Financial Aid for Post-Secondary Education

There are many options to pay for post-secondary education, such as savings, scholarships, grants, and student loans (federal and private). Costs for education is increasing. Tuition, room and board make up the majority of the costs but additional expenses that include books/supplies, personal, and transportation should also be considered.

Savings
A 529 Prepaid Tuition Plan, 529 Savings Plan, Coverdell Education Savings Account, or Roth IRA are tools that can be used to save money for post-secondary education. Most even provide tax benefits. Each plan has different benefits and risks. Research each type of plan to determine which is best for your situation.

Scholarships and Grants
Research scholarships and grants available from the institutions being considered, local community and state. Start the search process early to avoid missing submission deadlines. Remember to conduct the scholarship and grant search each year attending the institution. There are many scholarship opportunities that go unfunded because of lack of applicants. Never pay to apply for a scholarship/grant or for access to scholarship opportunities.

Federal Student Loans
Following are the types of loans available through the Federal Department of Education. Application for the loans is done by completing the FAFSA (Free Application for Federal Student Aid).

• Direct Subsidized Loans: Made to eligible undergraduate students who demonstrate financial need to help cover costs of school. These loans do not accrue interest until the student is out of school. The amount loaned is based on your grade-level at a particular school.
• Direct Unsubsidized Loans: Made to eligible undergraduate, graduate, and professional students. Students do not need to demonstrate finance need to get an unsubsidized loan. Interest begins to accrue as soon as the loan is disbursed and the amount is based on your grade-level at a particular school.
• Direct PLUS Loans: Are taken by parents to help pay for the students education. If a parent is denied a PLUS loan because of their credit history, they can contact the school to see if their student would be eligible for additional unsubsidized student loans.
• Federal Perkins Loans: School-based loan program for students with financial need. Under this program, the school is the lender and the amount of the loan is determined by each school based on the amount of funds they have available to lend.

Private/Non-Federal Student Loans
There are many non-federal loan options available to students. Most of these loans will require the student to have a co-signer. Being a co-signer is risky. If the student does not make the payments, the co-signer will be required to make the payments. Interest rates for private loans will be either variable or higher than federal loans. These loans are not available for flexible repayment plans and cannot be consolidated with federal student loans.

Source: Lorna Saboe-Wounded Head, iGrow