There are many reasons for going to college. You might want a college degree to help you get a job, to get a better-paying job or to get a job you will enjoy. A college education opens doors to opportunity and expands your horizons. As President Barack Obama said, "In a global economy where the most valuable skill you can sell is your knowledge, a good education is no longer just a pathway to opportunity -- it is a prerequisite." A college degree will help you follow your dreams and determine your future. College can also be a lot of fun!
College graduates earn more and have lower unemployment rates than people who have only a high school diploma. An Associate's degree yields $390,000 more in lifetime income, on average, while a Bachelor's degree earns $1.2 million more. College graduates have half the unemployment rates of people who have only a high school diploma.
But college can be expensive, and college costs increase every year. The challenge is to find a way to pay for college without going broke in the process.
The good news is that there is a lot of money available to help you pay for college. Student aid helps you bridge the gap between college costs and what you and your family can afford to pay. This includes money from the federal and state government, money from the colleges themselves, and scholarships from foundations and companies.
You don't have to be poor to qualify for financial aid. There are several types of financial aid available to students from middle-income families.
You may think that you can work your way through college, but students who work full-time while enrolling part-time are much less likely to graduate than students who enroll full-time and work part-time. Academic performance suffers when you are distracted by work. There's also an opportunity cost to part-time enrollment, as finishing quicker will help you cut college costs and get on with your life and career sooner. You may be better off working less and relying on financial aid to cover your college costs, so that you can devote more time to studying and getting good grades. You will also qualify for more financial aid if you enroll full-time.
Applying for financial aid is easy. There are only a few steps you need to take:
After you apply for financial aid, your college will put together a "package" of the different types of financial aid to help you pay for your college costs. You will receive a "financial aid award letter" that summarizes the financial aid package and what you need to do next.
The financial aid package will include several types of student financial aid to help you pay for college.
If you are trying to choose between several colleges based on cost, you should calculate the out-of-pocket cost for each college. The FinAid site has an award letter analysis tool that can help you with this.
Colleges like to talk about the net cost, which is the difference between the cost of attendance and the financial aid package. But the financial aid package includes loans, which have to be repaid. Education loans (and tuition installment plans) might provide cash-flow assistance to help you pay the bills over time, but they are not really financial aid. The out-of-pocket cost is the difference between the cost of attendance and just the grants and scholarships in the financial aid package. This is a better measure of the bottom line cost of college, as it reflects the amount of money you will have to pay from past income (savings), current income and future income (loans). Debt at graduation is higher at colleges with a higher the out-of-pocket cost.
In most cases the financial aid funds will be sent directly to the college. The college will apply the financial aid first to tuition and fees and other institutional charges. Any remaining money will be disbursed (refunded) to you to help you pay for textbooks and living expenses.
Good resources for further information about financial aid include the US Department of Education web site, FinAid and Fastweb. In addition to providing a free scholarship matching tool, Fastweb publishes practical news and advice about planning and paying for college. FinAid is an encyclopedic web site for free financial aid information, advice and tools.
Mark Kantrowitz is an expert on paying for college. He is publisher of FinAid.org and Fastweb.com, the leading free web sites for information about student financial aid, student loans and scholarships.