A good education can be a boon to a happy, successful life. It can open doors to satisfying and rewarding careers and help you become a well-rounded and productive citizen. Education often involves a college degree. Studies show that people with degrees tend to have greater earnings and often better job satisfaction. This can lead to a higher quality of life.
How far an individual goes in pursuing knowledge is a personal choice. An associate’s degree can be attractive on a resume but a bachelor’s or master’s is even more impressive. One of the possible roadblocks to obtaining a degree is the cost. Tuition, books, other materials, and housing can be very expensive. Paying for college can be challenging but there are ways to do it.
Just as with buying a house or car, you can pay for college using student loans. There are lenders who specialize in education funding. Before taking out a loan, carefully scrutinize your final situation, taking into account the field you are going into and your anticipated salary. Unlike Federal Financial Aid, interest on private loans begins to accrue immediately. Payments can be high and you don’t want to default. If you can afford the monthly payment, a private loan can be an excellent way to pay for college.
Federal Financial Aid
Students who are citizens and permanent residents in the U.S. may be able to qualify for Federal Financial Aid. This is done by filling out the Free Application for Federal Student Aid. A student must be enrolled at least half-time. The FAFSA collects information on the financial situation of the student and their family and determines how much and what type of aid the student is eligible for.
Part of the package can include federally subsidized loans. The interest rates on these loans are much lower than on a private loan, making the monthly payments lower. There is also a six-month grace period after the student graduates during which the government pays the interest. Financial Aid is the best option for most students.
Scholarships and Grants
There are numerous grants and scholarships available and you can find them with an internet search. Some are based on superior academic performance and others are offered for specific fields of study or to help students of a particular ethnicity. Even a grant or scholarship that only pays part of your tuition is worth applying for. These funding methods are not loans and do not have to be paid back. They can help you borrow less and accumulate less debt.
Savings Plans for College
Being able to pay any of the costs of college is a nice advantage. No interest, no forms to fill out, just pay the bill. Families can begin saving while their children are still in school, even as early as elementary school. Rather than a standard savings account, the best way to save is with a 529 plan.
The 529 savings plan is specifically for putting away money for children’s future college expenses. It has several advantages for parents and students. The two biggest are:
- Advantage for Financial Aid – A 529 plan is reported as a parental asset and so will not appear on a student’s FAFSA report. It will have little to no impact on the amount of financial aid the student qualifies for.
- Tax advantage – A majority of states provide a tax credit or allow a deduction for 529 plan contributions. Earnings are tax-deferred or tax-free if they are used entirely for college expenses.
Planning early and saving for college using a 529 plan is an excellent way to pay for college. No debt is accrued and the interest earned can be tax-free.
Many careers require a college degree to enter and certainly to advance. Attending college is a good idea for many high school graduates. It can be expensive but there are ways for families and students of limited means to get the funding needed.