A Guide On How to Go Back To College: Part Six (Page 3)

Grants and Scholarships: Some students, after filling out the FAFSA, may be eligible for a Federal Pell Grant, which awards up to $5,5007 (maximum amount for year 2011-2012). The amount, if any, awarded depends on your financial situation, your costs to attend college, and whether you are going full or part-time. Other grants and scholarships may be issued by the school to which you are applying and will be summarized in your overall financial aid package. Another resource for adult scholarships is to look into organizations in your community as well as any professional organizations to which you may belong and see if they offer financial assistance for adults returning to college. Financial aid awarded as a grant or scholarship is particularly attractive since aid of this type does not have to be paid back. Essentially, grant money is “free” money to help reduce your overall college costs, so it is worth the time to seek out any adult education grants you may be eligible for.

Federal Loans: Federal loans are divided into two major types: subsidized and unsubsidized. Eligible students borrow directly from the U.S. Department of Education through participating schools.

  • Direct Subsidized Loans: Direct subsidized loans are based on financial need determined from the results of your FAFSA. A subsidized loan does not charge you interest while you are in school at least half-time and during grace and deferment periods, saving you serious money. If available in your situation, you should use funds from this type of loan before using those from an unsubsidized loan.8
  • Direct Unsubsidized Loan: You are not required to demonstrate financial need to receive unsubsidized loans. Interest, however, will accrue from the moment the money is paid out. One strategy to save on the cost of interest over the life of the loan is to pay the interest while it accrues even when you are still in school. If you don’t pay the interest while you are in school, you will pay a higher monthly rate when you graduate. The interest accumulated during school is added to the initial principal. As such, upon leaving school, the overall principal will be higher than the initial loan amount.9 (For more tips and details on saving the most on your loans, see our StraighterLine Report: It Pays to Develop an Interest in Interest.)

Private Loans: Some students may also consider taking out a private loan through a bank or other financial institution. Typically, these loans are more expensive and carry higher interest rates. You will need to explore these loans independently of the school you plan to attend.

You Can Afford College

Paying for college effectively means having a plan. An effective college plan allows you to anticipate how much you will be required to pay out-of-pocket and how much you will need to borrow. For many, taking out a college loan is a necessity; the debt, an investment in your future. Knowing just how much debt you will owe and what your payment obligations upon graduation will be will allow you to pursue education in your life without any financial surprises. Knowing that you do have options when it comes to college choice and cost can open the door to educational opportunity. Be sure to fill out the Free Application for Financial Aid according to applicable deadlines and take the time to evaluate the full spectrum of financial aid packages available to you. It is possible to achieve your educational goals and be mindful of your financial future at the same time.

7 Federal Student Aid, Federal Pell Grant, June 20, 2011.

8 Federal Student Aid, Direct Stafford Loans, 2011.


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