Paying for College and Beyond

Getting accepted into a college or university is a proud achievement. It is the validation of years of hard work in high school. However, paying for college is a whole other challenge. Even when students get accepted into prestigious universities, they can't always afford to attend that institution, particularly without assistance. Fortunately, there are several options to help post-secondary school students afford tuition, books, housing, and other living expenses.

This section covers the legal issues involved in grants and scholarships, how the different federal student loans operate, repayment options, and tips for student borrowers.

Sources of Funding for College Applicants

There are several sources for students to get money for college. The U.S. Department of Education offers an important program called FAFSA. FAFSA means “Free Application for Federal Student Aid." This program helps students get financial assistance, but the U.S. Department of Education isn't the only source of funding for students. Here are other key sources to consider:

• Federal Loans: The U.S. Department of Education offers an important program called FAFSA. FAFSA offers students financial assistance.
• Private Loans: Many students turn to private lenders to bridge the financial gap. These entities might offer loans that vary in terms and interest rates compared to federal loans.
• Waivers: Based on various criteria, some students might qualify for tuition waivers. This could be due to their academic achievements, athletic abilities, or other circumstances.
• Need-Based Financial Aid: Students might receive grants from their institution. Students may need to demonstrate need in order to qualify for this type of financial assistance.
• Scholarships: Outside of government and school-based scholarships, many organizations, nonprofits, and businesses offer scholarships. They can be merit-based or need-based and are gifts that don't need to be repaid.
• Student Employment: Students might get a job either on or off campus to support their expenses and pay for school.
• Work-Study Programs: These are part-time job opportunities, usually on-campus. These jobs allow students to earn money while studying. They are often related to a student's course and can provide both income and valuable experience.

Let's take a closer look at the most frequently used source for college funding: student loans.

Student Loans: Federal and Private

When you get money for college, loans can help. There are federal funds and private student loans. Federal loans come from the government. Private loans come from banks or other businesses. Before you borrow, check the loan's interest rate. A low rate is better. Also, know exactly when you must start repaying the loan.

Most student loans are offered through the federal government, although private loans are also available through many banks and other financial institutions. In general, student loans may not be discharged in bankruptcy or otherwise forgiven, with a few exceptions. Some loans are need-based and offer lower interest rates, while others have no financial requirements. The main types of federal student loans include the following:

• Direct Subsidized Stafford Loan: This type of student financial aid is available to undergraduate students who demonstrate financial need. The U.S. Department of Education pays the interest while the student is in school at least half-time. These loans have a fixed interest rate.
• Direct Unsubsidized Stafford Loan: These loans are available to undergraduate and graduate students. There is no need to demonstrate financial need to prove eligibility for this loan. Borrowers are responsible for all interest with these loans. Interest accumulates while the student is in school and can be paid or added to the principal amount. These loans have a fixed interest rate.
• Direct PLUS Loan: These loans are available to graduate or professional students and parents of dependent undergraduate students. These loans can be used to pay for education expenses that are not covered by other types of financial aid. Borrowers must not have an adverse credit history. These loans have a fixed interest rate. Interest accrues while the student is in school.

Note that Federal Perkins Loans are no longer available to new borrowers after 2017. This type of loan was previously offered to undergraduate and graduate students with exceptional financial need. These loans were made with government funds but administered by participating undergrad and graduate schools.

Loan Repayment and Debt: What to Expect

Student loan repayment is a significant concern for many after completing their education journey. On average, students at state universities have less debt than those at private schools. Community college students usually owe even less. Regardless of the type of school you attended, understanding your loan obligations is essential. It's smart to know what you might owe after graduation. It can take many years to repay a loan. Some people have a hard time. It's best to borrow only what you need.

First, understand your repayment terms. The conditions, depending on the type of loan, can vary. Some loans offer a grace period after graduation. This allows the borrower some time before beginning repayments. Some borrowers opt to consolidate multiple federal loans into one. Or, they choose to refinance their loans, both federal and private, for better terms or rates. For federal loans, borrowers might be eligible for repayment plans based on their income. These are called “Income-Driven Repayment Plans."

In specific situations, such as financial hardship or further studies, borrowers can temporarily pause their loan payments. This can offer short-term relief. Keep in mind that interest will still accumulate for certain loans during these periods.

Dropping Out or Can't Pay Back Loans?

Making the decision to leave higher education, whether it's a four-year or two-year program, can be challenging. This is especially true if you have student loans. When an undergraduate student stops their studies before graduation, they often have to start their loan payments earlier than planned. If, during an academic year, a student decides to drop their enrollment, the financial aid they received might be affected.

Many aid programs, both federal and from the institution of higher education, have specific rules. These rules specify when and how much you have to repay if you don't finish the school year. Having student debt without a degree can be tough. If you're struggling with loan payments, it's essential to look into the education programs or aid options available. Some loan programs offer flexible repayment plans based on income or extended repayment terms.

Tips for Student Borrowers

Student borrowers should consider the following tips when figuring out their finances:

• Do check if community colleges offer cheaper courses. You can complete some or all prerequisite classes at a lower price through these programs.
• Don't assume your credits will transfer to another college. Always check with college admissions counselors to ensure you are fulfilling the right requirements for your degree.
• Do always read the loan details before you sign anything.
• Don't borrow more money than you need. This is how many students accrue an insurmountable amount of debt.
• Do ask about work-study programs at your school. These programs are federally funded. They allow students to work part-time jobs on or near their school's campus to earn money for their education expenses. These jobs can be related to the student's course of study or in areas that benefit the school community.

Student borrowers should take a look at FindLaw's Guide on Student Loan Debt to learn more about the process.

Grants and Scholarships

Grants and scholarships are ideal because you don't have to pay them back. The U.S. Department of Education has grant programs for eligible students. Grants tend to be need-based. They are targeted toward lower-income students. In contrast, scholarships are based on merit. This is usually academic or athletic merit. 

If you need help paying for college, you should apply for any grants or scholarships that match your qualifications before pursuing student loans. Schools, nonprofits, and other groups have scholarship programs, too. To find out about grant aid, students should fill out the FAFSA.

The federal government offers several different grants to college students, the most well-known being the Federal Pell Grant. The amount of a Pell Grant changes annually. However, the actual award is based on financial need, the cost of attendance, and your status as either a full-time or part-time student. Those incarcerated in a federal prison or who have completed a period of incarceration for a sexual offense are not eligible to receive a Pell Grant.

For-Profit Universities

Most colleges and universities are non-profit, but some colleges are operated by private entities with the goal of turning a profit. These institutions are very controversial. Many have been accused of charging high costs but delivering low student outcomes, while some have faced criminal charges for fraud or other crimes.

This does not mean all for-profit colleges are a bad deal, just that prospective students need to be absolutely sure what they're getting into. Before you enroll, use a net price calculator. This tool will help you map out how much school might cost. Be careful and compare costs with other schools.

Getting Legal Help

If you have questions about paying for college, it's smart to ask for help. Some people turn to the U.S. Department of Education or their state university. Others might need a lawyer. Everyone's path to postsecondary education is different. Seek advice when you need it. Talk to an education law attorney for help today.

Learn more about how to pay for college by clicking on one of the links below.