you can close the financial gap in a hurry.
How are you planning to finance your college degree? Share you comments below.