It’s important to evaluate online schools based on the types of financial aid available as well as other criteria. If you have not gathered information about one or more schools of interest, you should do so before deciding how to finance your education. This information will help you evaluate potential grants and scholarships from each school. It will also help you evaluate federal aid and student loans.
You can request detailed information about colleges and universities that offer accredited online degree programs by using our college search tool.
Grants and Scholarships
The major advantage of a grant or scholarship is it doesn’t need to be repaid. Depending on the particular school you are applying to, your family financial situation, GPA, test scores, etc. there are a great many grants and scholarships available. The important things are to apply to the right schools and to apply for the most likely grants and scholarships. Generally, the more well funded the school the more financing is available in the form of grants and scholarships. In addition to institutional scholarships offered by the school you can apply for private scholarships.
Another big advantage of scholarships is they generally have a continuing academic performance requirement. This usually provides a strong motivation for students to keep up their academic performance. Better student performance often translates into better career and post-graduate opportunities after graduation.
Some scholarships are based on need; however, many are based on previous academic achievement.
Grants are typically need-based. They tend to make up the difference between what the student is able to pay and the full cost of the education. Grants are available from the school and from the federal government. See Federal Aid for more information on government grants.
The federal aid program for students is named FAFSA (Free Application for Federal Student Aid). The application for FAFSA covers both federal grants as well as federally approved student loans. Make sure to give yourself plenty of time by submitting your application well in advance. You can submit your FAFSA application online at www.fafsa.ed.gov/index.htm. The application includes tips and prompts to guide you through the process. The grants available through FAFSA are:
- Academic Competitiveness Grant (ACG)
- Federal Pell Grant
- Teacher Education Assistance for College and Higher Education Grant (TEACH)
- Federal Supplemental Educational Opportunity Grants
- National Science and Mathematics Access to Retain Talent Grant (SMART)
Like grants and scholarships, tuition assistance is money that does not need to be repaid. Many companies reimburse tuitions costs to some degree. The types of reimbursement vary significantly across companies. Typically, the larger companies have better tuition reimbursement programs. The best programs should:
- Provide all the funds up front
- Offer reimbursement for all undergraduate and graduate degrees related to your employment
- Cover tuition, books, and related materials
You should see your human resources specialist about your employer’s tuition reimbursement plan.
The military offers a broad suite of financial student aid packages. For more information of military educational benefits see this page.
When you evaluate a school to attend, it’s important to verify whether you can take out student loans while attending the school. If the federal government or private lenders are unwilling to finance your education at a particular institution, you should evaluate why, and consider other alternatives.
One of the primary statistics to consider about a school is its student loan default rate. This is the percentage of students that attended that school that failed to repay their student loans. If this rate is too high relative to other schools, it implies that many students that attended that school were unable to make enough money to repay their loans compared to other schools.
The most important thing to consider when taking out a student loan is that it must be repaid, with interest, even if you don’t finish your degree or don’t find a job immediately. As a result, you should evaluate the other financial alternatives first, and use student loans to supplement those sources as necessary.
Student loans come in two types: federal and private. Federal student loans are more desirable since they tend to have lower interest rates than the private loans but they can be harder to qualify for. Also federal student loans tend to have better repayment terms than private student loans. The types of federal student loans are:
- PLUS (Parent Loans for Undergraduate Students). PLUS loans are available to the parents of dependent undergraduate students. The Grad PLUS loans are loans available to graduate students that are enrolled at least half time. Historically, the interest rates of these loans have been in the recent range of 8% to 8.5%.
- Stafford loans are available to both graduate and undergraduate students. They can be need based or not. An upfront fee of about 4% is charged and usually deducted from the loan amount. The interest rates on Stafford loans have been in the recent range of 5% to 7%. Interest may or may not be charged while you are in school depending on the type of loan.
- FFELP (Federal Family Loan Education Program) loans are PLUS or Stafford loans that are funded by a private lender but backed by the federal government.
To apply for a federal student loan you need to fill out a FAFSA application.
Private student loans tend to have higher interest rates and more stringent repayment terms compared to federal student loans. You can apply for private student loans online and they are reasonably easy to qualify for. Private student loans typically make up the minority of student loans in the US and should be your last resource for student financial aid.