The Right Way to Pay for College

You think applying for college is hard, try paying for it. Despite the rising costs of a higher education, there are more ways than ever to make it happen financially.

Costs

As you consider cost, keep in mind that public schools are usually less expensive than private schools.

• Public schools are supported by the state's taxpayers. Students pay 30 percent or less of the actual cost of education, and the state covers the rest. Because residents of the state already support the school through taxes, public schools charge residents (in-state students) less than nonresidents (out-of-state students).
• Private schools provide their own funding and tend to be more expensive than public schools. But because they are not tax-supported, private schools also tend to be more innovative in developing college financing plans, tuition assistance programs, and financial aid award packages.

So don't rule out any schools, yet, just because of cost. Often the more expensive schools also offer more financial aid. But do keep in mind, if your financial aid award includes loans, any money you borrow must be repaid.

Here are a few tips:

• Talk to your family. Have a frank discussion about money—what they can afford and what you can afford. This will give you an idea about whether you will need financial aid.
• Know your financial aid terms. There are basically three types of financial aid—gift aid (aid that doesn't have to be paid back like grants and scholarships), loans (money you pay back), and work programs (where you earn wages to apply toward college).
• Apply for financial aid. Even if you don't think you qualify, apply anyway because you just never know. Every school has its own financial aid process, but many begin with completing the infamous FAFSA (Free Application for Federal Student Aid). Fill out your FAFSA as soon after January 1 (before your freshman year) as you can.
• Research scholarships. It's a fact that many scholarships go unfulfilled every year. Ask your high school college counselor about scholarship possibilities. And do your due diligence on the Internet. A few hours of your time can end up saving thousands of dollars.

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