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Home / Articles / How to Pay for College: The Basics of Financial Aid

How to Pay for College: The Basics of Financial Aid

Paying for a college degree can seem like an impossible task. The evening news often reports on increasing tuition costs and schools that charge tuition fees upwards of $50,000.

The good news is two-fold. First, not every college degree program’s costs are astronomical. Second, regardless of what it costs to go to college, there are a number of programs available to help students and their families defray the costs, including:

  • Scholarships
  • Grants
  • Loans
  • Tuition Reimbursement

Scholarships
Scholarships are monetary awards that help pay down the cost of tuition, room and board and other associated fees. Scholarships never have to be repaid, and legitimate scholarships are awarded without any fees.

Students earn scholarships, either through academic or athletic achievement. Scholarships are offered by colleges and universities, community and non-profit organizations, and private corporations.

Students generally do not need to apply for scholarships that are awarded through colleges and universities. Such awards are determined during the recruitment or admissions process. Other scholarships tend to have an application process. A great way to find scholarships is using a basic Internet search. There are several scholarship search programs available in which students can enter some basic demographic and academic information and in return, receive a list of scholarships for which they may qualify. The most important thing to remember about scholarships is that students should never have to submit any sort of application fee. Legitimate scholarships will not charge for application.

Grants
Grants are similar to scholarships in that they are applied to the cost of tuition and fees and never need to be repaid. Grants are generally awarded by the federal and state government and individual schools. Many grants, such as those issued by the government, are awarded to students with great financial need. Federal grant programs based on need include the Pell Grant and the Federal Supplemental Education Opportunity Grant. Other federal grants include the National SMART grant aimed at students pursuing math or science majors and the TEACH grant for students pursuing education majors. Finally, the federal Academic Competitiveness Grant is awarded to students with strong academic performance. All government grants can be applied for with the Free Application for Federal Student Aid, or FAFSA, available at www.fafsa.ed.gov.

Loans
Millions of dollars are loaned to students all over the country each year to pay for the costs of college. Loans can make up the difference of what a family contribution, grants and scholarships do not cover. Money from loans can be applied to tuition, fees, room and board, as well as other fees, such as the cost of text books or parking. Loans must be repaid with interest, but repayment often can be deferred until after graduation.

Four federal loan programs are available to college students. All federal loans are applied for using the FAFSA.

  • Stafford Loan – The Stafford loan is available to both undergraduate and graduate students. Students must be enrolled at least half-time to be eligible, and loan awards are made without regard to financial need.
  • Perkins Loan – Perkins loans are also offered to undergrads and graduate students, but this program is reserved for students with financial need. More than 1,800 colleges in the country participate in the Perkins program. Loan funds are given first to students with the greatest financial need, and then to students whose financial situations are not as dire. Students who later work in certain military, teaching or other careers of public service may be eligible to have their loans forgiven.
  • Parent PLUS Loan – Parent PLUS loans are for the parents of dependent undergraduate students. The student must be enrolled at least half-time.
  • PLUS Loan – Similar to Parent PLUS loans, PLUS loans are granted to graduate or professional students. Students must first max out all other forms of financial aid before they become eligible for the PLUS loan.

Tuition Reimbursement
For adult students who return to school while working full-time, tuition reimbursement is a fantastic benefit that helps to defray tuition costs. Companies offer tuition reimbursement as a benefit to employees, and generally will either pay for the cost of each semester’s tuition up front, or reimburse a portion of the costs after the semester is complete. Often, students will have to earn a minimum grade in each course to have it paid for.

Anyone can make their educational dreams a reality with careful planning. There are millions and millions of dollars available to students to help pay for college. All you have to do is look.