College cost have been soaring higher for several years. Unless you have a prepaid college plan, you will need some way to pay for tuition, books, supplies, and possibly room and board. Even if you have a prepaid college plan, it may not cover everything mentioned. So what are your other options?
Here are some common methods of paying your college expenses. This list is sorted alphabetically, and not by popularity
- Bursary: A bursary is a monetary award made by a private organization or institution to individuals or groups of people who cannot afford to pay full fees. Bursaries do not have to be repaid, but in return for the bursary the individual is usually obligated to be employed at the institution for the same duration as the bursary. Bursaries are more common outside of the U.S. Tuition reimbursement is a pseudo for of the Bursary model. Some companies will pay some or all of your education, so long as it is related to the job you are doing with them now or in the future. This is less popular than it use to be because student employees would often gain the degree at the expense of the company, and then change employers for a higher salary.
- Family: Going to college is going to cost a lot of money, and to deal with those costs, students and parents may want to create college savings plans ahead of time. There are many prepaid college plans, but those tend to restrict you to attend just schools within your state and within a certain time frame, such as ten years from graduating high school. There are also 529 Savings Plan which are much less restrictive in the usage, but there is some risk in these plans that you may not have enough funds available when you are ready to go to school, because performance of these plans is tied to the financial markets. Families are also a possible source of direct help financially either through personal loans or just simply paying for some of your expenses.
- Grants: A grant is one type of financial aid, usually disbursed by the government. For example, the federal government gives the Pell Grant to low-income undergraduate students to help pay for their tuition. The government also provides free money through the Federal Supplemental Educational Opportunity Grant. In order to determine eligibility for these grants, you must fill out the Free Application for Federal Student Aid (FAFSA). Grants are free money that will help you pay for college, leaving you with less debt after you graduate.
- Government Loans: Federal student loans: These loans are funded by the federal government. Federal student loans include many benefits (such as fixed interest rates and income-driven repayment plans) not typically offered with private loans. You will not have to start repaying your federal student loans until you graduate, leave school, or change your enrollment status to less than half-time. The interest rate is fixed and is often lower than private loans—and much lower than some credit card interest rates. View the current interest rates on federal student loans. Undergraduate students with financial need will likely qualify for a subsidized loan where the government pays the interest while you are in school on at least a half-time basis. You don’t need to get a credit check for most federal student loans (except for PLUS loans). Federal student loans can help you establish a good credit record. You won’t need a cosigner to get a federal student loan in most cases. Interest may be tax deductible. If you are having trouble repaying your loan, you may be able to temporarily postpone or lower your payments.
- Private Loans: These loans are nonfederal loans, made by a lender such as a bank, credit union, state agency, or a school. Private loans are generally more expensive than federal student loans. Many private student loans require payments while you are still in school. Private student loans can have variable interest rates, some greater than 18%. A variable rate may substantially increase the total amount you repay. Private student loans are not subsidized. No one pays the interest on your loan but you. Private student loans may require an established credit record. The cost of a private student loan will depend on your credit score and other factors. You may need a cosigner. Interest may not be tax deductible. Private student loans may not offer forbearance or deferment options. Since Oct. 13, 2014, Sallie Mae is a private lender, so its direct loans are not federal loans.
- Scholarships: Scholarships are another form of financial aid issued by corporations, non-profit organizations, and individuals. Scholarships may ask you to write an essay on a creative topic or some other task to show that you are willing to do what is necessary to get the scholarship. There are scholarships for students of any age, sex, religion, and cultural background. Some are based on academic or athletic ability, or ethnicity, major, state, parent’s military or work background, and much more.
Scholarships are free money that will help you pay for college, leaving you with less debt after you graduate. So, make sure you apply for as many as you can, and keep applying every month — before and throughout college.
- Self Funded: If your are financially able, you might pay your own way through school. There is a sense of pride from being self sufficient, but that comes at the expense of a drained bank account. Tap into your savings, inheritance, or earnings.
- Sponsored: Sponsorships are much more common in Europe, where private benefactors sponsor students from the local community. In the United States sponsorships are much less common. International students talk about “finding a sponsor” while US students talk about “finding a scholarship”. A “sponsorship” model gaining in popularity in the U.S. is crowd funding. Today’s college students are reaching out to complete strangers through the use of crowd funding to help cover everything from tuition to study abroad trips. While the majority of crowd funding sites originated with the idea of helping charities or people in severe need (life-threatening illness or devastation from a natural disaster), many are now seeing an increase in campaigns specifically designed to help students pay for college. The premise is simple; tell your story and get people to donate.