Your Guide to Financing College
An important step in financial planning for college is learning about the different types of financial aid available to help students afford college.
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Financial planning for college is a common challenge for students and their families. Though college can be expensive, it can also be transformative, both personally and professionally. Because college graduates statistically earn $ 1 million more in their lifetime than a high school graduate, college is an investment in the future.
Our first post about financing college included strategies for planning ahead, having conversations with parents and family, and working with admissions and financial aid counselors. In our second post about financial planning for college we dive into different types of financial aid — such as loans, merit scholarships, grants and more — so that you can apply for the best financial aid options that will help you afford college when the time comes to begin paying tuition.
Navigating Loans, Scholarships, Grants and Types of Financial Aid
The first step in financial planning for college is understanding all the different types of financial aid available to help students afford college. Some aid, like grants and scholarships for college, does not need to be paid back, while other aid, like student loans, will need to be repaid over time. In order to receive financial aid, you’ll need to fill out the FAFSA each year you are in college. This will determine your expected family contribution as well as the federal aid for which you are eligible. Colleges will also begin working on your financial aid offers based on the FAFSA and any other college-specific financial aid applications you need to submit. It’s important to fill out the FAFSA — even if you think you will not qualify for need-based aid or if you plan to only receive merit scholarships — because this is a document that each college will use to begin working on your full package of financial aid for college.
Financial Aid that You Don’t Need to Pay Back
Grants and scholarships for college can be awarded to students from the school they are attending and also from outside organizations. This is financial aid that you do not need to pay back. When seeking out scholarships as part of your financial planning for college, consider:
- Your academic performance
- Your extracurriculars and interests
- Your financial need and expected family contribution
Merit scholarships are awarded based on grades and what you’ve done in school. Need-based scholarships are awarded based on your financial situation. Some grants and scholarships for college are automatically awarded for each year you are in enrolled, while others may be one-time scholarships that are only awarded once each year or require that you reapply each year. Be sure you understand the terms of any grants and scholarships for college that you are awarded. Also, remember that you can apply for scholarships and grants each year you are in college and some scholarships are only available to students after their first year.
Counselors, both at your high school and at the colleges you are considering, are an important resource when you are determining what scholarships to apply for. Your high school counselors will often be aware of local scholarships that may be less competitive than those open to students nationally. Asking financial aid counselors at colleges you are considering is also a great way to locate scholarships and to understand what scholarships might be specific to the college or their local area. Smaller university financial aid counselors are also more likely to respond to you personally if you reach out with questions. At Pacific University, you do not have to be a student or have applied to Pacific to speak with a financial aid counselor (financialaid@pacificu.edu). Counselors are happy to answer questions about financing college from any student who asks.
Financial Aid that You Do Need to Pay Back
Loans are often an important part of financing college and they can be taken out by students, their parents and guardians, or both. This is money that needs to be paid back. There are federal loans that historically have more protections in place for the borrower and private loans with terms set by private lenders. Federal loans may be subsidized (meaning the government pays the interest while you are in school) or unsubsidized (meaning the interest accumulates while you are in school). When taking out a loan, be sure you understand the loan terms, such as:
- When you must begin making payments
- How much interest is charged
- What your options are if you are unable to make loan payments for a period of time or need your monthly payment amount lowered.
A full package of financial aid for college comes together over time and is the result of the combined work of the student, family and counselors. Schools award different types of financial aid at different times and you may receive aid like scholarships after your award letter from a college has been sent. For example, at Pacific University, merit scholarships are sent out with award letters but other scholarships are often added later. Be sure to reach out to admissions and financial aid counselors with questions about your award letters when you receive them.
Have you had the talk about paying college? Talking about money with family can be awkward, but it’s a normal part of planning for college. Check out our suggestions for how to start the conversation.