Deciding to pursue an online education is an important investment in your future. And while it is easy to think that any type of continued education will pay off, it is imperative that you carefully weigh the cost of the programs you are considering, evaluating which is the best investment opportunity for you. Typically, online colleges and universities will be less expensive than an on-campus program; however, tuition and fees are influenced by a number of factors including area of study, program length, institutional policy, and geographical location. Still, perhaps even more important than the estimated total cost of attendance for the program is the school's track record for helping students find adequate financial aid. The top rated online universities will have a team of financial aid advisors available to assist you in finding the best options. Potential sources of financial aid include:
- Federal financial aid, both loans and grants
- Institutional aid
- Private scholarships
- Private loans
- Employer education stipends
Since most individuals cannot afford to pay for the cost of higher education out of pocket, it is crucial to research all these options for financing your degree. This will help make the cost of going back to school more manageable in the short term and, more importantly, in the long term.
Federal Financial Aid
One of the first steps prospective students should take when planning for the cost of college is to investigate their federal financial aid options. This includes both federally-funded loans and grants. To be eligible for federal assistance, you must:
- Be a U.S. citizen, or eligible noncitizen.
- Have a valid Social Security Number.
- Register, or already be registered, with selective service for the armed forces.
- Have a high school diploma, GED, or other proof of qualification or prior education for college admittance.
- Maintain a good academic record in your program.
To apply, students will need to fill out the Free Application for Federal Student Aid (FAFSA). The income data they supply will then be evaluated and they may receive grants and/or loans based on their demonstrated financial need. Perkins and Stafford loans are the two most common forms of federal financial aid.
- Stafford Loans. Stafford loans can be either subsidized or unsubsidized. Subsidized Stafford loans are only available to students with demonstrated financial need. This type of loan does not accrue interest while the student is enrolled in school, or during a six-month grace period following graduation. Unsubsidized Stafford loans are available to anyone, but will start accruing interest at a fixed rate of 6.8% as soon as the loan is issued.
- Perkins Loans. Perkins loans are only available to undergraduate and graduate students who demonstrate great financial need. Repayment for this type of loan is deferred for as long as you attend school at least half-time and through the nine-month grace period after you graduate or drop below half-time. Perkins loans have an interest rate of 5%.
Grants are the most desirable form of financial aid for students because they never need to be repaid. Federal Pell Grants are available to undergraduate students who have not yet earned a bachelor's or professional degree, and post-baccalaureate students in teaching certification programs. The maximum award for Pell Grant recipients is $5,550 per year, though the amount you receive will vary based on demonstrated financial need. Special consideration is given to Pell Grant applicants who have lost a parent in Iraq or Afghanistan after September 11, 2001.
In addition, the Teacher Education Assistance for College and Higher Education (TEACH) grant is available to students taking classes to become elementary or secondary teachers. This grant is limited to students attending participating schools.
Work-study opportunities are a widely available form of federal student aid. This program is designed to help students secure a government-sponsored job, either on or off campus, to earn money to partially offset their college expenses. Most work-study opportunities are located on campus, but off-campus jobs, especially at non-profit organizations working in the public interest, may also offer work-study positions.
The G.I. Bill
The G.I. Bill is a law that provides special financing and scholarship funding to active-duty and retired members of the armed forces and their families. The law's most recent iteration, dubbed the "Post 9/11 G.I. Bill," includes several updates to provide for veterans of the wars in Iraq or Afghanistan and their families.
The amount of money available through the G.I. Bill may depend on the length and nature of your service in the armed forces. The official Veterans Affairs website has electronic applications, benefit calculators, and other tools for veterans who want to pursue higher education. In addition, many of the best online universities have entire departments dedicated to serving the needs of military students and their families.
It is also important to check with individual schools to see if they offer institutional aid. This may include grants and scholarships based on merit or demonstrated financial need. Top ranked online universities may have funds set aside for eligible students who are enrolled in specific programs, are part of a minority demographic, or demonstrate strong academic abilities. It is significant to note that this type of aid will not need to be repaid upon graduation.
Private scholarships are also an excellent option to help pay for your college education. These awards are typically funded by private organizations and issued to students with a certain major, ethnic background, financial need, or level of academic performance. While this type of funding requires research and separate individual applications on your part, this money, unlike loans, will not need to be repaid, making it well worth the effort of applying to as many as possible.
In the some instances, federal financial aid, institutional assistance, and private scholarships do not cover the entire cost of a program. Students may then elect to take out private loans through a bank. While this is preferable to racking up credit card debt or emptying your emergency savings fund, it is important to consider the long-term repayment costs of these loans when selecting a program. This should be the last resort for financing your continued education.
Employer Education Stipends
Some employers even offer tuition reimbursement plans for employees who are looking to improve their job skills in an area related to their current position. This may require employees to sign a contract stating they will stay with the company for a certain period of time following the completion of the program, but this can vary. Check with your human resources department to see if your employer offers any type of financial assistance for continued education.
Tax credits are a way for the government to help you manage the cost of college without actually issuing a grant or a loan up-front. In combination with other forms of financial aid, these tax credits can reduce your educational costs by thousands of dollars over the years you are in school. There are currently two types of education tax credits offered by the Internal Revenue Service:
- The American Opportunity Credit, also called the HOPE credit, allows you to subtract up to $2,500 from the taxes you would have paid to the government, depending on your income and educational expenses for the year.
- The Lifetime Learning Credit operates similarly to the American Opportunity Credit, but the credit is calculated differently. A student cannot take both credits in a single school year, so you should calculate which one will save you more money before choosing which to accept.
Another way to lower the taxes you pay while you're in school is to start a Coverdell Education Savings Account. This allows you to deposit a certain amount of money, commensurate with your education costs, up to $2,000, as a tax exempt fund.
What Not to Do
Financing your education with a steadily increasing mound of credit card debt is a dangerous game to play with your money and your future. Credit cards have notoriously high interest rates and unforgiving repayment options. While taking on small amounts of credit card debt as a bridge between steady incomes can help you through a tough period, taking on credit card debt with no guarantee of a well-paying job in the future can seriously affect your credit score and your future ability to secure safer, more worthwhile loans.
Even if it means taking longer to finish your degree, keeping a job while you take classes can really ease the financial burden of college. Statistics show that college graduates tend to earn more money than people without degrees, but there's no guarantee you'll get a great job immediately out of school, so playing it safe with your finances is the best option.
Go Out and Do It
Financial aid is available for students at accredited online universities, but you will need to take the time to seek it out. Do the research and the legwork it takes to secure various types of federal and private financial aid, and you'll save money in the long run, all while increasing your earning potential by furthering your education.