Financial Aid: Finding Funds For College
College Funds
Paper Chase
Finding Funds For College
By:Jeffery Guillermo
how many factors are involved in choosing a college? Some may think about a particularly stellar program of study, and others perhaps ponder an institution’s reputation. But, unless you do the backstroke in your pool of gold bullion like Scrooge McDuck, cost is always a factor. Here are some things you should know before you face the inevitable sticker shock.
There is no way of knowing what your financial obligation is until after you do three things:
- Get accepted
- Apply for financial aid
- Receive your award package
COOK YOUR BOOKS
There are basic costs associated with college. Here they are:
Tuition & Fees: The balance depends on the number of credits you are enrolled in, as well as your academic program.
Room & Board: If you plan to live on campus and eat from a meal plan, these will be on your university bill. If you plan to live off campus and provide for your own meals, you must calculate your own costs. Living off campus may be cheaper, but transportation to class can add up. Tip: Resident assistants earn free room, discounted board and a stipend.
Books & Supplies: This amount includes textbooks and other materials. To cut costs, either purchase used books online or decide if a book is necessary to pass the course.
Travel: How far is your college from your hometown, and how often are you planning on going home? Check around for the lowest fare to determine an annual travel cost.
Personal Expenses: These can range from cell phones to Laffy Taffy. Whatever expenses you may have, set reasonable spending limits for yourself.
When it comes to bankrolling your college education, don’t rely on just one type of financial aid, says Amalia Bueno,of GEAR UP Hawai‘i, a resource for teenagers preparing for college.
“Get a package that is a combination of loans—work study, a student loan or an outright grant,” Bueno says. “Don’t put all your hopes on scholarships and government grants, as scholarships are very competitive and government grants may not be as large as you’d hope. Be open to all types of financial aid, and read the fine print.”
In creating a diverse college fund, be sure to find out whether you’re eligible for Federal Student Aid. The Free Application for Federal Student Aid (FAFSA) form can be completed on the web at www.fafsa.ed.gov or by submitting a paper application, which can be picked up at your college’s financial aid office or by calling the Federal Student Aid Information Center at 1-800-4-FED-AID.
If you’re eligible for aid, you’ll receive an award letter from your college outlining the type and amount of aid that is available to you.
If you feel like you might need some help filling out the FAFSA form, consider contacting GEAR UP Hawai‘i. In January, the company offers a College Goal Sunday, where people statewide can get help with the FAFSA.
Derek Wong, of First Hawaiian Bank, encourages students to seek federally guaranteed loans because they are usually at lower interest rates, and allow payback after the student graduates. Wong notes that First Hawaiian Bank is one of two banks in Hawai´i that offer federal student loans. “You can’t get all of your information over the Internet, so the most important step is to go to your local bank. If it is a good bank, they’ll have a personal banker who can talk to you about your different options,” Wong says. “We have personal bankers at all our branches.”
The downfall of federal loans is that there is a $30,000 per student limitation on total loan amount. If you need extra funds for college, Wong suggests talking to your parents about the possibility of supplementing the tuition with a home equity line of credit.
“As the tuition bills come in, parents can write a check,” Wong says. “The interest paid on that outstanding amount is tax deductible, and these lines have the lowest rates.”
Your family can also look into non-need based loans, which are for those unable to pay for the education from their current income and savings. These include unsubsidized Stafford loans, PLUS loans and private loans, which usually have higher interest rates and offer no in-school interest subsidy.
PRIVATE MONIES
You may be eligible for a private scholarship or grant from a private organization or agency. Many employers, unions, professional organizations, community groups and clubs offer scholarships. There are also a number of extensive scholarship search sites available on the Internet.
“Students and parents should look at all of those tuition vehicles,” Wong says.
CREDIT CARDS: PLASTIC PASSPORTS TO DEBT
All students should watch out for credit cards. College students are especially targeted and baited with free stuff. Yet, cards can also be a benefit. Credit cards can provide a cushion in case of emergencies, give you protection for purchases and help build your credit (so long as you pay your bills on time).
It’s vital for students to limit credit card usage and to manage the incurred debt. “Credit cards should be used primarily for transactional purposes, such as Internet purchases and to earn frequent flyer miles for going home,” Wong says. “Or, they should be used to utilize the 30-day float (the time allowed to repay the charge before you are billed the interest fee). Problems start to occur when a student is not able to pay before the 30-day payment due date and the debt grows.”
TIPS:
- Avoid impulse shopping
- Pay your bills promptly
- Read the fine print
IS IT WORTH IT?
According to a 2007 College Board Study titled Education Pays, people with bachelor’s degrees earn more than 60 percent than those with only a high school diploma. That roughly translates to more than $800K in a lifetime. Think of educational debt as a short-term loss, and a long-term investment.