Pay Less for Education: How to Take Charge of Your Financial Aid

1. Run the numbers

At the start of this process, students and their families first need to create a budget. By going in with realistic expectations, students can get a fuller sense of actual tuition, fees, required books and technologies, transportation, and housing so they can find a school that meets their financial and academic needs.

2. Complete the FAFSA

Students should fill out the Free Application for Federal Student Aid as soon as possible to learn about federal grants, loans, and work-study funds. Many colleges and universities use information provided on this form to award institutional and departmental scholarships, making it even more important to complete each year. Federal student loans also offer the lowest, non-variable interest rates.

3. Apply for aid you won’t need to pay back

Many students end up taking out loans to cover remaining portions of college tuition, but they should always exhaust funding sources that do not require repayment first. In addition to federal grants, many institutions provide scholarships, grants, fellowships, and assistantships to offset costs. Learners should also check with private foundations, nonprofits, and state governments that may offer awards based on merit, financial need, or subject area. Students who need funding beyond tuition and fees may also find scholarships that help cover things like books, technology, research travel, childcare, and/or housing.

4. Look into government or employer-based programs

Government-funded service programs such as AmeriCorps and the Peace Corps provide educational awards upon completion of service, while some companies also provide employee tuition assistance of up to $5,250 in tax-free funding earmarked for education per year. If working for a university, students may be able to take a certain number of classes for free or a significant discount each year.

5. Explore student loan options

In the 2022-2023 school year, students and parents borrowed $98.1 billion in federal and nonfederal loans. Although student loans can seem scary, students and their families who think about them logically and borrow reasonably can come out on top. Loans come from federal, state, and private sources, but students should always start with federal loans as these are the most secure and offer fixed interest rates. Students who want to test various loan amounts, interest rates, and terms to see how much they will pay monthly and over time can use FinAid’s loan calculator.

6. Factor personal income and savings

Not everyone has thousands of dollars in their savings accounts, but paying for as much of your education upfront can save you hefty student loan interest fees in the long run. If using savings isn’t an option, some students decide to work while enrolled, making it easier to pay for both day-to-day living expenses and some costs of college. Depending on the program, some colleges and universities offer interest-free tuition payment plans that charge only a small, one-time fee for paying over the course of the program.

7. Find your bottom line

After adding up all financial aid, loans, personal contributions, and other sources of funding, it’s important for prospective students to find out where they stand. If they still owe $40,000 for the cost of their education, how long will it take to break even based on projected average salaries? Considering all these factors – as well as continuing to apply for aid while in school – can help avoid financial challenges later on.

After sketching out a plan, check out the next section for advice on making the most of your financial aid.

• Continue applying for aid, even if you’ve started your program.
  Many students apply for lots of scholarships, grants, and federal funds as they enter college, but fail to continue looking for appropriate funds after starting school. Many funding sources exist specifically for upperclassmen, so keep researching.

• Talk to financial aid offices directly.
  If you receive an acceptance letter without any details on funding, contact the financial aid office directly to learn about your options.

• Negotiate your offer.
  If you wish your funding amount from the school was larger, consider reaching out to ask about other possibilities. At worst, they will say they have no additional funding for you, but your tenacity may pay off.

• File your FAFSA early.
  FAFSA funds are disbursed on a rolling basis, meaning those who apply late may receive less (or no) funding.

• Pay close attention to assets.
  When reporting income/assets on the FAFSA, remember that you can exclude some items that will help lower your Expected Family Contribution.

How Does the FAFSA Work?

To determine available federal funding, the government considers whether you plan to attend full- or part-time, how much the school costs, and when you plan to attend. The COA, or Cost of Attendance, includes tuition, fees, room and board, books, transportation, supplies, loan fees, dependent care, disability costs, and reasonable study abroad fees. It then calculates Expected Financial Contribution (EFC) based on taxed and untaxed income, benefits, and assets. The EFC is subtracted from the COA, determining how much need-based aid should be awarded.

What are the Requirements for Submitting a FAFSA Application?

Aside from meeting deadline requirements, students need to pull together a number of documents before sitting down to submit the application. These include your social security number, alien registration number (for legal non-residents), federal tax returns, earned money records, and W-2s/1099s, records of investments, bank statements, details on any untaxed income, and an electronic FSA ID. If applying as a dependent, all of these documents must also be supplied for your parent(s). Applicants must also include a list of all the schools they are considering attending so the government can send FAFSA data to each for scholarship and grant consideration.

What Is the Deadline for FAFSA?

For the 2024-2025 academic year, students must submit the FAFSA form by 11:59pm CT on June 30, 2025. Keep in mind, these are the federal deadlines. States and schools set their own deadlines, which are often earlier. Visit the official FAFSA website for more information on deadlines.

Should Everyone Fill Out the FAFSA?

Unfortunately, several myths exist that dissuade many students from applying for aid because they believe they won’t qualify. Some may feel their parents make too much money, while others believe that because they support themselves, they cannot use their parents’ information. Students should remember that, even if they do not qualify for federal aid, filling out the FAFSA can still qualify them for state and/or institutional funding. It’s also a mistake to only fill out the FAFSA as an incoming student, as it must be completed each year with updated financial information to remain eligible.

Apply early. Even though the FAFSA application remains open until June of each academic year, the federal government disburses funds on a rolling basis. Learners should complete the form as soon as possible for the best chance of funding.

Apply online. By applying online, learners cut out the additional time required to print and mail their forms, and the additional time required for FAFSA administrators to review the paper forms rather than viewing them directly online.

Avoid needless mistakes. Leaving blank fields, providing outdated information, or incorrectly filing taxes can all result in application delays and potentially losing out on federal student aid. Review your application thoroughly and double check all information before submitting it.

Re-apply annually. As previously discussed, financial information required by the FAFSA must be updated annually to continue receiving federal financial aid. This step exists so the government can update the EFC based on current income and assets.

Federal Loans

Federal loans are disbursed by the U.S. Department of Education and help learners of all educational levels cover any educational costs that they cannot pay out-of-pocket or with other sources of funding. Because these loans are secured by the federal government, they offer fixed interest rates and favorable repayment plans that aren’t a given with non-governmental lending options. Because several different types of federal student loans exist – for both dependent and independent learners – individuals considering this option should review each to learn about eligibility, interest rates, repayment plans, and award amounts.

• Subsidized Stafford Loans
  Stafford loans exist for undergraduate learners and provide aid up to $20,500 annually, based on how long they have been in school and their dependency status. Because they are subsidized, these loans do not accrue interest while the student is enrolled on at least a part-time basis.

• Unsubsidized Stafford Loans
  Unsubsidized Stafford loans can be used by undergraduate, graduate, and professional learners and amounts range significantly based on whether the student identifies as a dependent or independent. Because they are unsubsidized, interest accrues the entire time the student is enrolled.

• Parent PLUS Loans
  These loans exist for parents of dependent undergraduate students. Loan amounts are determined based on cost of attendance after subtracting any other financial assistance. Interest accrues on these loans while students are in school. For loans administered between July 1 2023 and 2024, the rate is 8.05%.

• Graduate PLUS Loans
  As the name suggests, this loan exists for graduate and professional students and covers any existing expenses once all other financial assistance has been subtracted from the cost of attendance. Interest accrues while the student attends school at a rate of 8.05%.

• Direct Consolidation Loans
  Rather than making multiple federal student loan payments each month, this type of loan consolidates all of them into a single monthly payment. The government charges no fee to consolidate loans. The new interest rate is based on the average of all the consolidated loans and rounds up to the nearest one-eighth percentage point.

State Loans

While most students first think about student loans provided by the U.S. Department of Education, 38 states currently provide separate loan programs. One such example is the Texas Higher Educational Coordinating Board, which offers low-interest options for residents who plan to attend a public Texas university. If the applicant does not have favorable credit (which typically includes a credit score of 700 or above and no previous loan defaults or bankruptcies), they can use a co-signer. Contact your local department of education to learn about options.

Private Loans

Some students may feel drawn to private loans, but they should fully research this option before signing up, as these often have variable interest rates, require existing credit histories, do not provide deferment or grace periods, and lack income-driven repayment plans.

• Salle Mae
  Sallie Mae provides private loans for undergraduate and graduate learners once they exhaust federal funding options. Rates vary between 4.50% and 16.70% depending on degree level, who takes out the loan, and whether the loan is offered with a fixed or variable rate.

• Credit Unions & Banks
  Many learners are attracted to credit unions due to potentially lower interest rates, better customer service, and less rigid rules surrounding existing credit. On the negative side, they tend to lack the benefits of federal loans and may require you to become a member.

• Private Lenders
  Private lenders may include parents, grandparents, or other family members and friends. Students should carefully navigate this process to ensure the relationship is strong enough to negotiate money contracts while also making sure they get a fair deal.

Borrowing Student Loans Responsibly

After exhausting all sources of funding that does not need to be repaid, students should carefully research the loans they take out to cover the remaining expenses of higher education. Aside from finding the best interest rates and repayment plans, here are a few other things to keep in mind:

• Only borrow what you need
  The COA estimate includes costs outside tuition and fees, meaning students can borrow thousands of dollars for housing, transportation, and other expenses. If at all possible, try not to borrow additional funds to cover these other costs.

• Live cheaply
  Students can quickly wrack up debt by living outside their means. Consider finding roommates, cooking at home, taking public transportation, and doing other things that cut your cost of living.

• Consider repayment realities
  When borrowing, think about starting salaries for your intended career. By considering opportunity cost (e.g. the monthly loan payment versus your salary), you can get a sense of reasonable amounts to borrow.

• Tuition payment plans: Many medical support programs provide tuition payment plans for learners to pay the school directly rather than a loan servicer. These often charge a small additional fee but no interest. Ivy Tech Community College provides an example of what to look for when reviewing financial aid options at prospective schools.

• Loan repayment assistance: Medical support students can sometimes feel overwhelmed by repayment plans when first graduating, especially if they’re still searching for a job or earning an entry-level salary. Those with federal loans can take advantage of several income-driven repayment plans that consider current earnings when setting monthly payment amounts.

• Loan forgiveness: In exchange for working with underserved communities or pledging service at an approved site for a set number of years, many medical support graduates can take advantage of loan forgiveness programs.