How to Pay for College: Financial Aid information

Whether you are parent supporting a child or a student who is faced with funding your own education coming up with a way to pay for school can be a very stressful task to face. Even with financial aid you can expect to pay for a good portion of tuition out of pocket. Here is a list of options available to everyone for the purpose of paying for school.

Student loans:

Student loans are generally obtainable by both parents and students. These loans are fairly easy to get and usually have very low interest rates. Lenders will require income requirements to be met for most of these loans. The most common types of student loans are:

Perkins loans – This is a federal loan given to students in severe financial need. These loans are administered through the students school.
Stafford loans – These loans are available to students and are funded by private lenders. Stafford loans are guaranteed by the federal government and are given out as both subsidized or need based as well as unsubsidized or non need based loans.
PLUS loans – these are federal loans that are made to the parents of dependent students.
Institutional loans – These are loans that are issued to students by the school itself. The requirements for these loans vary from school to school so you will need to speak to the financial aid office to see if you are eligible.
Private loans – Most banks offer private education loans to parents or students. If you are looking for a loan through a private bank you will want to shop around for the best interest rates as they vary from bank to bank.

Scholarships:

Many students qualify for financial help through scholarships but unfortunately they don’t know where to look for this information. I suggest that students check with both their high school guidance counselor and the financial aid office of the school that they will attend to see what types of scholarships are available. Scholarships are a important and often times overlooked resource.

Grants:

Each year schools are awarded a certain amount of federal grant money to be awarded to students to help pay for tuition. Grants are given out to students who meet certain financial requirements and on a first come first serve basis so students need to apply for grants as early as possible. The most common types of grants are Pell Grants and Federal Supplemental Educational Opportunity Grants also called FSEOG. Contact your school’s financial aid office for more information on grants.

Work-study Programs:

Work study positions are available on a limited basis through the school. This is a federal program in conjunction with the school which allows students to work, generally on campus through the school. These positions are few in ratio to the amount of students who apply so contact the schools financial aid office as early as possible to take part in this program.

Prepaid tuition plans / 529 plans:

Prepaid tuition plans are a fairly new route to go to pay for school. These plans are offered in every state and are a way to lock in today’s tuition prices for your child’s future education. The plans are designed to help you beat inflation. These plans do vary from state to sate but some of the most basic information about these plans is as follows:

Most of these plans cover public in state colleges and universities although as of 2004 several private schools began offering their own versions of these plans.

A prepaid tuition plan could affect your child’s eligibility for financial aid. Being the recipient of one of these plans is viewed much the same as receiving a scholarship or as an outside resource that is being used to pay for school and this very well could greatly reduce the amount of financial aid that your child would receive.

These plans are at this time probably an appropriate choice for families that know that they will not be eligible for financial aid. Prepaid tuition plans are a newer resource and states are slowly revising the plans to better accommodate families needs. For the most up to date information regarding prepaid tuition plans on the internet go to collegesavings.org and click on your state to see what’s available.

FOR MORE INFO:

Be sure and look in Links page under Student Financial Aid, Money and Credit Education for Children and Teens for additional financial aid resources.