The cost of attending college goes up every year1, and for both students and their parents, the burden of this expense is also increasing. Some students are not convinced of the long-term value of taking on so much debt at the start of their professional career, but many students believe in the importance of a degree in reaching their long-term professional goals.
For many parents, the challenge of saving for college is even complicating their efforts to save for retirement2. To toe the line between affording college and preserving their long-term finances, students and parents alike are eager to seek out financial aid opportunities that make the cost of college more manageable.
Here’s a look at why financial aid is important, some types of financial aid you may want to consider, along with tips to discover funding options and improve your odds of financial aid eligibility.
The Importance of College Financial Aid
Whether you receive a grant, a scholarship, or a subsidized student loan, financial aid packages are designed to offer various forms of financial assistance and support to a wide range of prospective college students.
For some families, this financial aid can make or break a student’s dreams of attending colleges. In other cases, it can help parents support their child’s education without cutting into their retirement savings or attaching them to loans that increase their debt and affect their financial stability.
Even when students and families can afford the cost of college, access to financial aid improves their ability to control their finances and prioritize other financial goals. No matter what your family income may be, college financial aid has something to offer.
Types of Financial Aid
Most forms of financial aid fall into one of a few key categories. As you start your search for financial aid, you should consider the following options for funding part or all of your tuition and other costs of attending college:
- Subsidized government loans: These loans are available at a reduced rate compared to other student loan options, which can provide great savings on interest payments for students and their families.
- Government grants: Pell grants and other grant money may be available based on need. Unlike loans, grant money does not need to be repaid.
- Scholarships: Students may be eligible for scholarship money from the institutions they attend, as well as outside scholarship funds. The total scholarship package available to students may depend on where they choose to attend college.
- Work-study programs: Many schools offer work-study programs that allow students to participate in research and other work in exchange for payments to their tuition bill.
- Employer tuition assistance: A growing number of companies, including Starbucks, Walmart and McDonald’s3, offer tuition assistance for employees.
Tips for Finding Financial Aid Opportunities
Overwhelmed with the task of tracking down financial aid opportunities? Here are some tips to get you started:
- Meet with a financial aid counselor to determine your eligibility for various programs. Financial aid counselors can help you understand where you’re most likely to find financial aid—including opportunities that many people may overlook.
- Start your search early. The more time you give yourself to find financial aid, the easier it will be to manage applications and deadlines, build up your financial aid package, and figure out how you’re going to cover your college expenses.
- File your FAFSA as soon as possible. This essential documentation is required to receive government grants, subsidized loans, and other financial aid.
- Dig deep into scholarship opportunities. As surprising as it sounds, some scholarship funds are unable to distribute all of their money to eligible applicants some years because of a lack of qualified applicants. You could be the person a niche scholarship is looking for.
- Explore employment options where tuition may be partially or fully paid. If you need a job while in school, you can increase your earnings by finding an employer that will help you cover college costs.
- Minimize taxable income, if possible. Lower taxable income could increase your eligibility for grants and other financial assistance.
- Always apply—even if you think you’ll be turned down. Even when you think you’re not a strong candidate for financial aid, you never know where you might receive valuable financial support to make college more affordable.
Take Control of the College Planning Process
The cost of attending college is no small thing. The earlier you can get started with the financial aid planning process, the better-equipped you will be to defray tuition costs, increase your savings, and create an achievable blueprint for affording this major life expense.
Find out how you can improve your college planning through better budgeting in your day-to-day life—download our free guide “A Complete Guide to Budgeting” today.
Sources
2 https://www.cnbc.com/select/how-to-save-for-college-and-retirement-at-the-same-time/
3 https://www.estudentloan.com/blog/10-companies-will-help-pay-college
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