The cost of one year at a private four-year college averaged $32,405 in 2015. To offset the rising cost of tuition and fees, many students enrolled in online programs must secure financial aid, even with the potential savings distance learning provides. This guide helps online students learn about available financial aid options and resources that can make college more affordable, such as scholarships, grants, loans and other funding. Also covered are expert tips when applying for federal aid, including do’s and don’ts for completing the FAFSA®.
With tuition rates escalating at such a fast pace, it’s important to research which online colleges offer the best financial aid opportunities. Prospective students can use this search tool to find schools based on their tuition costs and available financial aid packages.
Many students don’t investigate financial aid options because they assume they won’t qualify to receive help. However, there are millions of dollars available in financial aid for students, including those enrolled in online programs.
Source: College Board
Source: American Council on Education
Source: Trends in Student Aid 2015
The federal government offers several types of financial aid to eligible students, some of which needs to be repaid. Read on to learn more about all types of student financial aid, including scholarships, loans, work study programs and employer-sponsored tuition.
There’s much more to know about each financial aid type mentioned above. Keep reading for an in-depth examination of tuition assistance options for online college students.
Companies, clubs, religious organizations and non-profits award billions of dollars in scholarships each year to help students pay for education expenses. Scholarships are offered based on financial need, academic merit and other criteria. Best of all, this money does not usually need to be repaid. The criteria and requirements for receiving private scholarships vary widely, and awards can be worth hundreds or thousands of dollars.
Fellowships are grants usually offered to fund study or research in graduate school, although there are some undergraduate fellowships as well. Many fellowship programs target a specific field of study. Because fellowships are lucrative, they are very competitive.
Next Steps: Contact your school’s financial aid department.
Grants are another form of “gift aid,” meaning students don’t have to pay them back. The U.S. Department of Education and many individual states offer several types of grants to online college students.
Awarded to undergraduate students who have not yet earned a bachelor’s degree. They may also be awarded to students enrolled in a qualifying post-baccalaureate teacher certification program.
This campus-based aid, worth $100 to $4,000 per year, is available to students with the most financial need who already receive Federal Pell Grants. Unlike the Federal Pell Grant Program, which awards money to all eligible students, FSEOGs are limited to each school’s available funds.Teacher Education Assistance for College and Higher Education (TEACH) Grants
TEACH Grants are worth up to $4,000 per year. They are different from other federal student grants in that they require students to teach in low-income areas. The grant is automatically converted to a Direct Unsubsidized Loan if the recipient does not meet the conditions.Iraq and Afghanistan Service Grants
Iraq and Afghanistan Service Grants are worth the same as Pell Grants. To receive these federal grants, students must have a parent or guardian who was a member of the U.S. armed forces and died as a result of military service in Iraq or Afghanistan after 9/11.
Next Steps: Complete the FAFSA®
Most state education agencies administer at least one grant or scholarship to student residents, and many offer a long list of grants. In most cases, students must attend an in-state college to qualify.
Federal loans are offered to students who qualify as part of a school’s financial package. Students must pay back all money they borrow with interest to the lenders, whether it is the federal government or a private bank. The following table presents the types of loans available to online students, the maximum amounts that can be borrowed and the associated interest rates.
Next Steps: Complete the FAFSA®
|Direct Subsidized Loans||Direct Unsubsidized Loans||Direct PLUS Loans||Federal Perkins Loans|
|Who Qualifies||Undergraduates enrolled at least half-time in a degree or certificate program with financial need||Undergraduate, graduate, and professional students enrolled at least half-time; financial need not required||Graduate or professional students, parents of dependent undergraduate students with good credit history||Undergraduate or graduate students with exceptional financial need at participating schools|
|Lender||U.S. Dept. of Education||U.S. Dept. of Education||U.S. Dept. of Education||School|
|Annual Award Amount||$3,500-$5,500, depending on grade level||Dependent students: $5,500-$7,500, depending on grade level Independent students: $9,500- $20,500, depending on grade level||Cost of attendance minus other aid||Undergrad: $5,500 Graduate: $8,000|
|Interest Rate*||4.29%||Undergrad: 4.29% Graduate: 5.84%||6.84%||5%|
|Interest-Free Grace Periods||Yes||No||No||Yes|
|Repayment Start Date||6 months after student graduates or drop below half-time enrollment||6 months after student graduates or drops below half-time enrollment||Students: 6 months after student graduates or drops below half-time enrollment Parents: After disbursement but parents may apply for deferment while student is enrolled at least half-time and for 6 months after graduation||9 months after student graduates or drops below half-time enrollment|
Source: U.S. Department of Education
Note: Interest rates are updated every year. See current interest rates for federal loans.
Many states administer student loan programs, usually with terms and conditions similar to Federal Direct Loans. Because state resources are not as large as federal resources, interest rates and charges may be higher.
Loans from private lenders, like banks, credit unions, and other organizations, are an alternative funding option. Most experts advise students to pursue federal and state loans rather than private loans for several reasons.
Red flag: Private loans with no credit check requirement. Legitimate lenders pull your credit report.
Red flag: Interest-only rates that keep your payments low but extend the life of your private loan.
Red flag: Low-interest rates with extra fees that send your private loan skyrocketing over time.
Undergraduate and graduate students who participate in Federal Work-Study are able to earn money to offset their educational expenses. To qualify, students must have financial need. Participating schools administer the Federal Work-Study Program through their financial aid office on a first-come, first-served basis.
When possible, students are placed in jobs related to their course of study, and many students work for the school on campus. Off-campus jobs are usually with private nonprofit organizations or public agencies. Students are guaranteed to earn at least the minimum hourly wage and can only work the number of hours they are awarded.
Next Steps: Complete the FAFSA®
A 2014 survey by the Society for Resource Management found 54 percent of companies offered undergraduate tuition assistance, and 50 percent offered tuition assistance for graduate studies. Reimbursement amounts vary, but some employers will cover the full cost of tuition. In most cases, employers specify which areas of study are acceptable for reimbursement. In addition, students must typically maintain a minimum GPA to qualify for reimbursement.
Next Steps: Speak with your employer’s human resources manager.
While scholarships, loans, and grants are the most popular types of financial aid, they aren’t the only options for offsetting the cost of an online college education. Here are some alternative financial aid options.
Crowdfunding involves raising money from large groups of people. It often involves the help of a third-party website, where each person contributes a relatively small amount. Along with general crowdfunding sites like GoFundMe and Indiegogo, which are known for helping businesses and charitable causes, education-specific crowdfunding sites are now used by students to help pay for college or graduate school.
The IRS offers several tax credits and deductions for students.
Veterans may qualify for tuition assistance and higher education benefits through programs like the Post-9/11 GI Bill.Financial Aid
Some schools offer special scholarships or grants for students who have already attended that school or are the children of former students. Contact college financial aid offices for more information.
In 2013, more than 6.7 million students took at least one online class. As this number continues to increase, so does the demand for financial aid for online students. Here are answers to some common questions about online college financial aid.
Until February 2006, schools needed to provide at least 50 percent of instruction in a physical classroom to offer federal financial aid. Congress lifted the requirement, and now many accredited online schools offer federal financial aid packages. Online students who meet the same eligibility requirements as on-campus students are typically qualified for the same types of financial aid.
Yes. There are agencies and organizations that sponsor scholarships specifically for online students.
Yes. More and more online schools and universities are offering programs to make college more affordable. For example, online schools offer need- and merit-based scholarships as well as family and alumni discounts.
Completing the FAFSA® is the only way to determine whether you qualify for federal aid as an online student. FAFSA® stands for Free Application for Federal Student Aid. It’s fairly quick to fill out and is the catch-all application for all types of federal financial aid, including grants and work-study opportunities. Many colleges also look at student FAFSA® information when determining school-based financial aid packages.
Before applying, however, students need to make sure they meet all of the basic eligibility requirements. Take the quiz below to see if you qualify. Answer the following questions True or False.
You need a high school diploma.
Not necessarily. You can also submit a General Educational Development (GED) Certificate or proof that you completed a state-approved homeschool program.
You don’t need a Social Security number.
All federal financial aid recipients must have a Social Security number (except residents of the Republic of the Marshall Islands, Federated States of Micronesia, or the Republic of Palau).
You must be enrolled in or accepted to an approved college.
Enrollment in or acceptance to an eligible degree or certificate program is mandatory.
You must register with the Selective Service (males only).
All males ages 18 to 25 must be registered with the Selective Service.
You don’t need to maintain good grades to remain eligible for federal financial aid.
Receiving federal financial aid is dependent on maintaining successful academic progress.
You must certify that you won’t use federal student aid for anything except educational purposes and are not currently in default of a student loan.
Yes. In addition, you must certify that you don’t owe a refund on a federal grant.
You must be a U.S. citizen.
Not necessarily. You may also be eligible for financial aid if you have a green card, T visa, battered immigrant status or an arrival-departure record.
The U.S. Department of Education only allows accredited online colleges to participate in federal student aid programs. Many state programs also require participating schools to be accredited. To become accredited, a school must meet quality standards set by nationally recognized independent agencies.
Filling out forms is rarely a fun process, but skipping out on the FAFSA® means losing the chance to receive aid from the government and academic institutions. The FAFSA® may be intimidating at first, but these tips can help students through the process and get one step closer to potentially saving money on their education.
Even though the FAFSA® is a free education process, there are services that charge as much as $500 to fill out the forms. If you need assistance, your school’s financial aid office can help you or connect you with someone who can—for free.
Because there is only a limited amount of funds available, it’s important to apply as soon as possible. The FAFSA® submission period begins on October 1. Any applications received after the deadline will not be processed.
The most efficient way to submit the FAFSA® is online. It only takes 10 days for a school to receive your admission so they can determine your financial aid needs. If you need a break, you can save your work and continue later.
If a question doesn’t apply to your situation, enter “N/A” or “0” in the blank. Skipping questions puts your application at risk of being flagged as incomplete, which can affect processing time.
Depending on the time of year, you may need to estimate your income tax, so try to be as accurate as possible. If you are too far off the mark, it may mean major changes when they verify your final tax data later.
Even small mistakes can delay processing. One common mistake is misunderstanding who the questions refer to when they ask you to enter to “your Social Security Number” or “your income.” These questions refer to the student, not the parent, even if the parent is the one filling out the form.
Your financial aid package is only valid for one year, so submitting the FAFSA® is not a one-time deal. When you fill out the FAFSA® online, it is easy to renew it because the previous year’s information is automatically populated into the fields.
It’s not enough to be eligible at the time you submit the FAFSA®—you must remain eligible in order to keep your Federal Student Aid. Here are three ways you can become ineligible.
File the FAFSA® as soon as possible after October 1. Students who file the FAFSA® in the first three months tend to receive more than twice as much grant funding as students who file the FAFSA® later. Several states and colleges award aid on a first-come, first-served basis until the money runs out.
The biggest mistake people make is to not file the FAFSA®. You can’t get money if you don’t apply. Students should apply for aid every year, even if they didn’t get anything other than loans last year.
Allow extra time to get an FSA ID, as the process is complicated. You don’t have to wait until October 1 to get a FSA ID. You can start the process of getting a FSA ID before October 1. Note that you will need to have access to your email to finish the process of obtaining a FSA ID. The FSA ID is an electronic signature and should be shared with nobody, not even your parents or the parent’s FSA ID with the child.