Financial Aid and other forms of assistance for Distance Learning
There are two forms of financial aid for online university students: borrowed aid and gifted aid. Borrowed aid includes student loans both public and private, and must be paid back. Gifted aid is either through grants, scholarships, or employer assisted tuition programs, and is money that does not have to be paid back. We will be focusing mostly on loans in this article, as over 60% of students take out student loans in order to pay for their education. As long as your online institution is properly accredited, you will be eligible for the same grants, loans and scholarships as brick and mortar universities.
Loans: Public vs Private
The majority of students attending post-secondary institutions take out student loans while attending. These loans can come in two forms, being public and private, or government loans versus loans from private institutions such as banks. These loans are not equal, and federal student loans are almost invariably the best choice. Every US student looking towards taking out a student loan or applying for financial aid should fill out a FAFSA, or free application for Federal Student aid which is the first step towards getting a federal student loan. As a part of this process, you will need the university’s “School code,” which is simply a series of numbers they can supply.
There are a number of reasons why federal, or government loans, are preferable to those offered by private institutions. Federal student loans generally allow you to defer payment to graduation, as long as you are a full time student. This means that you can finish school before you need to start repaying your debt. Private loans will often force students to repay loans while they are still in school.
The biggest reason for choosing public over private is the interest rate. The interest rate on federal student loans is almost always lower than private loans, and is fixed rather than variable. This means that even if interest rates in the market change, you will still pay the same interest rate that you lock in to. These loans are almost always at a below 8% interest rate, going as low as 3.4% for subsidized loans in 2013. If you can find anything that low in a private institution, it is probably because your credit is so darn good you don’t even need to be going to school right now. Private institutions can have interest rates sometimes nearing the 20% mark- and woe and behold if you pay for your education with a credit card and end up in the endless cycle accruing interest on your interest.
Conditions for federal loans are especially favorable if a student qualifies for a subsidized loan. Those who are in the group of “financial need” will often be able to qualify for these subsidized loans in which the government pays the interest on your loan for the duration of your studies. That means you graduate with the same amount of debt as your students loans were for- not so with private loans where the entirety of the interest is your problem. Like I said earlier, if you are getting a decent rate on a private loan it is because you already have established credit. Private institutions will gauge the terms of your loan by your established credit history, which many students do not exactly pass with flying colors. On the other hand, federal loans often come without a credit check, and can help you get a good start on establishing a credit rating for those who are just starting out.
Are there any advantages to getting a private student loan? There are a few, though greatly outweighed by the negatives in most cases. Private loans can be more flexible in their deadlines, and also may be more flexible towards what they cover. In general, private loans are a matter of last resort.
These reasons are just touching the surface of why federal student loans are so preferable to their private counterparts if a student qualifies. Federal government loans are usually more lenient in their repayment plans, forbearance and deferment options and loan forgiveness. This is not to say that you can get out of payments- but if you get into trouble, it is generally better to find yourself scrambling to make payments to the government rather than to a bank. Your online university should have a financial adviser who can help you through the process of applying for your loan. If you online university of choice does not allow you to be eligible for federal aid, it is probably because they are not an institution which is properly accredited… a big red flag for a diploma mill.
Gift aid: The different types of scholarships
There are scholarships for almost everything, from academic excellence to simply being tall (Tall Clubs International Student Scholarships) or being able to make an amazing Duck Call (Chick and Sophie Major Memorial Duck Calling Contest). Chances are, you are eligible for more scholarship opportunities than you thought. And while there are some wacky scholarships out there for outliers, scholarships tend to be awarded to those who get good grades.
Merit-based scholarships are the most common, and are awarded generally for academic success, though there are also scholarships for artistic, athletic, and other abilities. As well, scholarships can be awarded based on factors such as gender, race, religion, family or medical history, and other factors. Institutions will also offer scholarships to top students, as they wish to count these individuals in their alumni. Students who are involved in charity work may also find themselves eligible for a wide range of scholarships.
Scholarships can be given for different periods of time, and may require maintaining a certain GPA and level of academic success in order to receive the full amount. Keep in mind that scholarships may affect your financial aid in that all student aid, when combined, cannot exceed the cost of attendance at your online university. Please, when researching scholarships, do not fall prey to scams. Never pay for help with finding scholarships, and use free resources such as your state grant agency, financial aid officers, and the official website of Federal Student Aid.
Gift aid: The different types of grants
Grants are another way of helping to pay tuition and materials costs that arise from post-secondary studies. Grants fall under the category of “gift aid”, along with scholarships, because they are money which does not have to be paid back. Grants differ mainly from scholarships because they are given out based on need more so than merit, which also means that they often do not have the same requirements to keeping the grant money, as long as you do not drop out of school.
The most widely known grants are the Federal Pell Grants, which are awarded only to undergraduate students. As of the 2012-2013 year, the largest possible Pell Grant awarded is $5,500, and this is based on financial need, tuition costs, whether you are a full or part time student, and whether you are planning on attending for at least a full year.
In addition to Pell Grants, there are a huge number of grants offered through diverse institutions. These grants can be on almost any topic conceivable, from food and nutrition, agriculture, humanities, natural resources, or almost anything else. A useful tool for searching different grants is the official US government grants site.
Employer tuition assistance
Larger companies may offer their employees assistance in completing degrees, often in the hopes that they will use their new accreditation and skills to further the company, or as an added incentive for employees to join their ranks. If you are lucky enough to work for one of these companies, your human resources specialist will have the information on how much your employer will cover, and the rules and restrictions which govern application and use of employer funds. Employers are often given tax credits and deductions for these programs, which is another main reason they offer them. Do a little research and take advantage of these options.
Most students are in a position where financial aid is a necessity rather than a luxury for completing an online university degree, but with the various types of financial aid available for online university students, there should be an option for you.