Financial Aid 101: How to Pay for College

So you're starting to think about college. That's great!  

High school is an important chapter of your life, but you're probably looking forward to the freedom that college offers. You'll finally have control over your own schedule and get to decide exactly which classes to take. 

Even if you aren't sure what you want to study, you might have an idea of where you want to go to school. But a big part of deciding where you'll go is figuring out what you can afford. 

There are a few common expenses for higher education you'll need to think about:  

• Tuition: This is what you pay to enroll in classes. In general, in-state schools are cheaper than out-of-state schools, and public schools are less expensive than private schools.
   
• Room and board: This is housing and food. Will you live in a dorm on campus? Or rent an apartment off campus? And a person's got to eat. Is an on-campus meal plan an option? Or will you cook for yourself if you have a kitchen?
   
• Books and fees: You'll need books for your classes, and they're not cheap! Especially those hefty science books. And there are always miscellaneous fees that pop up, like technology fees for campus Wi-Fi and health and wellness fees for access to the student health center.

Plus, normal living expenses won't go away. You'll need to budget for transportation, clothes, and your cell phone, and you'll definitely want some money for entertainment.

Yes, there's a lot to pay for. But there are several financial aid options to help you go after the education you want.

Your first step is to fill out the FAFSA—a.k.a. the Free Application for Federal Student Aid. It's how you apply for aid from both the federal government and your school.  

Most schools require you to fill out the FAFSA even if you don't plan to take out student loans. So it's smart to get it done around the same time you're sending in your college applications. Plus, doing it early can help you score more financial aid.  

After you submit the FAFSA, you'll get back something called a student aid report. This will include an expected family contribution (EFC) based on your family's financial situation.  

Don't stress, though—your EFC isn't a bill your family is required to pay. It's just a number that helps the government and your college figure out how much your family might be able to afford using a mix of savings and income. That way they can calculate how much financial aid you might need.

It works like this: If the cost of attending your school is $30,000 per year and your EFC is $20,000, your financial aid need would be $10,000. 

Your student aid report will also explain what types of financial aid you are eligible for based on your level of need, such as: 

Maybe your parents have been tucking away money for your education in a college savings account. If you're lucky enough to have one of these, that's awesome. Every dollar saved is one you don't have to borrow. But if you don't have any money saved, that's OK, too. It just might mean you'll need to do a bit more research into other available aid options. You could also explore community colleges. They typically have much lower costs and some states have transfer programs into state schools from community colleges.

Everyone should consider researching and applying for outside scholarships. Where can you look? Start by talking to your high school college counselor, your church pastor, local education-based organizations, or even your employer. You'd be surprised how many are out there.  

You may be able to qualify based on things like academic achievement, extracurricular activities, areas of study, and more. Like grants, you don't have to repay scholarships, but there may be requirements like keeping your grades up. And you may have to reapply every year.

Education can be pricey. Sometimes even a mix of financial aid, scholarships, savings, and loans might not cover it all. This is where your budgeting skills come into play. 

Think carefully about your options and what you might have to give up with each one. For example, a part-time job will cover more costs, but it might also leave less time for studying (and friends). More loans? Those will give you more time now, but you'll have to pay them back later, which could be a bigger burden down the road. 

The bottom line? If you can achieve your college dreams without racking up a ton of debt, you will have more money for your longer-term goals and more freedom to follow the opportunities your education opens up for you. A total win-win. 

• Research costs at your top colleges, then talk to your parents about how you might be able to afford each. 
• Do you have special interests or activities that you want to continue in college? Do some research on scholarships in those areas.  
• Learn about how investing can help you reach your goals, from college to your first house and beyond.