The Top 10 Things You Should Keep In Mind About Student Financing

Students in a college classroom.

Photo Credit: Flickr/SMB College

Paying for college is growing more costly. Whether you need to pay for college for yourself or your children, there are a variety of financing options available, ranging from student loans to savings plans to personal loans and military assistance.

While you can’t cover all the costs of college using student loans or scholarships, there are personal loan options that are also available to you. A combination of federal loans, grants, savings, and personal loans (typically an unsecured personal loan that doesn’t risk your assets or even a peer-to-peer loan where you can avoid using a bank) may be what’s needed for you to afford college. Here are things to keep in mind when looking for student financing:

  1. Learn what the net price of college is. The net price is what it would cost for a first time, full-time student in an undergraduate program to attend college for one year. (The net price excludes any aid money that a student may be eligible for.) Due to a recent federal mandate, colleges and universities now provide net price calculators online, so determining the cost has become easier.
  2. Always start by applying for Stafford loans and Perkins loans. You should also take the maximum amount of money they offer. These federal loan programs are more affordable and offer greater flexibility in their repayment options, so obtain as much financing as you can from the federal government before looking for a private loan option.
  3. Start saving as early as possible. One way to help fund college is to open a 529 savings plan. A 529 plan allows for investment in a variety of funds and in certain states, parents with a 529 savings plan can qualify for either credit on contributions or an income tax deduction. Another savings plan is the Coverdell Education Savings Account. Parents with a Coverdell account don’t have to pay income taxes on the money generated by that account.
  4. Research all scholarship options. There are scholarships available for requirements ranging from grade point average to whether or not the student is left-handed (the Frederick and Mary F. Beckley Scholarship is one such scholarship). Resources are available online for scholarship options, many of which are available up to the last minute.
  5. Look into contests and crowd funding sources. A growing number of websites offer contests to help students pay for a portion of their college costs. Additionally, crowd-funding sites such as GoFundMe and IndieGoGo enable users to seek out donations for use toward college tuition.
  6. Don’t forget about grants. Federal grants are available based on need. You shouldn’t rely solely on loans or scholarships to help pay for college. A number of federal programs are in place to help alleviate costs.
  7. Enter into a work study program. Many colleges and universities offer a work-study program for students. Check with the student financial services or admissions office to find out if they participate in the Federal Work-Study (FWS) program and what’s required.
  8. Utilize education tax benefits. Education tax benefits are another way to offset the cost of higher education. There are tax credits such as the Hope Scholarship Tax Credit (also known as the American Opportunity Tax Credit) and Lifetime Learning Tax Credit. If you’ve taken a loan, you may be eligible for a student loan interest deduction or a tuition and fees deduction.
  9. Check into tuition assistance. If you are currently working, your employer may have tuition assistance in place. Your human resources department can tell you whether employer education assistance benefits are offered.
  10. Learn more about military aid. If you are a member of the Reserve Officers’ Training Corps (ROTC), there is military aid and assistance for college. There is the Montgomery GI Bill, as well as recruiting programs, and financial aid for veterans and their dependants (if your family has a history of military service).