How to Finance Your College Education

When deciding to attend college to further your education, one of your most important considerations should be how to pay for tuition, textbooks and other expenses.

Luckily, there are many federal and state programs as well as private institutions that can help you finance your education. Below are a few of the options available.

Federal Application for Free Student Aid (FAFSA)

Completing the FAFSA application can be your first step in getting help to pay for college. It allows you to apply for federal student loans, scholarships and the Pell Grant, which helps fund education for students from low-income households.

If you submit your application before the deadline, there’s a good chance you can receive some sort of federal loan. There are various types of federal loans, including:

• Stafford and Perkins loans, which are paid directly to the student and neither require collateral or a credit check.
• PLUS and Grad PLUS loans, available for parents of undergraduate students and graduate students themselves.

Even if you don’t expect to receive any financial help from the government, submitting the FAFSA can be a good idea, as many schools use this information to create their own awards packages for students. You may be eligible for a needs-based scholarship from your college or university if they have information from your FAFSA.

Private loans

Federal loans don’t cover the entire cost of college. Even with other payment methods such as scholarships or a work study, students may still owe money, and private student loans can help fill that gap. Private loans are offered by different lenders, and many include:

• No prepayment penalties
• No origination fees
• Multiple repayment options, including in-school payment plans
• Competitive interest rates

Loans for other forms of education

Not everyone who desires higher education intends to go to a four-year college or university, and it is possible to get financial aid for more than just the traditional college path. Companies like Sallie Mae offer student loans for trade schools, professional training programs and part-time students.

If you receive an undergraduate degree and plan to continue studying for an advanced degree, such as a medical or law program, there are loans designed to help students in those specific fields. For example, Health Professions Student Loans (HPSL) are available for part-time or full-time students pursuing degrees, such as a Doctor of Dentistry or Doctor of Pharmacy.

529 Plans

A 529 plan is a tax-advantaged college savings account sponsored by schools, states or state agencies and authorized by Section 529 of the Internal Revenue Code. Parents and grandparents often start 529 Plans for children from an early age.

There are two types of 529 plans: prepaid tuition and education savings. All states and the District of Columbia support at least one type, and many private colleges and universities sponsor prepaid plans.

There are several regulations concerning when and how much can be withdrawn from a plan, as you can only use a 529 Plan to pay for certain qualified expenses. On-campus housing (as long as you’re enrolled part-time) and a computer are covered, while expenses such as insurance and transportation are not.

Also, note that using a 529 Plan can disqualify you for education-related tax credits, which are another way to help fund college. The U.S. Securities and Exchange Commission has a detailed description of each type of 529 Plan.

State grants and local scholarships

Most states provide local financial aid programs that primarily serve residents attending a local college, and some are available to non-residents or students going to school out of state. The National Association of Student Financial Aid Administrators has a tool that can help you find student aid options in your state.

Community college

Community college technically isn’t a form of aid, but you can save a lot of money taking prerequisite courses that are offered. Courses are usually less expensive than the same ones at a university, and credits can transfer to a four-year school where you can finish your degree. Check to be sure that any credits for classes you take will be accepted by the school you plan to attend.

Repayment Plans

If you plan on taking on student debt, you should always have a plan in mind of how you will repay the loan. There are plenty of options on how to do this, so pick the one that works best for your financial situation. For instance, many loans do not require you to pay anything back while you are in school and even have a grace-period, usually 6 months, after you graduate before your first payments begin. You may opt for this option if you want to have more money available during school, however, you will pay more in interest in the long run. Alternatively, you can pay what you can while in school or set up a fixed repayment plan.

Enjoy the benefits of a college eduction

A college degree can jumpstart your path to a satisfying career, and you shouldn’t let the cost hold you back. With a little financial planning, you can enjoy your educational experience and the many opportunities it will bring.

Visit Trustmark’s student loan page to learn more about the options available to you.