Funding a college education comes in second on the list of the most pricey things that Americans pay for. On average, a student living on campus spends up to $25,707 per year to fund a college education in the U.S. For this reason, the first thing that comes to the mind of many parents, students, or guardians after college admission is how to finance tuition, books, and rent or accommodation.
Having a stable source of finance can enable you to focus on your education with peace of mind. Fortunately, there are multiple ways to fund your college education, and exploring your options is essential. Discover the top ways to fund your college studies.
Merit and Need-Based Financial Aid
In the U.S., post-secondary students can apply for federal student loans and get the opportunity to afford the university of their choice. According to a 2022 report from Education Data Initiative, the level of student loan debt in the U.S. currently stands at $1.745 trillion, and up to 42.8 million of borrowers have outstanding balances.
There are a plethora of options for financial aid from the federal government, state governments, and private institutions. Typically, financial aid can be merit and need-based aid.
1. Merit-Based Aid
As the name suggests, merit-based aid is awarded to students depending on their academic performance. It can also be based on a student’s participation in extracurricular activities and looks beyond your financial needs. Typically, scholarships from public, private, or non-profit organizations fall under this category.
The awarding committee evaluates your grades, involvement in extracurricular activities, and standardized test scores. To qualify, you need to maintain a particular GPA while studying.
It’s important to remember that the decision to award a merit-based scholarship may depend on the institution. To look for scholarship opportunities, you can search for organizations that offer financial support to students who excel in different areas. You can also search online in your state or areas for search institutions.
2. Need-Based Aid
Need-based aid or grants are popular types of financial support for college students in the U.S. It includes scholarships, institutional grants, federal loans, state grants, federal grants, and federal work-study programs.
The Pell Grant is the most popular program, designed for students from low-income families. For the 2021-2022 academic year, the highest Pell Grant payout was $6,495, and the number of recipients grew to 6.4 million.
To qualify, you must demonstrate a certain level of financial need. Usually, you can fill out a Free Application Federal Student Aid (FAFSA) form offered by many colleges to check eligibility. You may also qualify for the Federal Supplemental Educational Opportunity Grant, which offers students up to $4,000 for tuition and other expenses.
Most scholarship platforms allow you to find various options depending on the search criteria. The most common are:
- Financial need
- Military affiliation
- GPA or Grade Point Average
Every scholarship is different, so you need to track all those that meet your requirements.
Private Student Loans
Private student loans are provided by banks, credit unions, and online lenders and involve a credit check. Therefore, you may need a cosigner for your first borrowing to qualify for one. In the future, your current repayment record will determine your credit score, affecting the type and amount of loan you are eligible to borrow.
To know the maximum amount you qualify for, you can use a personal loan calculator while adhering to the 30% credit utilization rule.
Usually, this loan may be more expensive than federal loans since interest rates may depend on economic conditions. Hence, the private student loan is best for covering other educational expenses after taking your eligible subsidized and unsubsidized federal student loan to avoid over-borrowing.
Federal Work-Study Program
The federal work-study program is an initiative that offers part-time job opportunities for college students with financial aid. You must fill out the FAFSA form under the work-study program section to check your eligibility.
However, there’s no guarantee that you’ll get the job because this may depend on available opportunities at your campus and the number of applicants. Also, you may have to work enough hours to qualify for the full amount.
Graduate school and postgraduate students can also consider getting financial aid from fellowships. Usually, a fellowship is a financial award given to students depending on various factors such as discipline and grades.
Fellowships mainly apply to postgraduate students willing to advance their studies or graduate students advancing their training beyond what they did in grad school. For example, you can get a fellowship to further your studies at your previous university after graduation.
Some of the popular fellowships include graduate, medical and postdoctoral. Often, fellowships are challenging to come by due to competition among students. Students who have demonstrated impressive scores and accomplishments such as research and publication of study work are usually in an advantaged position to get these fellowships.
Paying for a college education can be stressful for parents and students. However, with research, you can explore the various funding options available. Most importantly, remember to fill out the FAFSA form upon admission at the start of your academic years.