How To Finance Your Child’s Education
While most colleges and universities in Oklahoma have frozen tuition this year, the cost of a college education has been rising faster than the rate of inflation for the past several years. As a result, many families are relying on some type of financial aid to help pay their children’s post-secondary education.
Each family has different needs based on their overall financial situation as well as the educational goals of their aspiring college student. In Oklahoma, the cost of attending college tends to run less than the national average. A year at an Oklahoma research university runs about $15,000 per year, including books, fees, room and board, and other related costs for a full-time student, compared to less than $10,000 at the regional universities and about $7,700 at a community college. (More information on college costs in Oklahoma is available at OKcollegestart.org.)
Today, about two out of three full-time college students receive some kind of financial aid, such as grants, scholarships, work-study and education loans. Most grants, scholarships and fellowships do not need to be repaid. However, other types of aid—student loans and some grants—do require repayment. The different types of financial aid have their own set of criteria and eligibility, so it is important to be aware of the options available.
Following is a brief overview of the common types of financial aid currently available:
- Grants, Scholarships and Fellowships. Generally based on some form of achievement such as grades, community involvement, athletics, fine arts, etc.
- Work-Study. On-campus employment opportunities for college students. Supplemented with federal funds. Pay is minimum wage or above, and the number of hours worked is based on student need.
- Stafford Loans. Low interest federal loans for educational expenses. May be subsidized (based on need) and unsubsidized (not based on need). Payments deferred until after college graduation. Relatively easy to get and the most common type of loan available.
- Perkins Loans. Based on need and more limited than Stafford Loans.
- Pell Grants. Based on need.
- Parent PLUS Loans. Loans for parents of dependent children. Based on college costs and other financial aid received.
- Private or Alternative Loans. Tend to be more expensive than federal loans programs. Recommended to supplement other financial aid options or as a last resort. Terms, repayment options and eligibility vary greatly from lender to lender Oklahoma students have one additional option, called Oklahoma’s Promise. Available only to eighth-, ninth- and 10th-grade students (home schooled students must be age 13, 14 or 15), Oklahoma’s Promise covers the cost of tuition for students whose family income is $50,000 or less at the time they apply for the program and less than $100,000 at the time the student enters college. (More information on Oklahoma’s Promise is available at OKHighered.org/okpromise).
To qualify for almost all financial aid programs, applicants must be a U.S. citizen or an eligible non-citizen, be enrolled or planning to enroll in a post-secondary institution (a college or university) at least half-time and attend a school that participates in the Title IV federal student aid program. The most widely used process for determining eligibility is the Free Application for Federal Student Aid, commonly called FAFSA.
FAFSA was developed by Federal Student Aid, an office of the U.S. Department of Education. It is used to provide a fair and impartial process for determining who is eligible for various student aid programs and the amount of funds needed for those seeking financial support, which today exceeds $80 billion annually.
Most experts highly recommend that parents of all children preparing for college complete the FAFSA because it is a comprehensive application frequently used to determine eligibility for the vast majority of financial aid, including many scholarships, grants and fellowships at local colleges and universities
Most high school counselors or financial aid officers at colleges and universities are available to assist parents in completing applications and securing financial aid. It should never be necessary to pay for these services. Families who start saving when their children are young can reduce the financial burden of paying for a college education. However, even families with limited income and savings have several options to ensure their children have the additional benefits that come with a college degree or other types of post-secondary education. Knowing what is available to pay for that education can protect a family’s financial resources for years to come.
Sue Lynn Sasser, PhD, is an associate professor of economics at the University of Central Oklahoma.