In this multi-part personal finance series, readers will learn various ways to help save money for a college education, from off-the wall-scholarships and 529 programs to the right time to refinance your loans. Parents and students alike who read this series will find something to help reduce the costs of a higher education before, during and after it takes place.
Last year, 1.8 million low- to moderate-income families missed out on help from the government because they did not fill out the Free Application for Federal Student Aid, or FAFSA for short, which is needed to qualify for any federal, state and some institutional financial aid awards, according to the American Council on Education. In addition, the Council estimated that 1.5 million families missed out on the Pell Grant, an award of $4,310 that does not have to be paid back, just because they failed to file the proper paperwork.
If I told you the government would give you $4,310 if you simply filled out a form, you'd do it in a heartbeat right?
The FAFSA form is the first of a several forms that you need to fill out for college money. It's not difficult if you focus and read the directions step by step. Believe me, if more people filled the forms out I wouldn't be trying to convince you.
All undergraduate students, regardless of financial need, are qualified for a limit of $23,000 in federal Stafford loans. Students who are still their parents' dependants could borrow up to $3,500 for their first year of college through the Stafford program, up to $4,500 the second year and $5,500 for their third and fourth years. Loans are capped at 6.8% while Perkins loans are at 5%. This means federal aid is much cheaper than looking at a private loan.
In addition to the ones I've covered, the federal government offers a few other grants and loan programs as well:
- Federal Supplemental Educational Opportunity Grant (FSEOGs): This grant, meaning it doesn't have to be paid back, is for undergraduates with significant financial need and pays between $100-$4,000 to those who qualify.
- The Federal Work-Study Program : This program provides jobs for undergrads and graduates alike with financial need to help pay for their education. The program encourages community service work and work related to each student's degree.
- The PLUS loan: This loan is available to parents of undergrads and to grad students directly, letting you borrow as much as you need, minus financial aid. The PLUS loan features set rates at 7.9% or 8.5%, depending on the program offered by your school.
Am I already driving you crazy with loans and interest payments? Check out this Loan Comparison Calculator from Finaid.org, which calculates an estimate of the size of your monthly loan payments for three loans at the same time.
If you think loans aren't the way to go, check out the rest of my series: How to save money of your college education Part I: Scholarships, Part II: The CLEP and Part III: Work For It.
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Reader Comments (Page 1 of 1)
5-18-2007 @ 6:22PM
Lisa said...
So far you haven't mentioned using community and junior colleges. When I went back to school to get a degree that would lift me out of pink-collar low-wage slavery, I went first to my local community college. I was able to finish up all of my general distribution requirements and complete a lot of prerequisites for upper-division classes at a cost far lower than I would have paid to take the same courses at the local university.
You do have to make sure the courses are transferable and that they meet requirements at your future university, but it really doesn't matter whether you take your Freshman English and College Algebra classes at Harvard or at Podunk Junior College. What matters, insofar as it can matter, is where you get your bachelor's degree from. For my field, it doesn't matter where you got your degree as long as you know your stuff.
That's another huge advantage I encountered at my local community college: the science classes which provided the foundation for my bachelor's degrees in biology and chemistry were much better than at the university. The labs were better-equipped, and students received a lot more individual attention. Lecture classes were smaller, too, and the instructors were much more approachable.
Don't dismiss community or junior colleges as nothing more than "High School with ashtrays"--they aren't your grandparents' community colleges any longer. You could save yourself a lot of money AND get a better education by starting out small.