Let's be honest, most of the time, even students who have scholarships and financial aid still require additional money sources to cover their post-secondary costs. Student loans are a popular choice to fill in the gap. Many bright minds are put off from reaching their educational goals and dreams due to the enormous cost associated.
While investing in yourself is always worth it, there are other sources that may be willing to loan you the funds. Here are some routes to explore that may be lesser-known but equally as helpful.
Student Loans
Most students turn to a student loan to help them cover the costs of school. This is often the cheapest way to borrow funds. Some people are fortunate enough to be able to secure an interest-free loan from family members; however, this is not an option for most of us.
You need to fill out the FAFSA or Free Application for Federal Student Aid to find out if you qualify for a student loan. A great thing to note is that when your FAFSA is submitted, you automatically check your eligibility to earn low-interest, government-backed loans and check if you are eligible for grant money.
Line Of Credit
With a line of credit established, you are required to pay interest on the amount of money that you borrow. Interest rates may be variable or fixed, depending on the type of loan. There can be some great advantages to home equity loans compared to other kinds of consumer borrowing.
You can deduct interest from your taxes and being able to borrow what you need when you are in need doesn't affect your assets the same way as withdrawing it all out in one large sum. This makes the line of credit one of the better private loan options to pay for college since it offers a lower impact on your assets and offers a tax deduction for interest paid.
Private Loans
Of course, student loans are one option and private loans are another route to explore. Private loans may cover your needs. These can be loans that are not designed for college but can deliver the funds you require. There are often special loans available for students through financial institutions and banks.
These loans are often like federal student loans. Private loans have their terms set by their lenders. They are not guaranteed by the government. If you run out of federal sources of financial aid, these loans can be very helpful. Another bonus is that private loans are available at any time during the school year and there are no strict deadlines for applying.
You apply for private loans directly through a lender. Your credit history will factor into the interest rate you will be eligible for. The better credit you have, the lower the interest rate will be offered. Most private loans will enable you to defer principal payments and the interest until after you graduate. When you select a private loan option, be sure to compare the loan terms, repayment options, borrower benefits and the interest rates to ensure you are receiving the best option.
If you own your own house, a different option is that you may be able to tap into the equity in your home to cover your college costs. A home equity loan lets you utilize the equity in your home as collateral. You can set up a line of credit and borrow as much money as you need to or borrow a sum and make monthly payments. Your bank will be able to explain which options are available.
Subsidized vs. Unsubsidized Loans
Student loans can either be unsubsidized or subsidized. With unsubsidized loans, interest adds up while you are attending school. You are responsible to repay that interest after you start repaying your loan.
With subsidized loans, the government pays your loan interest while you are attending school and no interest accrues at that time. Either option of unsubsidized or subsidized loans doesn't affect when you need to begin paying them back. It simply affects the amount of interest that adds up while you are attending school.
If you decide to take a student loan, you will need to figure out who the best choice is to borrow the funds from. There are plenty of banks out there who will happily arrange a loan. Before you sign on for the first offer that comes your way, take advantage of what is known as "borrower benefits" by being a savvy shopper and shopping around.
There are often excellent benefits you can get as a borrower from choosing one bank over another. Incentives can come in many forms including reductions to the principal balance of your loans or partial interest rate reductions. Typically, you will not have to change anything about how you repay your loans when the incentive is activated on your account. Your monthly payment amount stays the same and you will repay your loan faster and save money.
When you are looking around to figure out who you will get your loan from, compare the different borrower benefits and pick which loan offers you the best bang for your buck.
Simple IRAs, Roth IRAs and IRAs
You can also make withdrawals from traditional IRAs, Roth IRAs and SIMPLE IRAs and avoid the 10 percent early withdrawal penalty if you use the funds for qualified educational expenses. You will still have to pay income tax on the amount.
Another option is to borrow some cash from your 401K plan. The catch is that you will be required to repay yourself the principal and interest within a 5-year period. If you lose your job, you will need to repay the loan right away. If you don't pay immediately, you face the double whammy of a penalty on the amount you borrowed and income tax too.
State Work-Study
There are work-study programs available in some states that operate like the Federal Work-Study. Your salary will be subsidized if you work for a non-profit or government job or work on campus. Work-study options allow students the chance to earn a substantial amount of money while attending school.
Funds from Your State
We all know that there is 4 to 9% sales tax on everything you buy tacked on by the state. However, you may be able to get some of these funds back through state financial aid programs. Each state has a department or an agency that helps students cover college costs. Some states also administer their own scholarship and centralized financial aid programs.
Your state agency offers a wealth of information and college fund opportunities. If you would like more information to find your state agency, check out the list maintained by the U.S. Department of Education website. Next click on the link "Applying for Financial Aid" to see a list of higher education agencies for each state. Once you locate your state's agency, call them directly by phone and check out their website.
If you speak to a representative or are perusing their website, find out about all of the opportunities you are eligible for. Each state operates independently, and many will not have the same programs. However, the following list covers the most popular resources and programs to ask about:
State Scholarships and Grants
There are grants and scholarships offered by the state that can help reduce your education costs. Find out the deadlines to apply, the eligibility factors and the scholarship requirements. There are some grants specifically offered to adult students, technical school and vocational school students and those who have received their GED recently, depending on the state.
There are grants and scholarships offered to graduate and undergraduate students. Some of these grants will have no regard for your financial situation and others will be need-based. Read the fine print to see what your state offers. Sometimes, all you must do is fill out an application to be able to receive the funds.
Private Scholarship List
There are numerous state agencies that offer a list of private scholarship opportunities available for college. Certain websites contain excellent information such as lists of all civic groups that award scholarships.
State Loan Repayment Programs
There may be loan repayment options sponsored by your state. Certain states will help you pay back your student loan if you decide to embark on certain careers including medicine, teaching, technology, nursing, or law enforcement. The state will help you pay off your student loans if you work in these fields within the state upon graduating.
Retraining Grants
There are a variety of retraining programs offered by state agencies to help employees that have been laid off from their jobs. Typically, these programs target adults who would prefer to return to school and learn a new skill or trade to help them find a career.
Some states including Minnesota have offered over a thousand workers different training grants worth over four million dollars. These funds were distributed through a job skills partnership. If you are thinking about going back to school to find a better job, consider inquiring about displaced workers grants and retraining programs.
Tuition Exchange
A tuition exchange may be offered with your state where certain state university systems have agreements with other universities and states to allow each other's residents to go to their school at a highly discounted rate.
If you have the chance to pay in-state rates at another state's school, you have the potential to save thousands of dollars on your education costs. Typically, these agreements are made among neighboring states. Speak with your school to see if they have any programs in place.
Tuition Equalization Grants
These programs are created to help minimize the difference in how much tuition costs between private and public universities. For instance, in Georgia, students who go to a more costly private college may qualify to receive a tuition equalization grant of up to $1425 each year. Find out if tuition equalization grants apply to you.
Grants for Disability
There is financial assistance offered by many states for disabled students. These programs range from different states and so do the qualifications for being in a disabled category. If you have some type of disability, start checking into this option right away as it may take several months or up to a year to complete the certification required for this program.
Discounts for Senior Citizens
Are you over sixty years old? Certain states will offer college course discounts to seniors, and some may even be free! Simply check with your university and your state agency to discover what kinds of senior citizen discounts are out there.
Additional Resources and Funding
Inquire about the other services and discounts available in your state. There may be sponsor workshops to help families apply for financial aid. Others will offer free publications about ways to help you cover college costs.
Taking the time to learn everything you can about the various programs you are eligible for within your state is worth the time and energy when it can save you thousands of dollars. There is a lot of free information out there. Simply request the info so you can take advantage of all the resources offered including community scholarship lists.
Your College
Did you know that your college is one of your greatest allies for receiving money for school? They offer grants, scholarships, and financial aid, even though they charge you for tuition. Community foundations and alumni provide schools with money that they can transform into scholarships for students who deserve them. Different offices are staffed with a host of administrators with knowledge and expertise regarding how to make attending costs less.
Paying for college can be more painless than you imagine if you tap into every available resource and opportunity the school provides. There are many services that your college can provide as a roadmap to help you maximize assistance options.
College Specific Scholarships
When looking for scholarships, your college is the ideal place to start. They offer both merit-based and need-based options to students with low financial means. There are merit-based rewards given for a student's career goals and interests. The issue is that these scholarships may be spread throughout the university.
Sometimes, the financial aid office is responsible and other times the admissions office has the information. Each department may also have certain awards offered to students in your major. There are campus groups to check out including the school newspaper that may offer scholarships to their members. Look everywhere for resources and don't give up. Be sure to ask around when seeking campus scholarships and check out the following:
- Library
- Admissions Office
- Alumni Clubs
- Adult Learning Center
- Financial Aid Office
- Foundations
- Student Organizations and Clubs
- Student Development Office
- Career Center
Transfer Scholarships
You could qualify for a guaranteed transfer scholarship if you are transferring from another community college or school into a college. Talk to the admission office at the colleges you are considering attending to see if this is an option. They will be able to tell you what type of financial aid package is available and speak to you about transfer scholarships.
Tuition Reciprocity Agreements
There are often tuition reciprocity agreements in place with certain schools that have developed relationships with neighboring states to offer their residents in-state rates. For instance, the University of Arkansas is a great example. They provide Non-Resident Tuition Awards for freshmen entering from neighboring states including Oklahoma, Mississippi, Tennessee, Kansas, Texas and Louisiana. This offer can save a student up to 6K per year in fees. If you want to go to college in a neighboring state, speak with their admission office to check if these discount agreements are available.
Your Employer
There are numerous reasons why a business would want to help you cover your education costs. Mainly, if the extra schooling allows you to do a better job, they may be happy to pay for a computer or accounting class. The employer understands that you can use these new skills to improve your daily work habits, and this will help you become a more productive employee.
Some companies are willing to pay for your education if you agree to work there for a specific term after. Aircraft maintenance companies may send you on a course to become certified on a certain machine if you agree to work there in return for a minimum of two years or more.
Retention is a huge reason why companies will offer to cover your education or upgrading costs. To qualify, you need to work for the business while you are obtaining your schooling since you will only receive these benefits as an employee. The trade is to commit to working there for a certain amount of time after you successfully pass the education, and they cover the costs.
Companies that advertise they are willing to pay for a candidate's education often recruit better workers that may be interested in staying longer. If there are two jobs that are similar, but one offers to cover the costs of developmental classes during your employment, it will be wise to consider this offer. It shows they are dedicated to helping their employees grow and expand their skills to be a long-term asset to the team.
Note that there is no standard education benefit with businesses. This means companies have the freedom to decide which incentives are most useful to their staff while being affordable to their finances. Typically, any kind of education benefits will fall into one of the categories below:
Speak With Your HR Department To Get the Details
Talk to your personnel department or your human resources to discover all the rules you need to qualify for any kind of company tuition assistance. Many places offer tuition assistance but don't necessarily publicize it. Often employees or adult students need to ask their HR department directly and may be told "no," but one of their managers may know of a program through their department manager instead of HR. Be sure to speak with both your department manager and your Human Resources department.
Understand that some companies will withhold paying benefits for up to one year to ensure that you stay at your job. If you decide to quit within a certain timeframe after finishing the schooling, they may deduct what they have paid for your courses from your last paycheck.
Professional Development Classes for Free
The company will schedule these classes often on-site or at a local facility. Typically, they cover material that directly correlates with your job description. For instance, if you work in sales, you may take a course on closing the sale or how to negotiate better.
These free training classes are often not mentioned in their company's employee policy. If you read your written policy and see nothing there, speak with your managers to find out which training classes may be offered. Often, your department manager can set a budget at the start of the year regarding education for employees.
This budget often fluctuates with the company's fortunes and isn't anything that can be individually guaranteed to each worker. Generally, managers have discretion over these amounts and can offer them on a first-come, first-serve basis.
It is important to communicate with your manager if you would like to have First Aid or forklift training or some other courses paid for. Think about your workplace and what types of skills could set you above the crowd.
Tuition Assistance
Reimbursement and tuition assistance is the most common kind of employer program offered. Companies can set individual policies regarding how these programs work. They may pay for a specific dollar amount or a percentage of the tuition costs or for a certain amount of education units.
There is commonly a grade requirement with most tuition programs. Therefore, if you earn less than a B or C grade, or below a specific percentage, they may not be obligated to cover the costs.
Businesses typically pay for courses that are considered "work-related," so they can justify and often write off the expense. Thankfully, this is a huge definition that is open for interpretation.
Often, you can make a convincing case for courses that are not directly job-related to the role you have currently, but they offer the chance to build new skills to advance your position. Look at the individuals above you and in management and see what kinds of educational backgrounds and skills they have. It makes a ton of sense for you to take classes that allow you to learn those skills so you can be promoted to higher-level jobs in the future.
Tuition Discounts
Your business may even have a deal with schools in the area for specific discounts on programs or classes. You might be able to enjoy a computer training class for a huge discount or possibly free. Individuals who work at a university or college, even on a part-time basis, often are eligible for major course discounts. Certain colleges allow their employees to receive free education. Asking around can really pay off!
Employer Scholarships
There may be scholarships offered by your company simply because you work there. These are excellent to win since there are no strings attached and the amount of people competing is relatively low compared to national or state scholarships. In many cases, the only requirement is that you are an employee, so even part-time workers have the chance to apply and are eligible.
Adult Training Programs from the Department Of Labor
The Workforce Investment Act authorizes most adult training programs. This is a federal program that aims to reduce dependence on welfare, increase occupational skills, enhance the competitiveness and productivity of the economy, and improve workforce quality.
One Stop Career Centers offer most of the services including training in basic skills and occupational training. Additional support services including childcare and transportation assistance are offered to help individuals be able to participate in the program.
Educational Opportunity Centers
Throughout the USA, there are 139 federally-funded Educational Opportunity Centers. They mostly serve underemployed workers and displaced workers from families with an income of less than 24K.
Sadly, there is no national directory of EOCs. Conduct an Internet search for "Educational Opportunity Center" with your state name to access the best opportunities. These centers are commonly located from a college base. After you discover an EOC in your state, contact them to get more information on the EOC closest to you.
Retraining Programs Offered By the State and Federal
There are numerous programs offered by the federal government that you can apply for. These are especially true if your company has downsized or if you have been laid off. There are broader resources at the state level that are available to more people and not simply displaced personnel.
The state often works alongside a variety of foundations, university systems, charities, vocational systems and adult education centers to establish a wide variety of options. Certain services may be greatly discounted or even free of charge for those who qualify.
