For many young adults, paying for college can feel overwhelming. Personal and/or family savings may not be enough to foot the bill for your desired college or university. Accounting for annual tuition, housing, books, and other monthly costs, college is expensive. It's common to need a bit of financial help in one way or another.
There are seemingly countless products and ways to pay for college. Unfortunately, many financing options don't explain why (or if) it is the best fit for you and your goals. This can convolute the process even more.
If you’re looking at colleges, it’s essential to have a good grasp of what funding options are available. Get to know what's out there and make committing to a university less stressful for you and your parents. Start the process right by using the following list of financing steps to choose wisely:
1. Complete the Free Application for Federal Student Aid (FAFSA)
Don’t know how to start applying for student aid? Start by submitting your FAFSA, or the Free Application for Federal Student Aid. The FAFSA determines if you’re eligible for student aid opportunities. This includes federal grants, student loans, work-studies, as well as state-, campus-, and organization-specific aid.
Timing is critical. Awards are on a first-come, first-served basis. Plan ahead and get in early. FAFSA accepts applications beginning October 1st each year.
Pro tip: Complete your section but be sure to have your parents or guardians nearby. They’ll need to share same income and tax information as well. Are your parents nervous about entering their sensitive information? They can rest assured. The FAFSA site and application are managed by the federal government. There are no third-party handlers involved here!
Beware: You NEVER have to pay to submit a FAFSA application. It is completely free, so don’t get fooled into scams. There are organizations that charge to complete the form for you. Don’t waste your time and money. Complete the FAFSA safely by always going to the source at fafsa.ed.gov.
This isn’t a “set it and forget it,” application. A FAFSA is required for most institutions and must be filed each school year. This means you'll need updated information from your parents too. Visit fafsa.ed.gov to get started on your application.
In addition to the FAFSA, some colleges require a CSS profile in order to be considered for financial aid. For more information and to create your CSS profile, visit cssprofile.collegeboard.org.
2. Keep your eyes open for scholarship
When it comes to scholarships, there’s no reason to wait. Start applying early and look often.
With the various types of scholarships out there, you’re bound to find a few that resonate with your background and interests. In addition to academic or athletic-based scholarships, you’ll also be able to find awards for things such as ethnicity, military affiliation, religion, and student organization affiliation.
Are you a HawaiiUSA member? We offer the HawaiiUSA Scholarship for members at different milestones in their academic career. Whether you're a graduating high school senior, undergraduate, or graduate, we encourage all students to seek a higher education.
Unlike student loans, award money from scholarships don’t need to be paid back, if you continue your education. Be sure to check with all eligibility requirements prior to applying. Each scholarship has unique application process and awardees must adhere to terms and conditions.
Pro tip: Familiarize yourself with funding restrictions. Some scholarships can only be applied to tuition expenses while others can also be used toward books and housing. You may also need to keep records on how the award money was spent for tax purposes. This means keeping receipts and other applicable documentation when available.
Submit scholarship application
3. Capitalize on available grant money
If you submit a FAFSA and show financial need, you may be eligible for federal grants. Like scholarships, funds awarded to you through a federal grant do not need to be repaid. Federal grants are need-based. The amount awarded and when funds are distributed is determined by your campus.
Grants available through FAFSA include Federal Pell Grants Federal Supplemental Educational Opportunity Grants (FSEOG) Teacher Education Assistance for College and Higher Education (TEACH) Grants Iraq and Afghanistan Service Grants.
Besides federal funds, many states have grant programs too. Search around for grant programs, just like you would for scholarships. You’re bound to find grants that are relevant to your lifestyle.
4. Save for yourself
According to Sallie Mae¹, the typical family contributed 34% out of pocket towards the costs of college for the 2016-2017 school year. Paying for school expenses out of pocket can be tough and put a strain on you monthly. Can you imagine trying to pay for monthly tuition on a payment plan with only a part-time job and a full-time class schedule?
That's why we recommend starting to save early. As soon as you’re able to, put money away for college. And, it’s not too late to start. There are programs meant for college funding, such as the 529 plan. It’s a special, state-sponsored college investment account. The 529 plan has built-in tax advantages that lets your money grow over time.
Other savings options include a transactional banking account or a standard savings account like HawaiiUSA’s Prime Share. Whichever method you choose, make the conscious effort to start putting money away. Whatever you’re able to save now will offset the cost of college in the future.
5. Fill the gap with a student loan
You have most of your funding, but still need to fill a few gaps. A student loan can fill in where you need it. However, we recommend applying for FAFSA, scholarships and grants before considering a loan.
There are two options for student loans. One is a privately-funded loan from a bank or credit union, and the other is a federal loan.
HawaiiUSA offers college-bound members a special, private student loan. Designed to serve your best interests, the Student Choice loan is ideal for seeking higher education. The Student Choice loan offers a lower interest rate, fewer fees, and flexible repayment terms.
Funds can be used for tuition, housing, textbooks, transportation, and other school-related expenses. For added convenience, you will only have to complete the application process once throughout your academic career. Your loan is subject to credit qualification and an annual credit review, and you must continue to meet your school’s Satisfactory Academic Progress (SAP) and enrollment requirements.
As with any borrowing, it’s important to make sure you understand the particulars of the loan, as well as the terms and conditions. Unlike the funds you receive from scholarships or grants, after you graduate, student loans must be paid back. Unless it’s a federal subsidized loan, you’ll also need to pay interest. Think carefully about how much you’d need to make ends meet for your entire collegiate career.
Pro tip: To avoid debt overload following graduation, only borrow what you need. If you are able to make early payments on interest, consider getting a head start.