Learn what you can do to expand your options and decrease your debt
College is a huge investment in your future—and it may take you quite a while to pay off that investment. In the past quarter-century, the cost of college tuition and fees has grown by nearly 600 percent. In fact, according to the Consumer Financial Protection Bureau, student loan debt in the United States crossed the $1 trillion mark in 2012. Clearly, the cost of college has become a national problem.
But it’s also a very personal problem. Two out of every three students graduate with some amount of college debt. The average (median) college student carries an outstanding loan balance of $12,800; about a quarter of all students carry a loan balance in excess of $28,000, and more than three percent have balances of more than $100,000. And the further your education goes, the higher your student debt is likely to become. Therefore, it’s clear that obtaining the best financial aid package—as well as other means to obviate debt caused by college tuitions, board and fees—is critical.
There are a variety of ways to obtain financial aid, both public and private; however, most college funding comes via the federal government. The first step toward obtaining federal financial aid is the completion of a Free Application for Federal Student Aid (FAFSA).
Because many colleges' financial-aid deadlines come early in the year, it’s smart to file for financial aid as soon as possible. FAFSA applications for the coming academic year can be completed at the beginning of the calendar year (e.g., January 2013 for the 2013-2014 academic year), but no sooner. Copies of your (and/or your family’s) previous year's tax return will be required. If your tax returns aren’t yet ready, you can file a FAFSA with estimate numbers, then go back and update the application once you have the official return numbers. Other factors, such as money invested in college funds or savings accounts, will also be taken into consideration when determining your financial eligibility.
After your FAFSA application has been processed, you'll receive a letter notifying you of the Expected Family Contribution (EFC). The EFC is not an-out-of-pocket figure; rather, this number is used by your college to help determine how much need-based aid (such as grants and subsidized loans) you’re eligible for. To determine how much non-need-based aid (unsubsidized loans) you may receive, your school takes your cost of attendance and subtracts any need-based financial aid or scholarships you’ve already been awarded.
Once this is calculated, your school will then send you an award letter, informing of you how much aid you’re eligible for, and in what forms. Depending on the school, an award letter could be sent anytime between spring and just before you start school. At that time, you have the option of accepting the entire financial aid package, parts of it, or none of it (although there’s little reason to reject grants and scholarships, as they’re “free money”).
Whether you think you’re eligible for financial aid or not, it’s worth it to complete the FAFSA. Changes within the family—for instance, a sibling (or more) attending college, which in turn results in fewer cash reserves—could greatly affect the decision-making process.
Grants make up about 40 percent of all financial aid—and about 95 percent of all financial aid that doesn’t require repayment. Again, grant money is primarily need-based, and is often awarded out on a first-come, first-served basis. Therefore, it's important to apply early for financial aid, and be aware of any available grants that might help lower your college costs. There are four major types of grants:
Federal grants are available only to undergraduate students; however, state and institutional grants may still be available to graduate students. Check with your state educational office or college to determine your eligibility.
As prestigious and helpful as scholarships can be, the fact is they only make up two percent of all financial aid. Still, if you’re eligible—and tenacious enough to hunt them down—scholarships can be a big help in financing your college education.
Depending on their source, scholarships can be need-based, a recognition of academic ability, or both. If you’re pursuing a marketing specialty or related area of learning that fills an academic need at your school, the odds of obtaining scholarships are improved that much more. In addition, many private scholarships are available, especially from private foundations and corporations. The Direct Marketing Educational Foundation, as one example, offers a variety of scholarships to both undergraduate and graduate marketing students. Students applying for these scholarships will need at least a 3.0 GPA, and will have already taken at least two courses in direct or interactive marketing; internships are also taken into consideration.
As with grants, there are many scholarships available to those who come from a minority or disadvantaged background, and some of them are specifically geared toward marketing students. For example, the LAGRANT Foundation awards scholarships of up to $20,000 to outstanding undergraduate and graduate minority marketing students.
Finding the right scholarships will take some research. But if you have the academic record, and a specialized focus (or the right socioeconomic background), your hard work could pay off before you ever step into a college classroom.
Student loans make up nearly 60 percent of all financial aid. And because they’re loans, they need to be paid back. The good news is: In some cases, repayment of those loans—and even sometimes the accrual of interest—can be deferred until after graduation. Therefore, it’s important to consider all your options when reviewing your school’s financial-aid package, and/or additional financial aid from private institutions.
When you receive your college financial award letter, you’ll likely see a series of loans offered, through the Federal Direct Student Loan Program, including some combination of the following:
The Top 3 and Bottom 3 States
Source: The Institute for College Access & Success
In addition, students might consider obtaining a better loan deal from other sources. Interest rates for student bank loans run higher than those for subsidized loans, but in many cases are lower than the rates for unsubsidized Stafford and Direct PLUS loans. Thus, even if you’re unable to cover all your tuition costs through grants and subsidized loans, it may well be smarter to reject the additional unsubsidized loans offered through your school’s financial aid package, and instead pursue loans through a private lender.
There are a few things to bear in mind when applying for private student loans. Unlike your federal loan package, which is already pre-approved, you’ll need to undergo a credit check to obtain a private student loan—and will probably need a co-signer on the loan, especially if you’re still a dependent student. Also, private lenders offer both deferred and non-deferred payment options, and the right choice will depend on your situation. Payment on non-deferred loans will begin while you’re still in school; however, those payments will be less than for deferred loans—and because you’re already been paying, there’s less capitalized interest paid over the course of the loan. Thus, the total cost of a non-deferred loan is thousands less than that of a deferred loan. Choose the best loan option for your situation.
Financial aid isn’t the only way to keep college costs down, though. Federal and institutional work-study programs can considerably defray the cost of a college education.
The Federal Work-Study (FWS) Program provides part-time jobs for undergraduate and graduate students who demonstrate financial need, ideally in the student’s area of study. Jobs can be either on or off campus. Although federal money is involved, the distribution of funds—and for what kinds of jobs—is largely at the school’s discretion. However, the program stipulates that a certain percentage of jobs must be community-service related.
There are a couple things to bear in mind when considering the FWS. First, the amount you earn and hours worked—determined by your FAFSA—can’t exceed your total Federal Work-Study award. In addition, at some schools, your ability to participate in the FWS may be contingent on grade-point average.
The most common work-study programs are those offered by the schools themselves. While many of these jobs are clerical or maintenance-related, it’s also possible to find part-time positions with a school’s marketing, outreach, or promotions departments. There will be entry-level work involved, of course—such as administrative and data management support, event registration, internet research, and telephone work—but even this work will prepare you to better handle the day-to-day aspects of your marketing career. You may also have the opportunity to get involved in event and promotional planning, brainstorming, and the creation and production of marketing materials, as well as follow-up work with those you’ve served to determine how well things went and how to improve future programs and marketing initiatives.
Many work-study positions often require a 15-to-20-hour commitment; thus, it can be demanding to keep up with a work schedule on top of a regular (or rigorous) course load. The good news is, your school understands this and is flexible—often much more so than other employers of college students.
You have a lot of options in pursuing financial aid (and financial relief), and you’ll want to pursue as many as possible. Talk to your financial aid officer, or the staff in your marketing department, to find out about scholarships, grants, loans, and work-study opportunities. And again: Because you’re competing with most of your classmates for these opportunities, start early.