Once you've decided to attend college, the next step is to figure out the best path to achieve your goal.
Gail Damotta
Chairman of the Education Finance Council
“The first step to reducing the financial burden of postsecondary education is to think about the long-term value of what you study.”
Don't let the sticker price of postsecondary education put you off. While it's true that tuition and fees at public four-year institutions have nearly doubled in price over the past 30 years when adjusted for inflation, the good news is that with a little planning, you can find affordable, quality higher education. , prudence, independent thinking.
Identify the correct program
The first step to reducing the financial burden of higher education is to think about the long-term value of what you study.
Going to school has a bigger impact on your finances than you might expect. Although many prominent figures in popular culture focus on four-year residential bachelor's degree-granting schools, the reality is that the return on investment may depend more on the academic program you study than on the perceived reputation of the institution.
The U.S. Department of Education's free online College Scorecard tool allows families to view a student's debt and income results broken down by institutional degree level and specific academic program. You should use this valuable resource to compare prospective educational institutions and study programs. That way, you can choose a school and program that will reward you for your time and money. You may be surprised to learn that prestigious institutions may not offer you the best return on your investment.
Save every penny you can
Not everyone has the luxury of a budget. But for people with discretionary income, one of the best ways to make college more affordable is to set aside some money from your paycheck each month. The earlier you start saving, the better. Every dollar you save today will reduce the stress of paying for tuition, textbooks, food, and housing while enrolled in college and help you achieve financial success after graduation.
There are three approaches you can take to increase your savings: earn more money, reduce your expenses, or a combination of the two. Choose the option that suits you best. For example, you might consider stopping drinking expensive coffee once a month, carpooling or using public transportation more, finding an additional roommate, starting a flexible part-time job, or buying more used items. Remember, saving money doesn't necessarily mean you need to make huge changes to your lifestyle.
For many families, investing their savings in a 529 plan can be a significant help paying for higher education costs. Named after a section of the tax code, state-sponsored 529 plans allow you to keep your current tuition the same before it increases or to grow your savings in a tax-free investment account. A 529 plan is a flexible financial product that allows your money to compound, so open and fund one as soon as possible.
Find Free Financial Aid
Most people cannot cover college tuition through personal income alone. In these cases, students rely on financial support from other organizations. You should prioritize finding support that you don't have to repay. Taking full advantage of free financial aid can help you reduce your dependence on student loans and keep college costs manageable.
The best thing you can do to get free aid is to fill out the Free Application for Federal Student Aid® (FAFSA). This newly simplified government form is free to fill out and is your gateway to receiving college funding from the U.S. Department of Education, including the Pell Grant. In the 2023-24 school year, the maximum Pell Grant amount was $7,395, and the average Pell Grant recipient received $4,514 to attend college.
Filling out the FAFSA is always worth it. This one application can secure funding from the federal government, state governments, universities, and other private organizations.
Billions of dollars in scholarships are awarded to students each year. Scholarships are like grants in that they are gifts that do not have to be repaid. In 2022-23, scholarship providers awarded more than $8 billion to more than 5.3 million students, resulting in an average award of $1,517 per recipient.
The key to finding scholarships is to use a variety of different search techniques. Don't hesitate to contact your state higher education institution, non-profit organization, college, employer, local business association, or place of worship. Search social media sites and the internet. You may also be surprised to learn that many of the organizations we work with already provide financial assistance to college students.
Note: Most reputable scholarship and search sites are free. Do not pay to search or apply for a scholarship unless you are sure it is not a scam.
Every scholarship or grant you receive can make college much more affordable.
Borrow cheap student loans, but only take out what you absolutely need and can afford.
Sometimes borrowing education debt is the best option left to cover the remaining college costs. Student loan interest rates may seem high, but it's a much smarter choice than using a credit card.
If you need to borrow money, apply for federal student loans first. Federal student loans generally offer lower interest rates and greater repayment and forgiveness benefits than private student loans. Before taking out a student loan, research your expected income and calculate your existing debt burden. This will help you know exactly how much you need to complete the program. Rent only what you need.
And if you need to take out a private student loan, shop around before committing to a lender. Finding a lower interest rate can save you hundreds of dollars in interest over the life of your loan. Nonprofit and state student loan lenders can generally offer qualified applicants better deals than for-profit companies because of their public purpose missions and access to tax-exempt capital.
putting it all together
Financing a college education may seem difficult at first. Considering the long-term value of your intended study program before enrolling at an institution, saving money wisely now, and seeking out grants and scholarships can greatly reduce your anxiety.
Embrace the roadmap outlined in this article. Complete the FAFSA, apply for scholarships, and choose affordable student loans. By following these steps, you will be well-equipped to make informed decisions and achieve your educational and financial goals.