How to Pay For College: an All-Inclusive Guide

Although the value of college goes beyond its price tag, the cost of college can make it a burden on your and your parents’ wallets. After factoring the tuition, room and board, textbooks and other miscellaneous expenses into the cost of college, that dream to become a doctor or journalist can easily go from possible to out of your reach without finding out how to pay for it. But don’t fear, collegiettes! There are plenty of ways you can fund your college education, and we’ve laid out all your options for you.

Federal Financial Aid

The federal government offers grants and loans to help collegiettes pay for their college education. When we covered Financial Aid 101, we talked about things like cost of attendance, expected family contribution, and the types of aid available through the federal financial aid program. Your first step to getting financial aid is filling out the Free Application for Federal Student Aid (FAFSA), which asks questions about your income, your parents’ income, and your living situation to determine how much aid you qualify for and what kind of aid you’ll be getting. The types of federal aid available are:

Grants: Federal grants are based on financial need and do not need to be paid back. When you apply for financial aid using the FAFSA form, you are automatically considered for government grants. The Pell Grant has a maximum award of $5,500 for a year, which could cover an entire semester if you’re attending a community college or a state university. Collegiettes who have exceptional financial need (for example, if their parents’ income falls below the poverty line) will also be eligible for the Federal Supplemental Educational Opportunity Grant (FSEOG), which ranges between $100 and $4,000 a year.

Loans: When you apply using FAFSA, you are automatically considered for government loans, which need to be repaid after you graduate or leave school. If the loan is unsubsidized, interest is tacked onto the loan as a charge for borrowing the money; if it’s not paid while you are in school, it is added to the amount you owe and can increase your future bill when you start having to pay it back. If the loan is subsidized, that means the government is paying for the interest and you’ll only have to pay back the amount of the loan without interest after you graduate. After you graduate, you or your parents will be responsible for paying your loans back, depending on whether you take out a student loan or a parent loan, but the government and your loan servicer (the bank that holds your loan) have several payment options to help you pay off what you owe, which you can read about on the Federal Student Aid website.

Work-Study: The FAFSA form will ask you if you want to be considered for the federal work-study program. “At most colleges/universities, an award of federal work-study means that the student has the ability to apply for [work-study] jobs, but it’s not a guarantee of employment,” says Andrea Caputo, the director of financial aid at Hiram College. Some of the jobs available in the program include working in your school’s library, working in your school’s admissions office, and assisting in your major’s department as a student assistant or teaching assistant. Taylor Lane, a junior at Sacred Heart University, works six to eight hours a week at her school’s library circulation desk. “It allows me up to $1,500 a year off of tuition,” she says. An added benefit is the job experience it gives you. Think of it as a resume-booster that also cuts down some of the cost of college!

Scholarships and Private Grants

Don’t limit yourself to just federal financial aid, though. “Students should look into private scholarships, which are scholarships that aren’t awarded through the institution they are attending,” Caputo says. Scholarships and grants are one of the best ways to pay for college, because you don’t have to pay the money back. As long as you apply the money you receive to your school expenses, you may essentially get to attend school for free, depending on how much aid you receive. But searching for scholarships and grants can take time and either exceptional financial need or exceptional accomplishments in academics or other activities.

So where can you find them? “Information on these scholarships can be found in the resource section of your local library, online through scholarship searches, as well as on your institution’s financial aid web page or in their office,” Caputo says. Start by checking out our list of the 10 best sites to look for scholarships.

Caputo advises caution, though, when you’re on the hunt for free money to pay for school. “One thing to be careful about when doing an online search is that some [scholarships and grants] are scams as well,” she says. “A usual tip-off for these is that they ask you to provide personal financial information, ask you to pay a fee to apply, (or) they will guarantee you financial aid.” A good rule to follow is to check with your financial aid office that a site is legitimate before you apply or choose well-known and trusted sites to look for scholarships.

Private Loans

Private loans are taken out through your local bank. To apply for a private loan, you have to go to a bank or credit union, talk to a banker, and fill out some paperwork. Unlike federal loans, private loans require established credit, which means that your parents may have to co-sign for the loan. If you’ve never had a credit card, this means that you don’t have any credit history, and you might be unable to get a private loan without your parents’ help. Still, Caputo suggests using private loans as a last resort. “Private loans should only be considered after all sources of financial aid have been exhausted, including federal student loans,” she says. What should you consider before taking out a private loan?

How is the interest calculated? Interest is the charge the bank adds to cover your borrowing of the money, and it can be either fixed or variable. Fixed interest means that the interest rate doesn’t change over time, and variable interest means that the interest rate can increase or decrease over time. If your loan has a variable interest rate, you could start with a low rate that might increase and make the loan more expensive in the long run. “Remember that interest is accruing while you’re in school, so if you can afford to, at least make payments on the accrued interest,” Caputo advises. Interest accrues, or builds, over time, and when it is added to the amount you originally borrowed, it becomes capitalized interest. Capitalized interest means that it has been added to your base amount (the principal) and will be charged an interest rate.

When do you need to start making payments? Private loans often need to be paid back while you’re in school and can come with higher interest rates, but using private loans can be a good option if you know that you’ll be able to make the payments while you’re in school or if you only borrow a small amount (like just enough to pay for housing for the year or your textbooks). But you might be able to defer the payments while you’re in school, which means that you don’t have to make payments on it until you graduate. But Caputo advises paying on them as soon as you can. “You may be surprised how affordable payments can be, and the earlier you pay on them, the sooner you have them paid off,” she says.

How much do you really need to borrow? Because loans can be an expensive option in the long run, knowing how much you actually need is important. Leftover loan money is not “free money” and is still included in how much you will owe the bank. “Keep your borrowing to a minimum and only borrow what you absolutely need,” Caputo says. Private loans can cover the upfront costs of your education, but make sure that you know what you’re getting into before you sign your name to the paperwork.