How to Pay for College | Crash Course | How to College

Summary

In this Crash Course: How to College episode, Erica Brozovsky explores the complexities of financing a college education. She explains the distinction between direct and indirect costs, the importance of understanding the total cost of attendance, and the various financial aid options available, including federal grants, work-study programs, scholarships, and loans. The video also touches on employer tuition assistance and the benefits of attending trade schools or community colleges to reduce costs. Erica emphasizes the significance of planning and the potential for military tuition assistance, advising students to consider all financial aid as building blocks towards their educational expenses.

Takeaways

• 💼 Understanding the total cost of attendance, including both direct and indirect costs, is crucial for managing college expenses.
• 🏫 Direct costs are fees paid to the school, such as tuition, building maintenance, and health services, while indirect costs cover everything else like books and transportation.
• 🏛️ Living on campus often comes with additional costs like dormitory and meal plan fees, which are required by most colleges for freshmen and sophomores.
• 🏠 Off-campus living typically requires covering personal living expenses such as housing, food, and utilities, and may include childcare for students with children.
• 💰 Federal financial aid, including grants and work-study programs, is a significant source of funding for college, accessible by completing the FAFSA.
• 📚 Scholarships, both need-based and merit-based, offer financial aid that doesn't need to be repaid and can be earned through a well-rounded application.
• 🏢 Employers may offer tuition assistance or reimbursement programs, which can cover a portion or all of an employee's educational costs.
• 🔗 Parent PLUS Loans are an option for parents to help cover their child's college costs if other financial aid is insufficient.
• 🏦 Private loans, based on credit history, are another funding option but often come with higher interest rates and may require a cosigner.
• 🎓 Attending trade schools or community colleges can be a cost-effective way to start higher education, with potential for quick employment or credit transfer to universities.
• 📈 Planning ahead, understanding financial aid terms, and exploring various funding sources can reduce out-of-pocket expenses and financial stress during college.

Q & A

What is the total cost of attendance and what does it include?

The total cost of attendance is an estimate for all the expenses a student will have to pay for each academic year, including both direct and indirect costs. Direct costs are expenses paid directly to the school, such as tuition, fees for building maintenance, technology, health services, and potentially dorm and meal plans. Indirect costs include everything else needed to be a student, like books, internet service, software programs, and travel expenses.

Why are direct costs important when considering college expenses?

Direct costs are important because they are the expenses that appear on your bill from the college and include tuition, fees, and often dormitory and meal plan costs. These are the primary expenses that students must pay before they can attend classes.

What are indirect costs in the context of college expenses?

Indirect costs are expenses not directly paid to the school, such as books, internet service, software programs, and travel expenses. They also include other living expenses if not living on campus, like housing, food, utilities, and childcare.

How can living on campus affect a student's overall college expenses?

In most cases, students who live on campus pay less for additional expenses like transportation, entertainment, and personal care compared to students who live off-campus. However, the specifics can vary based on location and whether the school is public, private, or for-profit.

What is federal financial aid and what types of aid does it include?

Federal financial aid is an umbrella term for several options funded by the US government, including need-based federal grants, federal work-study programs, and federal student loans. These aid options are based on financial need and do not need to be repaid, except for loans.

Why is it necessary to complete a FAFSA to receive federal financial aid?

Completing the Free Application For Student Aid (FAFSA) is necessary to determine eligibility for federal financial aid, including need-based federal grants and federal work-study programs. It's also the only way to qualify for federal grants and loans.

What are the differences between subsidized and unsubsidized federal student loans?

With subsidized loans, the federal government pays the interest while the student is in school, which can save money over time. Unsubsidized loans, on the other hand, accrue interest over time, which the borrower is responsible for paying.

How do Parent PLUS Loans assist in paying for college?

Parent PLUS Loans allow parents to borrow money to help pay for their child's college education. If the financial aid awarded does not cover all costs, parents can apply for this loan option. If they are denied, the student becomes eligible for unsubsidized loans to cover additional expenses.

What are private loans and how do they differ from federal loans?

Private loans are education loans from banks, credit unions, or other financial institutions. They are based on credit history rather than financial need and often come with higher interest rates than federal loans. They may also require a cosigner.

How can scholarships help reduce the cost of college?

Scholarships are a type of financial aid that does not need to be repaid and can be based on various criteria such as need, merit, or demographic circumstances. They can significantly reduce the amount a student needs to pay out of pocket for their education.

What is institutional aid and how can students access it?

Institutional aid is money given directly by the college, either based on merit or need. Students can access it by applying to the college, and some colleges may automatically offer this aid after acceptance.

How do employer tuition assistance programs work and what are the different types?

Employer tuition assistance programs help employees pay for their education by either reimbursing them after they've earned a passing grade or by paying the school directly. Types include tuition reimbursement programs, direct bill programs, and lump sum programs, which offer a set amount of tax-free funding annually.

What are some alternative educational paths that can reduce college costs?

Alternative paths include attending trade schools for specific career focus, community colleges for lower costs, earning college credits in high school through AP courses, or taking advantage of programs like ASU's universal learner courses, CLEP, and DANTES.