Posted on July 22, 2014 by Kristel Stopoulos – VP of Consumer Lending
Paying for higher education is a monumental task, and at times can seem overwhelming. There are ways to start saving, borrow intelligently, and use different financial resources to take the load off of your mind and wallet.
1. Always Apply for Financial Aid
It is very important to apply for financial aid. Some people assume that they will not be chosen to receive any financial aid because of their income or household status. But nearly sixty percent of undergraduate students receive aid that supplies twenty to forty percent of the total cost of their tuition. Free Application for Federal Student Aid (or FAFSA) is a program through the U.S. Department of Education. Apply for this program every year to be considered for different grants, scholarships, loans, and work-study programs.
2. Save Early, Save Often
Of course, saving is important when it comes to tuition and other expenses, but knowing how to save is key. First, learn to budget. It does not sound fun, but the investment of higher education still gives you profitable returns; so it is worth it. Start with your income, and separate all of your known expenses. Leave some money aside for emergencies or unexpected events. Then use whatever is left, to begin your higher education fund. If you make these deposits automatic, your savings will begin to grow nicely. As you begin to save, write down your savings goal. This will not only remind you to save but also motivate you to achieve your goal.
3. Look into a 529 Account
What is it? In short, a 529 savings plan is a tax-advantaged savings account operated by a state or educational institution specifically designed for college savings. There are two types of plans: pre-paid tuition plans and college savings plans. All states are covered in the plan. Benefits include grant matching, no federal taxation, and in many cases no state taxes. Each individual situation is different, but worth researching.
4. Seek Out Grants and Scholarships
Grants and scholarships are great options for college funding. A grant is money that does not need to be paid back. Many times grants come from a federal source, the college itself, or a private source. Scholarships are very similar to grants except that most scholarships are awarded for academic excellence or volunteer work. Many times grants or scholarships are not a large amount of money by themselves, but together, they can grow quickly. Only apply for scholarships from trusted, reputable sources.
5. Student Loan Options
In many cases, student loans will still be required to cover the cost of your education. There are two main types of student loans, Federal and Private. The majority of student loans offer fixed interest rates and have no required payments while you are in school. And in most cases there is a deferment period if you cannot immediately begin repaying the loan directly after school. If a Federal loan cannot cover your tuition cost, a private student loan from RIA Federal Credit Union has even more benefits for those looking to further their education. Learn more about Student Loans.