HOW TO PAY FOR YOUR ONLINE DEGREE 3
HOW TO PAY FOR YOUR ONLINE DEGREE
Earning an online college degree requires a substantial investment. While some students choose to pay for college out-of-pocket using savings or loans from their parents, many must seek financial aid to offset the costs of tuition, housing, food, and other necessary expenses. Many online schools also allow students to pay for tuition and housing in monthly installments, rather than paying one lump sum for each semester or quarter term. These deferred payment plans carry little to no interest, but the balance must be paid off by the end of each term.
Financial Aid
Financial aid opportunities are available through various sources, including the federal government, nonprofit organizations, and private companies, as well as the online college or university the student attends.
A Free Application for Federal Student Aid (FAFSA) is required to qualify for federal student loans, as well as many scholarships and grants. The FAFSA form may be completed and submitted online.
The FAFSA includes questions about the applicant's financial background, including their family's income, tax history, and current assets. All undergraduate and graduate students must complete the FAFSA form.
The student's online college will evaluate the information in the FAFSA form and send them a financial aid offer, including federal loans. The college will also guide them through the process of accepting part or all of the offer.
Students who complete FAFSA forms are paid in disbursements from the school they attend. The money is generally disbursed twice per academic year.
Some schools automatically deduct tuition and housing payments from the disbursements, and provide students with the remaining balance. Other colleges disburse all of the financial aid, requiring students to make tuition and housing payments themselves. The aid money that is left over may be used for books, food, transportation, and personal expenses.
Students may seek loans from the federal government or private lending institutions, such as banks or credit unions. Federal loans carry a fixed interest rate and the interest may be tax-deductible. These loans do not need to be repaid until the student graduates or leaves school, and those who struggle to repay their loans may be able to postpone or reduce their monthly payments.
Loans from private lenders, on the other hand, typically carry a variable interest rate -- up to 18% in some cases -- and the interest is rarely tax-deductible. Students are often required to begin repaying the loans while they are still in school. Private lenders may place restrictions on how the aid money is spent, as well.
The federal government offers Direct Subsidized and Direct Unsubsidized Loans. Direct Subsidized Loans are available to undergraduate students who demonstrate financial need. The federal government will pay the student's interest as long as they are enrolled in college courses, and during the six-month period after they graduate.
Direct Unsubsidized Loans are available to any undergraduate or graduate student, regardless of their financial need. However, students will be responsible for paying the entire interest.
Loan repayments are due each month. The federal government offers several loan repayment options, including structured plans that allow students to pay off the entire balance in 10 to 30 years.
Work-Study Programs
Federal Work-Study is designed for students who demonstrate financial need. The program allows them to work part-time while enrolled in courses.
Any student attending a school that participates in Federal Work-Study is eligible for the program. This includes those seeking undergraduate, graduate, or professional degrees, as well as those enrolled part-time or full-time.
Federal Work-Study jobs are often related to the student's field of study. On- and off-campus positions may be available through the program. Those who work on-campus usually work for the school, while off-campus employees often work for nonprofit organizations or public agencies.
The college's financial aid office will review the student's academic record and class schedule to determine the number of hours he or she may work per week.
All students participating in Federal Work-Study earn at least the federal minimum wage. Skilled positions may offer more compensation. Additionally, earnings depend on the college's amount of available funding and the student's financial need.
Tuition Reimbursement Programs
According to a report from the Society of Human Resource Management, more than half of private organizations offer tuition reimbursement plans to employees who wish to earn a postsecondary degree or certificate. These plans are mutually beneficial. Employees who receive assistance can offset some of the out-of-pocket costs for their education, and employers strengthen their workforce with workers who have advanced training in their field. However, tuition reimbursement will not cover all of the student's expenses. The average organization reimburses roughly $4,600 in tuition expenses per year. Additionally, the employee may be required to work for the organization for a certain length of time after they have received their degree or certificate.
Grants, Fellowships, and Scholarships
A grant is a form of financial aid delivered to students in a lump sum. The federal government provides grants to low-income students, and many colleges and universities also offer similar grants.
Fellowships are a type of grant for students who conduct independent research studies. Scholarships are similar to grants, but these are normally available through private organizations.
Some grants, fellowships, and scholarships impose restrictions on how the money may be spent. Recipients who do not follow these guidelines may need to pay back some or all of the award. Otherwise, these forms of financial aid -- unlike loans -- do not need to be repaid.
Some grants, fellowships, and scholarships are delivered to students in a single payment. Other 'renewable' awards are available for two or more years of study. Students may need to reapply for renewable awards in order to receive successive payments.
Some of these awards require students to attend national conferences, or work or volunteer in their community while attending school.
To learn more about finding grants, fellowships, and scholarships, please scroll down to the 'Financing Your Online Degree' section.
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