American Students' University Payment Plans Explained

The cost of studying in the US can be daunting, with students spending an average of $99,417 over the course of their degree. However, there are various funding options available to American students to help finance their education. These include financial aid packages in the form of grants, scholarships, loans, and work-study options. Parental contributions also make up a large portion of a student's funding, with the average parental contribution being $11,862 per year. Additionally, students may take on part-time jobs to help cover their expenses. International students, however, may face more limited financial aid options and are typically required to pay their first year's tuition in a single instalment.

Scholarships and grants

There are many types of scholarships and grants available, and they are offered by a variety of institutions. These include federal and state governments, schools, community organisations, private organisations, businesses, and nonprofits. Some institutions are founded solely to provide scholarships. Federal grants are awarded by the Office of Federal Student Aid (OFSA) at the U.S. Department of Education (ED) and are generally need-based. Scholarships are also available from other federal institutions, such as the Department of Health and Human Services (DHHS) and the U.S. Department of Labor.

There are also many scholarships and grants available for specific groups of people. For example, the American Association of University Women offers fellowships for non-American women seeking a Master's or doctorate in the USA. The Civil Society Leadership Awards offer full scholarships for Master's students from specific countries who are dedicated to fostering social change. The Foreign Fulbright Student Program offers scholarships for graduate students from around the world, as well as young professionals and artists, to study in the USA.

It is important to note that scholarships and grants may only cover a small portion of the total amount required for an academic year in the USA. Therefore, it is crucial to research and apply for multiple scholarships and grants, as well as consider other forms of financial aid, such as loans or work-study options.

Federal student aid

To access federal student aid, individuals need to complete and submit the Free Application for Federal Student Aid (FAFSA). This application is free of charge and serves as the gateway to the largest source of financial aid for college or career school. The FAFSA is used to determine eligibility for grants, scholarships, work-study programs, and loans. It is essential to meet the submission deadline, as federal student aid is awarded on a year-to-year basis. States and colleges also utilise FAFSA information to allocate their own financial aid packages.

The FAFSA process begins with creating an account and obtaining a Federal Student Aid (FSA) ID. This FSA ID can be used immediately to sign and submit the FAFSA form. However, for other purposes, one must wait up to three days for the Social Security Administration to confirm the information. After submitting the application, individuals can check its status by logging into their account on fafsa.gov or by contacting the Federal Student Aid Information Centre.

Federal grants, a significant component of federal student aid, are typically awarded based on financial need. The Office of Federal Student Aid (OFSA) at the U.S. Department of Education offers need-based grants, while other federal institutions, such as the Department of Health and Human Services and the U.S. Department of Labor, provide scholarships. Federal grants include the Federal Pell Grant, Federal Supplemental Educational Opportunity Grant (FSEOG), Teacher Education Assistance for College and Higher Education (TEACH) Grant, and the Iraq and Afghanistan Service Grant. Pell Grants offer the highest possible payment, with a maximum of $6,345 per academic year.

In addition to grants, federal student aid also encompasses work-study programs and loans. The Federal Work-Study Program, administered by the Department of Education, prioritises financial need, civics, and finding students work related to their field of study. This program is available to full-time undergraduates, graduate, and professional students, with authorised working hours ranging from 10 to 20 hours per week.

Parental contributions

There are various strategies that parents employ to finance their child's education. Long-term, high-yield savings accounts are a common approach, allowing parents to accumulate funds over time. Additionally, property mortgages are sometimes utilised, leveraging the equity in their homes to access funding. For parents with multiple children in college simultaneously, the financial burden can be even more substantial.

The amount of parental contribution is influenced by several factors. Firstly, the household income plays a crucial role, with the expectation that parents with higher incomes will contribute more. The number of children in the family and their respective educational pursuits can also impact the contribution, as parents may need to support multiple tuition fees and expenses. Additionally, the cost of living in the specific state or region of the United States can vary, affecting the overall financial burden.

In cases where parents are unable or unwilling to provide financial support, students may need to explore alternative funding sources. This can include scholarships, grants, work-study programs, and student loans. While scholarships and grants offer free money, they may not always cover the full extent of expenses. Work-study programs provide part-time employment opportunities, allowing students to earn an income while studying. However, taking on a part-time job can also add to the student's workload and impact their academic commitments. Student loans are another option, but it is important to carefully consider the interest rates and repayment terms before taking on any debt.

Student loans

There are two types of student loans: federal and private. Federal loans are either subsidised (the government pays the interest) or unsubsidised. Federal student loans are subsidised for undergraduates only. Subsidised loans generally defer payments and interest until some time (usually six months) after the student has left school. Private student loans are offered by banks or finance companies and are generally used only when students have exhausted the federal borrowing limit. They are not eligible for Income-Based Repayment plans and have less flexible payment terms, higher fees, and more penalties than federal student loans.

International students are not eligible for federal student loans but can apply for international student loans, which are specialised private education loans. Most international students applying for loans must have a US co-signer, although some lenders do not require this. A co-signer is legally obligated to repay the loan if the borrower fails to pay. The co-signer must be a permanent US resident with good credit who has lived in the US for the past two years.

The amount of money borrowed in student loans varies widely based on race, social class, age, institution type, and degree sought. In 2019, the average undergraduate who had taken on debt had a loan balance of about $30,000 upon graduation. Almost half of the student loans are for graduate education, and those loan amounts are typically much higher.

Work-study schemes

Work-study programs are a great way for students to earn money while pursuing their degrees. These programs are especially beneficial for international students who often have to pay out-of-state tuition and bear the costs of books, health insurance, room and board, and transportation.

The Federal Work-Study (FWS) program is a federally sponsored program that allows eligible students to work part-time with select organisations, including universities, local non-profit organisations, and government agencies. To be eligible for the FWS program, students must complete the FAFSA and demonstrate financial need. The maximum award amount for an academic year is $2000, though this may be smaller depending on financial need. Students tend to work 3-5 hours per week during the academic year, earning at least minimum wage.

The FWS program offers a range of opportunities to satisfy students' diverse interests and meet the critical needs of the university and its community. On-campus jobs can include marketing, administrative support, research, and blogging. Off-campus jobs are usually at non-profits, public institutions, or community groups.

In addition to providing extra income, work-study programs offer valuable work experience and the opportunity to practice English in a professional environment, which can be especially beneficial for international students. It is important for students to manage their schedules effectively to balance their coursework and part-time jobs.

Some universities also offer specialised Curricular Practical Training (CPT) programs that allow students to work from the moment they arrive on campus. These programs provide a unique opportunity to earn money while gaining practical skills related to their field of study.

Overall, work-study schemes offer American and international students a practical way to fund their university education while gaining valuable work experience and improving their English language skills.

Frequently asked questions