Figuring out how to pay for higher education is always a big question when planning for the future. It’s easy to become overwhelmed with the plethora of financial aid options available to you. There are subsidized and unsubsidized Federal Stafford Loans, PELL Grants, scholarships and numerous private loans to add to the confusion.
With giant dollar signs in their eyes, most people ask, “How much money can I get?” But that is not the right question.
It’s easy to forget that financial aid award amounts are usually all-inclusive and have been calculated to include the cost of school plus the cost of living expenses. If you do not need the full amount to cover your living expenses, you might not need to accept the excess cash.
Instead of asking yourself, “How much money can I get?” the better question to ask is “How much money do I need?”
This is important to remember because student loans come with a catch – the majority of this “easy money” has to be paid back. Students often graduate happy and relieved that they have finally earned their degree, only to be faced with a pile of student loans to wade through as they begin the next step of their journey.
So, instead of asking yourself, “How much money can I get?” the better question to ask is “How much money do I need?”
Being responsible with loan money while acquiring a higher education will pay off double; you’ll be able to earn your degree, hopefully increasing your overall lifetime earnings, and you won’t have excessive student loan debt for the next 25 years.
Determining what you need
Determining your living expenses is going to require some math, future planning and an honest assessment of will power.
The first step in determining your financial need is to look at what scholarships and grants you qualify for. This money is there for the sole purpose of helping pay for education and can go a long way in decreasing your overall costs. Start early in your searches and make a list to keep track of application deadlines and award dates.
The next thing you should know is that a huge chunk of that nice fat award amount is going to the school. The amount left over is what’s been calculated to go toward living expenses. Sometimes you need the whole amount and sometimes you don’t. Being frugal in your choices now by buying used textbooks, living with roommates or working a full- or part-time job will pay off later with decreased overall debt.
So have a hard look at yourself and your financial situation. Will you be able to accurately budget for a school year or will the temptation of easy money start you on a path of lifelong debt? These are big questions to ask but important answers to know before you jump in.