You’ve done it.  You finished high school and decided to pursue higher education (a wise move, given stringent requirements for good jobs and the sore lack of them these days).  But there’s still a monkey on your back, and you wonder how to pay for college.  True, education is a HUGE investment, but there are lots of ways to pay for it.  Take a look.

1. Out of pocket (or your parents’).

While there’s a very good chance that you will not have to absorb all college costs yourself, few students go without having to pay anything (i.e. full-ride scholarships, “free tuition babies” of those working at universities, etc.).  If you don’t fall into the free categories, you will have an EFC (Expected Family Contribution) which the federal government expects your family to put forth toward educational costs (amount determined by family income).  And indeed, some students are well-off enough to pay for school without any assistance and thus pay all expenses.

2.  Loans.

This second “How-to” covers any sort of money borrowing you may do to fund your education. Loan money falls into two prominent categories: federal and private.  Private loans are those obtained via your bank or other financial organization, requiring an institution-specific application and other materials.  They typically have higher interest rates than their federal counterparts but are nonetheless valuable to those needing them.

In mentioning federal loans, one term springs to mind: FAFSA.  Ok, it’s an acronym, and it stands for Free Application for Federal Student Aid.  The FIRST thing you want to do if you are considering any sort of government educational assistance is submit this (application period: January 1st-June 30th of every year).  Commonly-awarded federal loans include the Stafford and Parent Plus Loans (for more information on these and more, check out education loans).  Remember that any borrowed money must be repaid upon graduation.

3.  Education Tax Benefits.

Certain tax benefits help students offset educational costs, and include tax credits, tax deductions and exclusions from gross income.  Technically it is not money you’re getting for school, but you can think of it the same way because it is money you’re saving.  For example, the Lifetime Learning credit gives students up to $2000 in income tax credit based on the first $10,000 spent on tuition each year. Additionally, college students who took out loans can get the Student Loan Interest Deduction.   Student loan borrowers can nix up to $2,500 in interest as an income exclusion.

4.  Scholarships.

While you ponder how to pay for college, consider pursuing some free money.  Scholarships may be obtained in a variety of ways.  Writing an essay, demonstrating exceptional skill in some area, filling out an entry form for a contest-like award and earning spectacular grades are all ways to become eligible for various awards (sometimes totaling in the thousands).  Check out some useful sites for scholarship ideas.

5.  Workstudy.

This is another fairly easy financial aid option for students.  Again, be mindful that FAFSA completion is necessary for this aid form, but workstudy doesn’t require much paperwork itself.  The FAFSA comes into play here to determine your eligibility to participate in a workstudy program at your school.  If your family income is too high, you will most likely be ineligible to obtain government money for working at your school.  Participating, however, creates wonderful opportunities to build work or field experience and save up to repay loans.  Positions are limited and HIGHLY sought-after, so move your tail and apply at school ASAP.

Still need help?  Contact a Financial Aid Consultant for more solutions, and never wonder how to pay for college!

In lieu of this raise in tuition, there is a bright side. The federal government has also expanded the programs for the Pell Grant and other loans, which will make it easier for students to receive more financial assistance. Student loans are one of the most utilized forms of financial aid, so making them more accessible for students will be a big help to the students and their families alike during the college payment process.

However, federal aid is not always enough. When you get your FAFSA back, and see how much aid you are eligible for, it may not be quite up to par. Private loans tend to have high interest rates, and are not nearly as desired for this reason.

If the financial aid you’re receiving from the federal government isn’t as much as you feel is necessary, don’t overlook scholarships, grants and things of that sort. While applying for a numerous amount of these can be time consuming, it is well worth every second. If you don’t apply, you’ll never know how much of this “free financial aid” you can get.

With the changes in the US Department of Education currently underway to help make financial aid more available to people who really need it, getting federal student loans should become something well within your reach.

1. Begin a scholarship hunt. Scholarships are free money. Remember you can find scholarships that are awarded for athletics, academics, volunteering, background, etc..

2. Appeal your financial aid award. Contact the school and see if they can provide you with a more favorable financial aid package. This idea may seem far fetched to some, however if you are an excellent student and have a variety of offers on the table for various other schools…your number one school may be willing to work with you. They don’t want to lose the best and the brightest.

3. Research and apply for private loans. These loans are credit based–therefore nearly all undergraduate students will require a co-signer. A private loan will allow you to borrow up to the entire cost of your education–meaning as long as you repay no school is out of the question. Remember, private loans will have higher interest rates than federal school loans do.

Remember to keep your options open and keep looking. While the financial aid process is not easy, if you want something bad enough you can find a way to make it work. Your best bet is to do your research and discover your options!

1. Private loans generally have an interest rate based and borrowing terms based on your credit record and current economic climate. If you have a credit score that is less than perfect, you are likely to have a high interest rate. Your rate will also vary based on current prime rates. Over the course of your loan, you are likely to experience drastic changes in interest rate.
2. Federal loans have a six month grace period unlike private loans. Interest also begins to accrue the minute you begin school. While this also occurs with federal unsubsidized loans, the interest rate with unsubsidized loans will be lower than that of private loans.
3. Can’t find a job after school? Lose your job?  Federal loans can be deferred based on economic hardship. This is not true with private loans.  It is nearly impossible, regardless of situation, to get a deferment on private loans.