Hacking Financial Aid: 33 Ways to Get Money for College

The price of college has increased steadily for years. In 1976, students at public, four-year institutions paid $2,275 for tuition plus room and board. In 1987, they paid $5,494 for the same education. Currently, the annual cost of attending a public, four-year college plus room and board is $20,770.

College is an investment that presumably pays dividends; however, for many graduates, it can also be a financial burden. When students do not have college savings funds, they turn to federal loans, the largest source of financial aid available to undergraduates and graduates. After that, students may take on private loans with high interest rates and inflexible repayment plans.

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As a result of these decisions, many students graduate with thousands of dollars in debt, which they often struggle to pay off after graduation. On average, Americans in 2017 graduated with $32,731 in student debt.

If this sounds bleak, take solace in this good news: If you are wise, you can get through college without borrowing or taking out loans, and without going into extreme debt. For example, scholarships and grant money can offset the cost of tuition. This guide offers tips on how to get money for your college education.

Where to Go First

To help you learn how to get money for college, consult with your high school counselors and/or your university's financial aid office. Schedule an appointment, and they will help you find programs, scholarships, and grants to suit your needs. Also, file a Free Application for Federal Student Aid (FAFSA). At the very least, FAFSA enables you to receive federal loans or grants, should you be eligible for aid.

Free Money

Financial aid is a broad term used to describe options available to help you find ways to pay for college. Under financial aid is the category "free money." Before you take out loans to cover tuition or housing costs, find scholarships and grants — or free money — given to students based on merit or financial need.

What is the difference between scholarships and grants?

The federal government gives grants like the Federal Pell Grant and the Federal Supplemental Education Opportunity Grant based on financial need. There are also grants specifically available for African-Americans, single mothers, and women. Other grants are offered through your specific state. Students can find out if they are eligible for various grants after filling out a FAFSA.

Scholarships are given mostly on a merit basis, but award money is also dispersed to students in financial need. Scholarship money goes directly to the student or school to offset tuition costs and other college expenses. There are thousands of scholarships available for everything from left-handed students to online students. Reward money is sometimes given to students who demonstrate the financial need or to minority groups.

Nonprofits, individuals, and associations also give out scholarship money throughout the year. On average students attending public, four-year colleges, at all income levels, received $9,740 for the 2011-2012 school year in grant and scholarship aid, according to the Department of Education.

Popular Scholarships

There's seemingly no end to the amount of scholarships and free grants available to students. With scholarships based on financial need, academic achievement, heritage, or special talents, chances are, there's a scholarship out there for you. Investigate your options. Here are some of the most popular scholarships available today.

Loans

If you are a first-year college student, you likely have questions about the loan application process. What kind of loan should I take out? How much money will I need? How long do I have to repay the loans?

Your first step is to fill out the FAFSA. You will have to fill out a new form every year to determine how much aid you will receive. The FAFSA opens every year on Oct. 1 and closes on June 30. The financial aid office at your college will determine how much aid you receive and will notify you. How much you receive is determined by your cost of attendance (COA) and your expected family contribution (EFC). The cost of living is calculated by totaling up your projected length in school and estimated tuition and expenses per semester. If you are a parent, this also includes additional costs for childcare. As for the EFC, that is calculated using income data you submitted on your FAFSA. To be clear, you may receive offers for more loan money than you actually need. It is your responsibility to do your own COA and EFC calculations.

Remember, loans are one of the ways to pay for college, but most loans come with strings attached. That means you will have to pay interest on loans and abide by repayment rules. Typically, repayment plans are flexible for federal loans and less flexible on private loans. It takes roughly 10 years for students to pay off their debt. For more information on how financial aid awards are determined, visit the Federal Student Aid portal.

Which Type of Loan Should You Take Out?

If you learn anything about financial aid for college, let it be this: There is a significant difference between federal and private loans. Before you apply for a private loan from a bank or credit union, use all possible federal aid available to you, including subsidized and unsubsidized loans.

Federal loans, which are provided through the federal government, have certain protections for student borrowers. First, they offer fixed and low interest rates that private loans typically do not. Second, federal loans include income-driven repayment plans, which set your monthly repayment fees to match your income. That means if you lose work, you can adjust your repayment plan to reduce your monthly fees. Third, with federal loans, you generally do not have to start making payments until you graduate; and with subsidized loans, the federal government pays the interest on the loan while you are in school. An added bonus, when you file taxes, the interest on your federal loan may be tax deductible. Federal loans, include Perkins Loans, Direct Plus Loans, Direct Subsidized Loans, and Direct Unsubsidized Loans.

Private loans, available through banks and credit unions (or sometimes schools), have higher interest rates than federal loans. The interest on your loan is dependent on your or your co-signer's credit score. That interest rate is often variable, with rates that can increase up to 19% or more over a period of time. Generally, you have to start making payments toward that loan while you are in school. And to make matters worse, if you lose your job or have a hard time making payments, private loans may not let you file for deferment or forbearance. The bottom line is, if you must take out a private loan make sure you are aware of the interest rates and repayment options.

Loan Repayment

"Out of sight, out of mind" is bad philosophy to live by when it comes to student loans. While you may not have to worry about repaying your loans while in school, it is important to have a clear understanding of future obligations. How will you pay off your loans? What are your options?

In an ideal world, you will graduate and immediately land your dream job with a high-paying salary. Hope for the best, but perhaps plan for the worst. The Department of Education's Repayment Estimator can help you get a clear picture of your loans, the interest rates, and your repayment options.

With federal loans, you have a variety of options available to repay your loan, depending on your financial circumstances. If you do not choose a specific repayment plan, you will be on the standard one, which runs on a 10-year timeline. Graduates having difficulty paying their debt can opt for a repayment plan that suits their situation. One option is the income-driven repayment plan, where your monthly fee may be reduced depending on your income. Another option is to consolidate your loans to make one, reduced monthly payment. Again, you can do this by applying for the Direct Consolidation Loan.

If you cannot afford to make a payment, contact the loan service and find out about your options. You may be eligible to defer your loan or request forbearance to delay your payments.

Loan Forgiveness

Certain occupations will "forgive" student loans. If you take on a certain job after graduation, you will not have to repay some, or any portion, of your loan. Graduates who go into public service or teaching may be eligible for forgiveness of their Direct Loans, Federal Family Education Loans, and Perkins Loans. Also included are jobs in the nonprofit sector and federal, state, and local government. And those who serve full-time in the Peace Corps or AmeriCorps qualify for student loan forgiveness. To apply for student loan forgiveness, complete the Employment Certification form.

In other cases, your loan may be cancelled or discharged. For instance, if your college should shut down or if it is determined that your school was in violation of any state laws, you may be eligible to become discharged from your student loan. If your loan is discharged, then you will not have to repay anything. Bankruptcy in rare cases is grounds for discharge. Also, if you should become permanently disabled, you could be discharged from your student loans.

Remember that loan forgiveness is only applicable to federal loans, not private loans. To be considered for loan forgiveness, or to see if your loan is eligible to be cancelled or discharged, contact your loan servicer. Remember, during the process of review, you will still have to make loan payments.

Other Sources of Money

Special programs, odd jobs, and even crowdsourcing can add up to impressive college funding sources.