Continuing your education is an exciting opportunity. You’re making a very big investment in one of your most important assets—yourself. Now that you’ve made the commitment to your education, it’s important to keep your finances top of mind too.
For many students, thinking about how you’ll pay for that education can bring on an. However, keeping tabs on your tuition payments and financial aid is a critical part of establishing a strong financial foundation for yourself now and after you graduate. You’re not alone. Every year, hundreds of students apply for student aid and find themselves in a similar position.
Luckily, managing your money doesn’t have to mean a trip to student health or another late night in the library. We’ll explore four ways to make your financial aid package work for you:
1. Learn the ABCs of financial aid
There are a few buzz words when it comes to financial aid - think of these as the ABC’s of Financial Aid. By familiarizing yourself with these terms, you can take actions throughout the course of your education to maximize your financial aid benefits. If you have loans, you may even start to think about how to get ahead of your post-graduation payments. Here are a few of the most important terms you need to know, regardless of where you are in your education:
- Expected family contribution: How much money can you get in student aid? How much will you need to cover on your own? The government calculates this number using a formula that takes into account your family’s income and assets.
- Loans: A loan is money that you borrow from the bank, the government, or a lending company to pay for your education. Student loans come in many forms and must be paid back with a fee for borrowing, called interest.
- Grants: A grant is a free giftof money from a source like the government or the school you are attending. A student who receives grant money is not required to pay that money back.
- Scholarships: A scholarship is a type of grant, or free gift of money, awarded on the basis of a student’s educational achievements. There are many scholarships available. However, be sure to look at the qualifications, like being a student athlete or keeping up a minimum GPA requirement.
2. Understand the terms of your loans
By familiarizing yourself with the makeup of your own personal financial aid package, you are taking an important step to secure your financial foundation after you graduate. Let’s start with your loans , as those are often the most confusing and difficult to break down. If you have a Federal Loan, do you know if that loan is subsidized or unsubsidized? Both types of loans guarantee that you receive your financial aid money at the beginning of the semester. In addition, neither require you to pay them back before graduating. However, they do differ in when you start paying interest. Interest is the fee you pay to borrow money. If your loan is subsidized, then the government pays the interest on your loan while you’re in school. If your loan is unsubsidized, then you’re required to make interest payments throughout your time in school.
If you’re close to graduation, or want to get ahead of your finances before you leave school, you should also consider:
- Grace Period: Or the period of time after you leave school in which you have to begin repaying your loan.
- Repayment plans: A variety of options that give you the flexibility to repay your student loans in way that work best for you.
- Loan forgiveness: Usually tied to public service, if you leave school to work in organizations like the government, a nonprofit, or join the Peace Corps, part of your student loans may be forgiven.
3. Continue applying for grants and scholarships
Grant and scholarship dollars do not need to be repaid after you graduate. Thus, there are many opportunities to apply for grant and scholarship money throughout the course of your education. Many grants and scholarships are merit-based, you earn them for your academic achievements and need to apply - or qualify - annually. These scholarships may be tied to your GPA, talents, or involvement in school (e.g. as a student athlete or as the leader of a student organization). Others are geared towards particular groups of people, like women or graduating seniors. Some are available because you come from a certain background, such as being from a minority group or the child of a veteran.
While some grants and scholarships do cover the entire cost of a student’s tuition, many are only one-time awards. The good news is that there are many of these types of monetary awards available if you apply and qualify year-to-year. It’s worth taking the steps needed to apply for these opportunities to help you cover the incremental costs of your education.
4. Explore your work-study options
If you have a financial need, you may also qualify for the Federal Work-Study program . Federal work-study provides part-time jobs for both undergraduate and graduate level students to earn an income and pay for the costs of their education. Work-study jobs are available both on and off-campus. On campus jobs give students the flexibility of working near their classes. Other schools have relationships with local nonprofits or government agencies that provide work-study students the opportunity to participate in public-service work.
Your hours and pay are determined by your financial need and the Federal work-study package offered to you. Make sure you explore your options and apply early if work-study is an option for you.