5 Things You Should Know About Funding Your Education
Paying for college can feel overwhelming when you look at the total cost of tuition, fees, and living expenses. These days a college education is an investment that could cost you thousands of dollars. It is important to understand the key elements that play a role when it comes to funding your education.
If you are like most students, paying for college is the scary part of the process because it may seem impossible. Also, the path for everyone may look a little different, but there are still key fundamental things you should know as you take your path.
First and foremost, you will hear the term FAFSA, throughout most conversations when it comes to paying for college. The FAFSA stands for “free application for federal student aid.” It is your main ticket to receiving financial aid.
After completing the FAFSA, they will take your family income and create a story around how much assistance you may need throughout your college years. Essentially, they will give you an amount that they feel your family could contribute in terms of covering your educational costs. This estimated amount is commonly referred to as the Expected Family Contribution (EFC) however; they will be changing that EFC term in the future to Student Aid Index (SAI).
It is recommended that every student planning on attending college fill out the FAFSA regardless of income. Submitting your FAFSA, allows you to qualify for federal grants, work-study opportunities, student loans, and even state and school-based financial aid.
If you don’t know what some of those opportunities are, stay tuned, as I will get into that in the sections below. Just keep in mind that you will need to complete your FAFSA for every year that you plan on being in college. It opens on October 1st every year, and it is always advisable to fill it out as soon as possible as some colleges award money on a first-come, first-served basis.
Grants are often a preferred method of funding your education because it is money that does not have to be repaid. Grants are a form of funding by the federal government or your future academic institution. In order to qualify for grants, you must complete your FAFSA every year you plan to attend college.
There are many different grants, but the main thing to understand is that most grants are need-based. Meaning that funds are given to students based on their financial need that was indicated on the FAFSA. Although grants are most commonly based on financial need, there can be other types of grants specifically for students pursuing particular career paths or having other circumstances. So regardless of your income or financial need, it is highly advisable that you complete your FAFSA application so you don’t miss out on any grant opportunities.
The most common grant that you will hear about is known as the Pell Grant. This is a very well-known grant and probably the grant awarded most often to students. It is reserved for those students pursuing undergraduate degrees. Your financial need will determine your eligibility and the amount you receive based on the information you provided on your FAFSA.
Other factors that play a role in determining the amount you will receive are dependent on the college you are planning to attend. They will review the cost of the college you are considering and whether you’re attending part-time or full-time.
The most important thing to remember with grants is that you have to complete your FAFSA in order to be eligible.
Similar to grants, scholarships are awarded to students and don’t need to be repaid. This is another form of “Gift Aid.” The biggest difference between scholarships and grants is that many scholarships are merit-based. Merit-based scholarships simply mean that, typically, there is some sort of requirement or candidate they are looking for in terms of academics, extracurriculars, etc. Each scholarship will have its criteria, and it could be based on merit or financial need. They are awarded to students by private organizations, clubs, individuals, colleges and universities, businesses, the government, etc.
Another benefit (aside from not having to pay it back) of scholarships is that you can get started on that process early, and sometimes, the money is distributed to individuals directly. There are scholarships available for even elementary-aged students.
A common way to break down scholarships is by considering national, local, and college-specific ones.
First, you can consider national scholarships. These can be found on many different websites if you are on the hunt for any national scholarships. We have a lot that can be found on our Niche Scholarship page that are very simple to apply to, and many don’t require an essay. Many other national scholarship websites allow you to narrow down based on your qualifications and future goals. The only downside of National scholarships is that you are competing against a broader pool of applicants, so it may be harder to win these scholarships.
Another sought-after scholarship is looking within your local community. Many times, these can be more attainable because you are not competing against as many applicants. I typically recommend that students search their local school district or high school first, as there may be scholarships reserved specifically for students in their district. Another piece of advice that I give my students is to google “Community Foundations” in their local community and search through the non-profit websites. Many times they have scholarship opportunities within their community foundation non-profit.
Lastly, I always remind students that colleges also have institutional scholarships that may be available upon acceptance. These scholarships many times have merit qualifications such as GPA or SAT/ACT scores that are required in order to qualify. I always encourage my students to make sure that they research the scholarship page of each college that is on their list. Check the requirements and also make note of the scholarship deadline as that may be different than their general admissions deadline.
A work-study is a federal student aid program for college students with financial needs that helps them obtain part-time jobs while in college. Typically through work-study, students are able to find part-time positions on campus.
Many work-study jobs are on-campus and can include things like working in the library, campus office or even acting as a research assistant. The biggest benefit of work-study (aside from the extra income) is that the jobs promise flexible hours so you can work around your class schedule.
Another key thing to note is that work studies are federally funded (sometimes state-funded), so in order to qualify, you must complete your FAFSA and indicate that you are interested in being considered for a work-study position.
Lastly, if you are finding that your scholarships, grants, and work-study will not be enough to cover your college expenses, then we can consider student loans. Loans are the last thing to consider after you have explored all of the options above because student loans have to be paid back and most often with added interest.
It is important to understand the entire process when figuring out how much student loans will play a role in funding your education. Once you complete your FAFSA and apply to all of the universities on your list, the fun begins. You will be waiting on your acceptance, and shortly after (typically around March/April), you will receive your financial aid award package. Typically these come out, and they include several important pieces of information.
You will see a COA(cost of attendance) that incorporates the breakdown for your bill. Understanding that bill (COA) will be critical to making a well-informed smarter, financially savvy decision with your package. The financial aid award packages will include potential scholarships, grants, work-study, and loans. You must understand the breakdown fully, so you understand the gift aid compared to what you are being asked to cover.
It is important to know what all of this means and determine the breakdown fully. Some questions and details need to be considered. Are these scholarships offered by semester or by year? How is it all broken down? What if I don’t want to accept the work-study? Will I be able to cover more loans to make up for that cost difference?
It is important to look at everything super closely. Also, sometimes that miscellaneous costs can be pretty high, and if your parents are able to contribute to some of these miscellaneous costs throughout the year while you are in college, then you may not need as much as the ticket price they have listed. Drafting out a future budget is important to consider and carefully review. You may not need as much as expected on their COA breakdown, or you may need more depending on your personal needs.
After close consideration of your budget, if you do feel that there is a significant financial gap that needs to be covered, then you would log in and accept a partial or full amount for the student loan aid that is being offered to you.
Suppose you are planning on taking the full amount of the loan being offered to you. In that case, you can accept the loan amount, and typically, the university will have you go through pre-consultation financial aid counseling to give you an understanding of what you are signing up for. They will typically have the verbiage that includes terms like subsidized or unsubsidized. Look through the terms carefully and try to select any loan options that don’t start accruing interest until after graduation if they offer that as an option.
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