Everything You Need to Know About Paying For College and Tips
on Paying Off Loans Before Graduating
Choosing to go to college is a major financial decision and if
you want to make it out with the least impact to your wallet, you
need to plan appropriately.
If you're fresh out of high school, you should discuss your
plans with your guardians. Discussing finances with your guardians
can be a difficult subject to talk about. You need to understand
their financial situation and then discuss with them what they can
realistically afford to pay to send you to school and how much
contribution you will need to make.
If you don't have the help of others or if you're an adult
seeking education later in life, you need to understand what your
options are. Working towards higher education does not have to
become a financial burden. Having your loans paid off before
graduation is realistic if you are motivated and driven to do so,
and if you do not pay your tuition in full before graduation, you
can significantly reduce the amount of debt most students incur by
making responsible decisions and thoroughly reviewing all
Calculating the Actual Costs of College
According to the Trends in College Pricing 2011 report from
CollegeBoard, the average in-state tuition for a four-year college
is $8,244 per year. If you include additional fees, such as room
and board, the price averages $17,131. The average tuition for
out-of-state students for a four-year college comes out to around
$20,770 per year or $29,657 when additional expenses are
Full-time undergraduates receive an estimated $5,750 in grant
aid and tax benefits. Subtracting grant aid and tax benefits, you
can expect to pay $27,226 total, without considering room and
board. Additionally, you can plan to pay interest on your loan,
which comes out to about $567 per month.
The interest on your loans accrues each month throughout your
enrollment in school, except on subsidized federal student loans
where the government pays the interest for you while you are
enrolled and working towards completion of your degree.
You can use this equation to calculate your approximate interest
accrued per month.
Interest Rate * Your Loan Balance / 12
For example, if you take out an $8,244 loan at 6.8 percent
(.068) interest, you will accrue $46.71 in interest each month. As
the loan balance decreases, so will the accrued interest. Remember
to include this into your monthly payment when you are calculating
your totals and planning your budget.
Planning For College While You're Still in High School
If you're currently in high school, now is the time to start
planning. You need to keep track of all the activities you are
involved in. Keep copies of your awards (academic and
non-academic), and detailed information pertaining to
extracurricular activities. Also make note of volunteer work and
hours. Track all clubs, organizations, committees and sports you
are a part of. These things will be important to reference while
applying to scholarships.
If you have well written essays, hold on to those too, because
you might be able to submit those to scholarships that you will be
Many high schools will have a scholarship coordinator or
guidance counselor in house, which can help you find scholarships.
If they are not able to help you, consider contacting your local
school board to find resources and assistance.
If you aren't actively participating in school activities or
volunteering in your community, consider starting now, because many
more scholarships will become available to you in the future.
Choosing a College You Can Afford
Many students have the desire to go to private schools like John
Hopkins University, Vanderbilt or Dartmouth, but for most of us,
that's just not realistic, financially speaking. In fact, all three
of those schools are some of the most expensive schools in the U.S,
costing more than $55,000 a year in tuition. Just because you can't
afford to go to a high-end private school doesn't mean that you
won't get a great education at other schools.
For the 2011-12 school year, the average tuition of a:
- Public, two-year, in-state college is $2,963
- Public, four-year, in-state college is $8,244
- Public, four-year, out-of-state college is $20,770
- Private, for-profit, four-year college is $14,487
- Private, non-profit, four-year college is $28,500
By using tools such as the College
Matchmaker from CollegeBoard or the College
Search from U.S. News, you can filter colleges based on tuition
costs, average required GPA, acceptance rates, program ratings and
other metrics to find the school that fits your needs and which
meets your budget.
You should also know that tuition and fees differ greatly
between in-state and out-of-state students. For example, for the
2011/2012 year at Metropolitan State College of Denver, tuition for
18 credits costs $2,416 for in-state students, while out-of-state
students can expect to pay $7,845 for 18 credits. The reason prices
are higher for an out-of-state student is because out of state
individuals have not contributed taxes to the funding of public
colleges. There are ways to meet the in-state tuition requirement
if you're an out-of-state student, but in most cases you will need
to meet a durational residency requirement and show intent of
becoming a permanent resident of the state. Some schools will also
offer in-state tuition to students in neighboring states.
Requirements vary greatly by state and school, so you will need to
speak with a representative at the school you wish to attend.
Living On a Budget
The average cost of books and supplies cost around $1,168 per
year for a student attending a four-year college. If you buy your
books used, you can save up to 90% of the cost of a new textbook,
depending on where you shop. You can even sell your books back if
they are in good condition. Remember to buy early so that your
books are shipped before class starts!
Here are few sites where you can buy and sell used
Cutting back on dining expenses is often a necessity for most
college students. This usually means forgoing fast food, not going
out to restaurants and keeping frozen dinners to a minimum. If you
want to save money, you'll need to cook or eat-in. It might sound
difficult, but it's possible to live on $20 a week for food, if you
plan it right.
Cooking 1-3 large, full-sized meals per week can save a lot of
money. Make the meals large enough to provide five to six servings
and you can live off the leftovers all week. Make it a habit to
never let your leftovers go bad. Foods such as spaghetti, rice and
beans are extremely affordable. Consider buying a basic cookbook to
keep meals interesting.
If you're living on-campus, see if your dorm has an oven. All
you need is a pan, a pot and cookie sheet and you should be able to
cook anything you need. If your dorm doesn't have an oven, consider
a George Foreman grill, but keep in mind that some schools have
banned cooking devices such as these because they are
You can also supplement your meals or just snack on foods that
are always cheap, such as Ramen noodles, tuna, and macaroni &
cheese. To get your daily recommended amount of fruits and
vegetables, buy only in-season produce. Apples in the fall can be
purchased for around $1.00 a lb. Look for oranges and grapefruits
in the beginning of the year, broccoli and lettuce in the spring
and watermelon, strawberries, tomatoes and cucumbers in the summer.
Look around the produce section for the best deals.
Live With Your Parents
When you're young, the thought of moving away and living
on-campus is a dream come true. It's that next step towards
becoming an adult, but if you can bring yourself to live with your
parents for just a few more years, you won't regret it. The average
cost of room and board for a student living on a four-year college
campus costs about $8,887 per year. That's a savings of $35,548
over the course of four years.
Other benefits of living with your parents is that you'll likely
always have food, you can cook when you want, you can do your
laundry for free, you'll have access to a landline phone and free
television. Many students also find it nice to have the support of
the family at any time of the day.
Using School Benefits and Facilities
If you're looking for some entertainment, instead of going out,
consider attending school events. Many schools have theatre
programs that put on free or discounted shows for students. If you
have sports teams, go to some games. Your college probably has a
school paper, which will often list free or discounted events
on-campus or in the neighborhood. You can usually find some
discounted or free comedy shows, concerts, movie screenings and
Many schools have on-campus gyms and fitness centers as well. If
you already have a gym membership, cancel it and go for free. Many
college fitness facilities will have workout equipment, a swimming
pool, basketball courts, and even dance studios. There are other
services you can utilize as well. If your school has a psychology
department, they might provide free therapy. The journalism
department can help review your essays and the human nutrition
department may offer free dietary advice. Ask around and you're
likely to find something beneficial.
Federal Student Aid is an office of the U.S. Department of
Education, which provides financial assistance to eligible
individuals. Financial aid starts with filling out the Free
Application for Federal Student Aid (FAFSA), which can be filled
out and returned to the school, or you can fill it out entirely
online. The earliest you can submit your FAFSA is January 1st, and
that's the day you should do it. Federal funds haven't been
allocated yet and you're most likely to get more money. If you
qualify for grants, experts suggest filling out your FAFSA form no
later February 15, before state grant money runs out.
To receive financial aid, you need to meet a variety of
requirements. You need to show a need for financial aid, you need
to have a high school diploma or GED, a valid social security
number, you need to be enrolled in a degree program, and need to
maintain a satisfactory academic record. You can't use this money
for anything other than education purposes. You can learn more
about eligibility by visiting
Student Aid on the Web.
Types of Loans
There are two main types of loans available to pay for college -
federal and private. Private loans are generally more expensive
because of higher interest rates, so it's best to see which federal
loans you qualify for first. With all loans, pay off your highest
cost loans first to reduce the amount of accrued interest.
To keep debt low, you need to seek out the lowest cost loans.
There are federal loans for students paying for themselves and
federal loans for parents who are paying for their children. If you
are a student, you should look into Perkins and Stafford loans and
parents should look into the Parent Loans for Undergraduate
If you don't qualify for a Perkins loan, Stafford loans are the
next best option available for students. Stafford loans are
typically set at a fixed rate of 6.8 percent, but some lenders
offer discounts. If it's determined that you qualify for a
subsidized Stafford loan based on financial need, the government
will pay your interest while you attend college.
Perkins loans have the cheapest interest rate at only 5 percent,
but they are only available to students with the greatest financial
PLUS loans allow parents to borrow the money they need which
isn't already covered by the student's financial aid. This includes
the full cost of attendance, so the parent will not need to take
out any private loans. PLUS loans also have a fixed interest rate
of 8.5 percent. Some lenders may offer discounts as well, for
example by electing to participate in automatic payments.
Private and State Loans
Banks, colleges, private foundations and other financial
institutions provide private loans. State agencies also offer
loans. Private and state loans are usually not subsidized and are
typically more expensive than federal loans.
Banks and other financial institutions usually offer loans that
have higher interest rates than federal loans. Some colleges and
universities are also able to provide loans, and in some cases may
carry lower interest rates than federal loans. Private
organizations and foundations have also been known to provide
reasonable rates and terms. Be sure to do your research to find the
best option available to you. You can find more information about
state loans from your state by visiting the
State Higher Education Page on the U.S. Dept. of Education
Stafford and Perkins loans cannot be consolidated until after
graduation or when repayment starts, but if you've taken out a
private loan, you can consolidate your loans while you're still in
school. Parents who have taken out a PLUS loan can also consolidate
while the student is still in school.
Consolidating your loans combines several loans into one new
loan and will usually result in a lower interest rate and lower
monthly payments. The key benefit is a lower interest rate. To pay
off your loans quickly, continue to make the same monthly
If you have a public service job, for example working for the
government, or with a school or non-profit, you can consolidate
your federal loans directly with the government, but keep in mind,
you can only consolidate federal loans after repayment has
Tuition Discounts and Waivers
A tuition discount is when the school quotes tuition at full
price, but then offers to reduce the amount. These are strictly
discounts that reduce the amount of tuition a student owes;
additional money is never distributed. Most discounts apply only to
tuition, but in rare cases, they may extend to other require fees,
but don't expect any discounts on room and board or for other
Eligibility discounts are usually offered based on a student
meeting specific requirements, for example some may be based on
religion, employee/student relationship or age of the student.
Requirements vary by school. These discounts can't be negotiated
for a better deal. Some examples of eligibility discounts would be
a tuition discount because of being a relative of a college
employee or children of alumni. Senior citizens may also receive
discounts. Some schools work with various businesses to provide
tuition discounts to their employees. Some colleges will also offer
discounts if you're a part of a religious institution. Check with
your school to see if they provide any discounts which you may
Incentive-based discounts are often provided by colleges to
entice students to attend their school. Reasons for this include
wanting to increase the quality or diversity of the student base,
or simply so that they can acquire more students each year. Funds
used for incentive-based discounts are set-aside specifically for
this reason and can often be negotiated. Incentive-based discounts
may only apply to your first year of school, so you should make
sure to understand this before accepting the offer, otherwise your
tuition might increase considerably in the following years.
Merit-based discounts depend on academic eligibility. These
types of discounts are often very steep because the requirements
are difficult and help the school increase the academic quality of
students attending. To give an example, in 2011, Seton Hall offered
a discount of about $21,000 on a $31,440 per year tuition, but to
qualify, the student must graduate in the top 10 percent of their
high school class, have SAT math and reading scores of at least 550
or an ACT score of 27 or higher. More schools are moving to this
model in order to obtain a higher quality of students.
Need-based discounts are provided to students in financial need.
These discounts are offered to help people who might not typically
have the ability to pay for higher education. Eligibility varies,
but often requires the student to take a minimum amount of credits
per semester and to maintain a satisfactory academic record. Some
schools even offer full waivers, which depend on the financial aid
policies of the school.
To show their appreciation of those serving in the military,
many schools will offer discounts to service members, spouses and
immediate family members. Requirements vary, but students will
normally need to commit to a minimum course load and time
If you are paying off your loans, you are allowed a deduction in
your taxes, up to $2,500 per year, depending on income
requirements. Make sure to give a copy of your latest 1098E
document to your tax preparer.
Thousands of grants are available every year and many students
qualify for one or more. Grants are similar to scholarships, but
are most often provided by government or non-profit organizations.
They are also often more flexible in how the awarded money can be
used. Some grants are available only to specific fields of study,
while others depend on specific factors, for example being a single
mother or military veteran. The money provided by a grant is free
and does not need to be repaid.
The government has several grant programs designed to help
low-income students attend college, for example the Pell grant.
Pell grants are only offered to low-income households and to
students enrolled in an undergraduate program. Pell grants are
provided entirely by the government, which means you don't have to
compete against other students for the award. To be considered
eligible for the Pell grant, you must complete the FAFSA, which
will be reviewed. The results will determine how much a student
will receive. The highest awards are given to students attending
full-time. Low-income students eligible for or who have received
Pell grant awards should also look into eligibility for the Federal
Supplemental Educational Opportunity Grant.
Undergrad freshmen and sophomore students, who are eligible for
Pell grants and additionally maintain outstanding academic records,
can apply for the Academic Competitiveness (AC) Grant. Undergrad
juniors or seniors with outstanding academic records and who meet
the requirements of the Pell grant and are studying computer
science, engineering, mathematics or sciences are eligible for the
National Science and Mathematics Access to Retain Talent Grant.
Just about every state in the U.S. provides college grants. This
money comes from sources such as the state lottery. Eligibility
depends on the grant. Some state-based grants are offered based on
minority, for example to African American, Asian, Hispanic and
Native American students. Other grants depend on financial need and
some are awarded based on the student's field of study. Some
state-based grants will cover tuition expenses if you agree to work
for the state providing service in your field of study.
Other Types of Grants
There are plenty of other types of grants available for students
of all types. There are grant programs designed specifically for
women who are studying a field in which women are underrepresented.
Grant programs are also offered based on low-incomes or
non-traditional age groups or for military personnel. If you're
working on a graduate or doctoral degree, there are grant
opportunities available to you as well.
Scholarships are a great way to help pay for college. The money
awarded from scholarships is usually restricted to paying only for
tuition and room and board. Many scholarships are on a first come,
first serve basis. If you wait too long, the money could run
Different Types of Scholarships
The most common scholarships are based on SAT and/or ACT test
scores, in addition to awards and honors, extracurricular
activities and community service. There are scholarships that are
awarded for writing an essay and some scholarships may even be
based entirely on community service. Some scholarships are based on
the student major and others are based on financial need.
You might find that there are scholarships that have several
requirements such as academic, extracurricular and volunteer. If
you are lacking in one area, there's no need to worry because many
scholarships will overlook one area if you are stronger in
Some students worry that they won't get a scholarship because of
a bad mark on their school record. Awarders consider many different
factors, and some of your mistakes may not matter in the
consideration of you receiving the award. Regardless of a few bad
grades in the past, academic probation, or if you've skipped
school, you should apply for that scholarship.
Writing a Scholarship Essay
When writing an essay for a scholarship, keep in mind the
context of the application. If the scholarship award is based on
extracurricular activities, make sure to include the activities
you've participated in. You want to highlight the aspects of your
life based on the goals of the organization offering the
It's also important to make your essay original. When writing
your essay, think about if anyone could write the same thing as
you. If your material is general enough to be written by hundreds
of other applicants, it's not going to be original enough.
Personalizing your essay will be very helpful, so do not be afraid
to share your unique story.
Before submitting your essay, it's important to also check for
spelling mistakes and grammar. Some mistakes are tolerated, but
many others aren't. Clean it up and have a friend review it for
you. Be careful about plagiarism as well. Plagiarized copy will be
Where to Find Scholarships Online
Watch Out For Scams
Students have a hard enough time dealing with financial
challenges associated with attending college, but scammers prey on
these situations. With students eager to find financial aid
opportunities, they are often easy targets for scammers. Below are
some tips to help you avoid becoming a victim.
- Before applying to scholarships, look them up on the Better
Business Bureau website.
- Be wary of notifications saying that you've won a scholarship
or grant, but you don't remember applying for it. Track
scholarships and grants you've applied for.
- Don't believe in guarantees. No services can guarantee you'll
receive a scholarship or grant.
- Scholarships are not private. Don't pay someone to find them
- Never provide your bank account or credit card information over
the phone unless you were the one who initiated contact and you
know you are talking to a legitimate business.
- Don't pay anyone to apply for scholarships or grants for you.
It's not allowed and they'll take your money and run.
- Scholarships and grants are free. Never pay anyone for the
opportunity to apply.
If you suspect a scam, report it to the U.S Dept. of Education, the Federal Trade Commission, the
Better Business Bureau, the State Attorney General's Office, your
State Bureau of Consumer Protection, or the National Fraud Information
Getting a Job
If you want to pay off your loans before graduating, the reality
is that you will need to work during school. Students who go to
school full-time usually take part-time jobs. It's not easy
finding a well-paying, flexible, part-time job. Typical student
jobs include working in fast-food restaurants, grocery stores,
retail stores, theaters or office/assistant positions. Your college
career center can help you find a job that meets your school
schedule. You may even be able to find a job working with the
school to make things even easier.
Federal minimum wage in 2011 is $7.25 per hour. According to
FairTax.org, the average federal, Social Security and Medicare
withholding is 23% and state and local taxes depend entirely on
where you work. To pay off the average loan, you will need to pay
at least $600 per month, which means you will need to earn
somewhere around $750 per month and at minimum wage, you'll need to
work about 26 hours per week.
Some people are able to go to school full-time while working
full-time. This is extremely difficult. If you're considering it,
start school as part time first to see how well you handle it. If
it works out well, move to full time. If you're already in
comfortable job, your employer might also allow you to switch to a
part-time schedule to accommodate for school. Most colleges
consider full-time status to be 12-18 credit hours per semester,
which usually adds up to around 4-5 classes per week. This means 6
hours of actual class time and 20-30 hours of study time. You
probably have the capability of dedicating somewhere around 3-4
hours of your time each day, outside of work to study, which is 20
hours total during the work week and 10-15 more hours on your days
off. It can be done, but it will be difficult.
As you can see, paying your way through college is a
possibility, but you need to be serious about getting it done. It's
going to take hard work and dedication. You need to find grants and
scholarships anywhere you can and you need to get a job. You'll
need to live inexpensively, budget your groceries, purchase used
books, and you have to stay at home most nights, while your friends
go out. It's going to be a tough 2-6 years of your life, but when
it's over and you have a degree with zero debt; you'll be the
happiest graduate on campus.