Can I still afford college?
Paying for college was already challenging, but the current economic uncertainty has some students questioning their ability to afford college altogether.
Many returning college students expecting lower tuition were surprised to see a tuition bill increase in the form of distance education fees. As COVID-19 forced colleges to transition to remote learning, the costs of non-traditional instruction were passed on to students.
Does this mean you’ll need to take out more loans? It might. But, before you sign a promissory note, understand how much you can realistically afford to borrow and discover alternative ways to pay for your degree.
How Much Should You Borrow
Even before you graduate college, your career choice will influence your lifestyle. Your expected starting salary can help determine the maximum amount you should borrow for your education.
According to the College Board®, experts recommend monthly student loan repayments be no more than 15% of a new graduate's monthly income. The average starting salary for a 2018 college graduate was $50,944 or $4,245.33 a month. That would cap monthly student loan repayments at $636.79. Your specific starting salary may be more or less depending on your discipline, geographic location, and other factors.
Use a Student Loan Calculator to figure how much you can borrow to stay below that amount. Actual payments will vary based on the loan type, repayment terms, and interest rates.
Other Funding Resources
Before you lean too heavily on loans to pay for school, know that there are other funding sources to consider.
Institutional Grants and Scholarships
Your chosen college's financial aid office can provide information on merit and need-based scholarships. Merit-based scholarships require applicants to demonstrate prior academic achievement in high school or college. Need-based scholarships are based on your family's income. Your Free Application for Federal Student Aid (FAFSA) results will likely determine eligibility for need-based institutional grants and scholarships. Apply early since awards are often available to eligible students on a first-come, first-served basis.
Scholarship Websites
Free online scholarship databases, like Scholarships.com and FastWeb, can do much of the research for you. Start by completing a profile so they can match you with scholarship opportunities. Using scholarship aggregators can save time and keep your applications organized.
Employer Scholarships
Employers sometimes offer scholarships to employees and their children. Since you'll compete with fewer applicants for the award, overlooking this hidden opportunity could be a costly mistake. You might even be the only applicant. Speak with your employer or your parent's employer to see if they offer college scholarships.
Employer Tuition Reimbursement Programs
Some companies will pay you to complete your degree. Details of tuition reimbursement programs vary, but most require students to:
· Obtain prior approval for reimbursement before classes begin
· Pay for the course up-front
· Complete the coursework with a "B" grade or higher
You may not need to be a full-time employee to qualify for specific employer tuition reimbursement programs. With an average annual reimbursement limit of $5,000, pursuing this option could make college more affordable.
The day you receive your college acceptance letter will be one of the most memorable days of high school. But obtaining your college degree will be one of the most memorable days of your life. Pair responsible borrowing with alternative funding sources to make your higher education dreams come true.
Additional Resources
Apply for the HawaiiUSA Scholarship