How To Pay For College

There are two things that everyone knows about a college education. First, it significantly improves your chances of landing a good-paying job. Second, it is expensive. College can cost anywhere from $2,700 a year for two-year community colleges to $9,000 or even $35,000 a year for a four-year college. If you’re unemployed or underemployed, even the low end of these numbers can seem totally unattainable.

But there are two things to keep in mind about paying for college. First, think of it as an investment. The money you spend now can end up helping you score better paying, more fulfilling jobs in the future. Second, there are many ways to help you pay for college. Here are some of the most common ways to help you pay for college.


The first thing you should do when you decide to go to college is to fill out the Free Application for Federal Student Aid (FAFSA). This application is required for all federal and state grants, loans, and work-study programs.

The FAFSA requires information from your family’s most recent tax returns, so you should file your taxes before beginning the FAFSA application. You may file a FAFSA application as early as January 1st, but deadlines for filing vary by state and school.

The most important thing the FAFSA will tell you is the your Expected Family Contribution, which is an index that the government and schools use to determine your eligibility for aide. The Expected Family Contribution, despite its name, is not the amount your family is expected to pay for college. Campus-based and private financial aid providers also occasionally ask for your FAFSA information, so it is in your best interest to complete this application as soon as you decide to pursue a college education.


Grants are gifts from the government or private organizations to assist in paying for your college education. They are typically awarded on the basis of financial need, and do not need to be repaid. Here are a few examples of federal grants:

Pell Grant: A federal grant for students who are pursuing a two- or four-year college degree. It is available to US citizens with a high school diploma or GED who have not achieved an undergraduate degree. The maximum amount of this grant is $5,500 per year. This grant is awarded to around 5.4 million undergraduate students annually (about 2/3 of the total).

FSEOG: The Federal Supplemental Educational Opportunity Grant is a grant awarded to students with exceptional financial needs above and beyond the standards of the Pell Grant. The maximum amount of this grant is $4,000 per school year.

Iraq and Afghanistan Service Grant: This grant is awarded to students whose Expected Family Contribution is too high to qualify for a Pell grant, and whose parent or guardian died in active military service since September 11, 2001. The maximum amount of this grant is the same as the Pell Grant, currently $5,500.

National SMART Grant: This grant is awarded to college juniors and seniors who are majoring in mathematics, engineering, technology, science, or a foreign language critical to national security, and have a GPA of 3.0 or better. The maximum amount of this grant is $4,000.

Academic Competitiveness Grant: This grant is awarded to students who receive Pell Grants and completed a rigorous course of study in high school with a GPA of at least 3.0. This grant awards $750 the first year of college, and $1,300 the second year.


Scholarships are gifts of money used to help you pay the cost of college. Unlike grants, which are need-based, scholarships are primarily merit-based.

Federal and state governments, as well as private organizations across the country offer a variety of scholarships. These scholarships can be for general students, as well as people of certain ages, racial backgrounds, religious affiliations, and economic conditions, as well as people who play various sports or have various hobbies. If you’re involved with a church, club, or group, see if they have scholarships available and what the award criteria are. Chances are that there are scholarships out there that are tailored for your unique situation.

Work Study

Federal Work Study programs provide part-time jobs to help students pay for their education. Work Study jobs include on-campus service and administration jobs, as well as off-campus jobs for non-profit and community service organizations.  Hours, wages, and eligibility are determined by the Expected Family Contribution on your FAFSA form. The great thing about Work Study jobs is that, in addition to helping you pay for college, they count as valuable experience in future job interviews.

Service Grants

When you accept a service grant, you agree to serve in the military or a public service organization in exchange for education funding assistance. In addition to funding your education, service organizations also solve one of the immediate problems of unemployment by providing room and board, plus stipends to cover living expenses.

GI Bill: The GI Bill is a program that grants money to military veterans, reservists, and National Guard soldiers for use in education, starting a small business, or buying a home. Benefits and eligibility requirements vary by branch of service, length of service, and the type of education that you are pursuing. GI Bill benefits are also partially transferrable to family members.

Peace Corps: The Peace Corps sends volunteers overseas to developing countries to assist with local education, health, agriculture, business, and environmental development. Volunteers can defer, or even cancel, parts of their student loans after a year or more of service. The Peace Corps also provides assistance for certain types of Masters degree: The Peace Corps provides volunteers with job placement assistance and $7,425 to use as they wish upon their return.

AmeriCorps: AmeriCorps is the same concept as the Peace Corps, but applied to helping communities in the United States. Volunteers work for anti-poverty programs in inner cities, maintain national parks, or even rebuild communities struck by natural disasters. AmeriCorps grants $5,550 per year of service for education expenses, which can be doubled if you attend a school that offers matching funds. AmeriCorps volunteers are also eligible for loan forgiveness and payment reduction.

Student Loans

Student loans are low interest rate loans offered by government agencies, schools, and banks. Student loans are issued to students to assist with tuition and living expenses while attending school, and students are not required to repay loans until after their education is complete. Some federal loans used to be issued by schools or banks, but as of 2010, they are all administered through the Direct Loan Program. Some student loan options include:

Stafford Loan: This federal loan program allows students to borrow up to $5,500 for their first academic year, $6,500 your second year, and $7,500 for your third year and beyond. The interest rate on Stafford loans is 6.8%. That rate is fixed for the life of the loan. Your repayment period begins six months after you leave school. There are a range of repayment options available depending on the amount you borrow and your ability to repay.

Parent PLUS Loan: This federal loan is available to parents to help pay tuition for their dependent children. The amount you are allowed to borrow is based on the cost of attending school, and takes grants, scholarships, Work Study, and other aid into account. Borrowers must pass a credit check for this loan, but co-signers are allowed for people with spotty or no credit. The fixed interest rate for the PLUS loan is 7.9%, and the government charges a 4% fee for this loan. This means that a loan of $10,000 will only result in a payout of $9,600. Repayment begins six months after the end of school, and can be repaid anywhere from ten to 25 years.

Graduate PLUS Loan: This federal loan is intended for students in graduate and professional programs. The terms are similar to the PLUS loan above, except that repayment begins 60 days after the ends of school.

Private Loans: You can apply for student loans from private lenders like banks, credit unions, and specialty lenders like Sallie Mae. There are typically no limits on the amount you borrow, but banks are far less forgiving when you miss a payment. Banks and credit unions may offer you preferential rates and repayment options if your credit is good or if you have banked with them for many years. Although private lenders usually defer repayment until after you finish school, their interest rates tend to be higher than government-issued loans.

Improving your education significantly improves your odds of securing a better-paying, more stable job. It might be difficult to think about as big an investment as education when you are unemployed and struggling to keep your head above water, but there are plenty of ways to finance your education, and your day-to-day expenses while you are in school. There is a wide range of government programs, private grants and scholarships, and student loans available to give you the boost you need to improve yourself and your life.

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