Douglas Olsen
Paying for college can be a complex and challenging endeavour, with students and their families often relying on a combination of sources to cover the costs. While the specific methods may vary depending on individual circumstances, there are several common ways that students use to fund their college education. These include scholarships, grants, student loans, part-time work, savings, and financial aid from the government or other organisations. Understanding these options is crucial for prospective students and their families to make informed decisions about their educational journey.
| Characteristics | Values |
|---|---|
| Grants | Need-based |
| Scholarships | Merit-based |
| Part-time income | Babysitting, dog walking, food delivery, freelancing, internships |
| Loans | Federal, private |
| Savings | 529 plans, custodial accounts, Roth IRA |
| Work-study programs | Federal Work-Study Program (FWS) |
| Payment plans | Tuition instalment plans |
| Military service | Reserve Officers' Training Corps (ROTC) |
| Regional tuition exchange programs | Western Undergraduate Exchange, Midwest Student Exchange Program, New England Regional Student Program, Academic Common Market in the South |
| Veterans benefits | Post-9/11 GI Bill |
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What You'll Learn
Scholarships and grants
Grants
When you complete the FAFSA (Free Application for Federal Student Aid) and apply to colleges, you will automatically be considered for government and institutional grants. Private grants, however, usually require separate applications. Grants have strict requirements for what they can be used for and are typically only applied to tuition, room and board, and fees. There are also conditional grants, which provide financial assistance to eligible economically disadvantaged students interested in working for certain government bodies. For example, the Conditional Grant Program in Texas is available to eligible students pursuing a degree in engineering or a TxDOT-approved operational business discipline. Grants from private organisations may have fewer restrictions on what they can be used for, but it's important to check with the grant provider to determine what the grant can be used for and what steps need to be taken to be considered.
Scholarships
Scholarships are usually awarded based on merit or identity. This could include academic performance, athletic performance, artistic ability, volunteer service, musical talent, gender, ethnicity, or being a first-generation college student. Colleges and universities offer scholarships, but they are also offered by various private organisations. Scholarships tend to have more flexibility when it comes to how the funds can be used. Generally, you can use scholarships for any external academic expenses, such as a computer, food, or off-campus housing, in addition to tuition, fees, and room and board. Sometimes, there are no restrictions placed upon scholarship money at all.
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Student loans
Before applying for student loans, it is recommended to first explore other options such as grants, scholarships, and federal loans. Grants and scholarships are types of financial aid that do not need to be repaid. Grants are often need-based, while scholarships are usually merit-based. Federal Work-Study programs are another form of federal financial aid that provides part-time jobs to students, allowing them to earn money while studying. However, the earnings from work-study programs cannot typically be used to cover direct costs like tuition, on-campus housing, or meal plans.
If other options are insufficient, student loans can provide additional assistance. When applying for student loans, it is important to borrow responsibly and only take out what one can afford to pay back. The repayment amount includes the borrowed sum plus interest. Federal student loans may have fixed and deferred repayment options, with varying interest rates. Private student loans may approve borrowers to borrow up to 100% of their school-certified costs for the year. It is advisable to understand the terms and conditions of any loan before committing to it.
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Work-study programs
One of the most common ways to pay for college tuition is through work-study programs. These programs are a form of federal financial aid that provides part-time jobs to students, helping them earn money to pay for their educational expenses. Work-study programs are available through colleges and universities and are typically offered based on the school's funding level, availability, and the student's financial need.
Work-study jobs are usually on-campus and low-effort, allowing students to work around their class schedules. Examples include working at the library or filing papers in an office. While the pay is often low, a portion of the student's earnings may be subsidised by a federal program, meaning that their paycheck remains the same while the department's budget is spared. However, work-study money usually cannot be used to cover direct costs like tuition, on-campus housing, or meal plans, as these bills must be paid before the work-study funds are earned.
To qualify for a work-study program, students must demonstrate financial need and meet certain eligibility criteria. The amount of financial aid provided through the program is determined by the student's level of need and the availability of funds. Students should inquire with their financial aid office to understand their options and eligibility for work-study programs.
While work-study programs can provide valuable financial assistance, they may not always be sufficient to cover all college expenses. Students should consider combining work-study with other forms of financial aid, such as grants, scholarships, and savings plans, to ensure they have adequate funds for their education. Additionally, students can explore off-campus part-time job opportunities or utilise their specific skills, such as graphic design, to offer freelance services.
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Part-time jobs
Working part-time is a common way for students to pay their college tuition. The Federal Work-Study Program (FWS) helps place students with financial aid in part-time jobs to earn money while attending college. In 2017-2018, over 3,000 schools participated in FWS, and about 613,000 students received earnings, with an average of $1,650 for the school year. However, work-study money usually cannot be used to cover direct costs like tuition, on-campus housing, and meal plans.
There are many part-time job options for students, including babysitting, dog walking, and food delivery. Students with specific skills, such as graphic design, can also offer their services as freelancers. Many paid internships are also available to college students. These can be a great way to gain experience and earn money simultaneously. Students can check with their academic advisor or school career centre for any opportunities.
Students can also work part-time off-campus jobs, which can provide additional benefits such as learning about running a small business or becoming more involved in the local community. However, it is important to balance part-time work with academic commitments to ensure that studies remain a priority.
In addition to part-time jobs, students can also explore other options to pay for college, such as scholarships, grants, and loans. Scholarships are often merit-based, while grants are usually need-based. Students can research and apply for various scholarships and grants to increase their chances of receiving financial aid. Loans are also an option, but it is generally recommended to maximise federal student loans and explore other avenues before taking on private loans, which may have varying rates and less consumer protection.
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Savings and gifts
One option for families is to save money in a 529 college savings plan or other savings account. A 529 plan is a state-sponsored investment plan for educational costs, and tax-free disbursements can be used to cover tuition and fees, room and board, books, and other expenses.
Custodial accounts are another way for parents or guardians to save for their child's education. With this type of account, money is put into an account until the child reaches legal age. A Roth IRA is another option, although it is traditionally reserved for retirement. However, funds from a Roth IRA can be used to pay for tuition and other qualified expenses without incurring a penalty, although income tax must still be paid.
Students may also receive gifts from relatives and friends to help pay for their college tuition.
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