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.

Outlines

00:00

💼 Understanding College Costs and Financial Aid

This paragraph introduces the complexity of funding a college education and emphasizes the importance of understanding the costs involved. It explains the concept of financial aid, distinguishing between free money and loans. The speaker, Erica Brozovsky, presents an overview of the types of expenses students encounter, such as direct costs (tuition, fees, room, and board) and indirect costs (books, internet, software, and transportation). The paragraph also touches on the differences in living expenses for on-campus versus off-campus students and how certain student categories, like adult or returning students, might have different housing requirements. The segment concludes with a discussion on the various forms of financial aid available, including federal aid, grants, work-study programs, and the necessity of completing a FAFSA to access them.

05:02

📚 Exploring Financial Aid Options and Employer Assistance

Paragraph 2 delves deeper into the financial aid landscape, discussing scholarships, which are non-repayable forms of financial aid that can be merit-based, need-based, or demographic-based. It also addresses institutional aid, which is direct financial support from colleges, either automatically granted or applied for. The paragraph stresses the importance of considering each aid option as part of a larger financial plan, rather than a single solution. It introduces the concept of employer tuition assistance programs, which can cover or reimburse a portion of educational costs, and highlights the potential for military personnel and their families to receive tuition assistance. The segment also suggests considering alternative educational paths, such as trade schools, community colleges, or earning college credits in high school, to reduce overall college costs.

10:03

🎓 Planning for College and Utilizing Study Hall Resources

The final paragraph focuses on the benefits of planning ahead for college expenses to reduce financial stress and enhance the college experience. It promotes the Study Hall program, a partnership between Crash Course and Arizona State University, which offers foundational courses and resources to help students navigate college life and academics. The paragraph encourages viewers to visit the Study Hall channel for additional support in choosing a major, understanding college requirements, and accessing college credit courses that can be challenging in the first two years of university.

Keywords

💡Student Loans

Student loans are a type of financial aid where students borrow money to pay for their college education, with the expectation of repaying it later. In the video, it is mentioned that there is no shame in taking out a student loan to pay for college, emphasizing that it is a common and acceptable way to finance education. The script also points out that federal student loans often have lower interest rates than private loans, making them a more favorable option.

💡Financial Aid

Financial aid refers to the various forms of assistance, including grants, scholarships, work-study programs, and loans, that are available to help students pay for their college education. The video discusses how financial aid can come from federal, state, or institutional sources, and it is essential for understanding the affordability of college. The script explains that all schools will have a total cost of attendance, and financial aid can help cover both direct and indirect costs associated with it.

💡Total Cost of Attendance

The total cost of attendance is an estimate of all the expenses a student will incur for each academic year, including both direct and indirect costs. The video script uses this term to illustrate the comprehensive nature of college expenses, which include tuition, fees, room and board, books, and other living expenses. Understanding this total cost is crucial for budgeting and applying for financial aid.

💡Direct Costs

Direct costs are expenses that students pay directly to the school, such as tuition, fees for building maintenance, technology, and health services. The video script explains that these costs are typically required to be paid before attending classes and are clearly itemized on the student's bill from the college. Direct costs are a significant part of the total cost of attendance and are a key consideration in college budgeting.

💡Indirect Costs

Indirect costs are expenses related to attending college but not paid directly to the institution, such as books, internet service, software programs, and travel expenses. The video script highlights that these costs are essential for being a student but are not always immediately apparent, as they are not listed on the college bill. They are part of the total cost of attendance and need to be factored into a student's financial planning.

💡Federal Financial Aid

Federal financial aid encompasses various forms of assistance funded by the U.S. government, including grants, work-study programs, and loans. The video script emphasizes that to be eligible for federal financial aid, students must complete the Free Application For Student Aid (FAFSA). This aid can significantly reduce the out-of-pocket expenses for college and is a critical component of many students' financial aid packages.

💡Scholarships

Scholarships are a form of financial aid that students do not need to repay and are often awarded based on merit, need, or other criteria. The video script discusses how scholarships can be a valuable source of funding for college, as they can help reduce the overall cost of attendance. Scholarships can be found through various sources, including the institution, private organizations, or employers.

💡Employer Tuition Assistance

Employer tuition assistance refers to programs where employers offer to pay a portion or all of an employee's tuition costs. The video script mentions that an increasing number of companies are offering such benefits, which can be a significant aid in financing college education. The script gives examples of different types of programs, such as tuition reimbursement and direct bill programs, and highlights the importance of checking with one's employer for potential assistance.

💡Military Tuition Assistance

Military tuition assistance is a type of financial aid available to active-duty service members, veterans, and their dependents. The video script explains that programs like the Post-9/11 GI Bill can cover educational costs and may be transferable to spouses or children. This form of aid is particularly relevant for those with military affiliations and can provide substantial support for college education.

💡Community Colleges

Community colleges are two-year institutions that offer associate degrees and can be a more cost-effective way to start a college education. The video script suggests that attending a community college can reduce costs as tuition is generally lower than at four-year institutions. It also mentions that credits earned at community colleges can often be transferred to universities, making it a strategic choice for students planning to complete a bachelor's degree.

💡CLEP and DANTES

CLEP (College-Level Examination Program) and DANTES (Defense Activity for Non-Traditional Education Support) are programs that allow students to earn college credit by passing exams, potentially reducing the number of courses they need to take and the associated costs. The video script introduces these options as strategies for students to save money on college tuition by avoiding the need to take certain introductory courses.

Highlights

Understanding the costs of attending college is crucial for managing the financial aspect of education.

All schools provide an estimate of total costs, including direct and indirect expenses, on their websites.

Direct costs include tuition, fees, and on-campus living expenses, which are paid directly to the school.

Indirect costs cover items like books, internet, and travel, which are not included in the school bill.

Some schools require underclassmen to live on campus, affecting housing and meal plan costs.

Adult or returning students often have exemptions from on-campus living requirements.

Off-campus living requires covering additional personal living expenses like housing and utilities.

On-campus students generally pay less for transportation and entertainment compared to off-campus students.

Federal financial aid includes need-based grants and federal work-study programs.

Completing the FAFSA is necessary for federal aid eligibility and can lead to other financial opportunities.

Federal student loans offer lower interest rates than private loans and include subsidized and unsubsidized options.

Parent PLUS Loans can help cover college costs not met by other financial aid.

Private loans are an alternative with higher interest rates and may require a cosigner.

Scholarships are financial aid that doesn't need to be repaid and can be based on various criteria.

Institutional aid is provided directly by colleges and can be merit-based or need-based.

Employer tuition assistance programs can cover or reimburse for college costs.

Military tuition assistance and the Post-9/11 GI Bill provide education funding for service members and their families.

Trade schools and community colleges offer more affordable pathways to education and career readiness.

Earning college credits in high school or through programs like CLEP can reduce future college costs.

Planning and understanding financial aid options can alleviate financial stress and enhance the college experience.

Transcripts

You have to take out student loans. All financial aid is free money.

There aren’t many options to pay for college.

If you live in the US or are  attending an American school,

you may have heard things like this when  it comes to funding your college education,

and it can be hard to know  what’s true and what’s not.

Hi, I’m Erica Brozovsky and this  is Crash Course: How to College,

a Study Hall series presented in  partnership with Arizona State University.

Today? We’re talking money.

[INTRO MUSIC PLAYS]

No matter what kind of school you’re considering,

understanding the costs can make the process  of paying for college more manageable.

Fortunately, on their website all schools  will have the total cost of attendance,

which 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 all the expenses  you pay directly to the school,

like tuition for the credits you  need to complete your degree,

which can cover a wide range of  things. You'll probably have to pay

building maintenance fees, technology fees,  wireless fees, fees for health services–

a lot of schools even charge you  to support the athletic program.

And depending on what you  choose, your direct costs can

also include your dorm room and meal plan.

Most colleges require you to pay these  costs before you can attend classes.

Just remember: if you don't live on campus,  you generally don't get a meal plan!

But there are also indirect costs,

which are pretty much everything  else you need to be a student,

like books, internet service,  and software programs.

Depending on where you live, these  can also be travel expenses, like gas,

vehicle maintenance, and parking  or public transportation fees.

In case that’s confusing, there’s  an easy way to keep track of it all:

direct costs are the things that will  appear on your bill from the college,

and indirect costs are everything else!

As we mentioned in earlier episodes,

some schools require freshmen  and sophomores to live on campus,

in the dorms, while juniors and seniors  have an option of where to live.

If you're an adult, returning student,

you often are given an exemption to living  on campus, even if you're an under-classman.

For whatever reason, if  you're not living on campus,

you need to be prepared to  cover your living expenses.

These will include housing, food,  utilities, and, if you have kids, childcare–

although check with your college  for help on that last one.

Many offer before and after-school  childcare to help parents stay in school.

And to help you make sense of it,

here's a brief overview of how  costs compare between living

on and off-campus at different kinds of colleges.

You may be surprised to learn that, in most  cases, students who live on campus pay less

for additional expenses like transportation,  entertainment, and personal care

than students who live off-campus.

The numbers depend on where you live and whether  the school is public, private, or for-profit.

And while these expenses vary  based on your own unique situation,

these figures can give you  an idea of what to expect.

After all that budgeting and spreadsheeting,

that total cost of attendance can  look like a really big number.

But there are so many ways to find  financial aid to help pay for college

[-- and none of them are even following every  rainbow you see to find a magical pot of gold!]

First off, we can consider federal financial  aid, which is kind of an umbrella term

for several different options  funded by the US government.

For instance, federal financial aid  includes need-based federal grants,

which are awarded based on financial  need and don’t need to be repaid.

Federal financial aid can also  include federal work study,

which is a government funded  part-time job designed

specifically to help both part-time  and full-time students pay for school.

While most federal work study jobs are on campus,

some jobs are off-campus at  organizations the college partners with.

If you plan to enroll as a distance  learner or online student and want to know

whether a federal work study  job is an option for you,

check with the college you’re interested in.

To receive a need-based federal grant  or be eligible for federal work study,

you have to complete a Free  Application For Student Aid,

otherwise known as a FAFSA.

You’ll need to complete the FAFSA for  every year that you’re enrolled in school

and want to receive federal financial aid.

Lots of students don’t complete the FAFSA  because it requires a lot of information

from you and often your parent or guardian,

but it also opens the door to so  many other ways to pay for college…

and is the only way to qualify  for federal grants and loans!

For instance, loans are money you borrow  to pay for a product or service up front

with the expectation that you will  repay the loan at a later date.

And if you complete the FAFSA, you may  be eligible for federal student loans

which often come with lower interest  rates than private or bank-based loans.

These include subsidized loans,  unsubsidized loans, and graduate PLUS loans.

Each one has its own benefits and requirements.

Like with subsidized loans,

the federal government pays your  interest while you’re in school,

which can save you money over time.

On the other hand, the interest rate on  an unsubsidized loan builds up over time.

Parent PLUS Loans can also help  students pay college costs.

Although not required to,

parents can apply for this loan option if the  financial aid that has already been awarded

does not cover all your costs.

If they do apply and are denied, you’ll  be eligible for unsubsidized loans

to cover additional expenses.

Private loans are also an  option for paying for school

and are based on your credit  history rather than financial need.

However, it’s important to note that private  loans often come with higher interest rates

than federal loans and may  require you to have a cosigner.

Some private loans, like those offered  by credit unions, are more affordable.

We often hear about student loans  and how difficult they can be,

but there is no shame in taking  out a loan to pay for college.

And if you stick with us here on Study Hall,

we’ll help you succeed throughout  college so you can graduate,

get a job, and hopefully not  struggle to pay off those loans.

And in addition to federal financial aid and loans

you can also round out how you’re  paying for college with scholarships,

which are another type of financial  aid that you don’t have to pay back.

Some scholarships are need-based,

which means the amount for which  you are eligible is dependent

on your or your family’s economic status.

Others are merit-based, which means they’re  awarded based on your academic achievement.

And there are also scholarships granted

based on socioeconomic or  demographic circumstances,

like income-based scholarships or  scholarships meant to encourage people

of underrepresented identities to go to college.

Scholarships are amazing  opportunities for you to earn money

for school that you don’t have to pay back.

But that also means that you  have to plan ahead to earn them

so that you can submit a well-rounded  application and stand out from the crowd.

The same is true for institutional aid,

which is any money the college gives you directly

whether that’s merit-based or need-based aid.

You can get institutional aid by applying,

but some colleges automatically  offer this type of aid to students

after you get accepted to the college.

And no matter what types of  financial aid you end up using,

perhaps one of the most important  things to remember about financial aid

is that it’s rare for one aid  option to cover everything.

Instead, think of each option as a building  block toward your total cost of attendance.

Some options will give you bigger chunks of change

and some will seem like drops in  the bucket, but it all adds up.

So as you’re planning for college,

review each option carefully and  understand the unique requirements,

limitations, and terms of each one.

And keep in mind that just  because you don’t qualify now

doesn’t mean you won’t qualify in the future.

As you review your aid options, don’t  forget to check with your employer!

More and more companies, such as Starbucks,

Uber and Chipotle, are  offering 100% tuition coverage

for employees, and most companies agree  to pay a portion of your school costs

depending on the type of tuition  assistance program they offer.

Tuition reimbursement programs require  you to pay for the costs upfront,

then your employer will repay you after  you’ve earned a passing grade for the course.

And in direct bill programs, your  employer will pay the school you attend,

instead of having you pay for the courses first.

But if you don’t earn a  passing grade in the course,

your employer may require you  to pay them the money back.

Unlike those tuition assistance programs,

a lump sum program offers all the money  you are eligible for once each year.

Although the amount of tuition assistance varies,

companies are allowed to offer up to  $5,250 in tax-free funding annually.

Some companies choose to offer more,

so it’s important to ask how much  tuition assistance is offered each year.

And you should ask whether you’re  limited to specific areas of study.

Some companies only offer tuition assistance if  your courses relate to the company’s industry.

Like if I worked for a tech  company and wanted to take courses,

they might only cover things like cybersecurity,  programming, web design, and related topics.

But if I wanted to study something  else -- like linguistics! --

I can try to make a case that other courses

will help me do my job better and  convince my employer to cover it.

So research the courses you want to take  before applying for aid through your company.

And be prepared to explain how each course

relates to your job and how each one  can help you contribute to the company.

If you’re under 24 and considered a dependent,

you can also consider asking your parents  or guardians to check with their employer.

For instance, Wells Fargo offers  tuition reimbursement for employees

and scholarships for the children of employees.

Or if your parent or guardian  works for a college or university,

you may qualify for tuition  assistance if you attend that school.

And if you or your spouse  is employed by the military,

you may qualify for military tuition assistance,

which is available to both active  duty service members and veterans.

As a veteran, your dependents—like  your spouse or children—

may also receive aid through  spouse or dependent assistance. F

or example, the Post-9/11 GI Bill is  designed to pay for service members'

education and can be transferred to a  qualifying spouse or other dependent.

And each branch of service has  different tuition assistance programs,

so we encourage you to check with the  appropriate branch for more specific information.

Ultimately, paying for college is about  finding money to put toward your education,

but it’s also about reducing the amount  of money you need to pay out of pocket,

and what school you go to  can be a big part of that.

Trade schools may have higher  up-front costs than four-year schools,

but offer a more specific career focus that  can lead to gainful employment quickly.

You can often earn a certificate  there in one or two years,

and fund your program with federal  financial aid, scholarships, or grants.

Community colleges also cost less  than state colleges or universities.

Even if you decide to attend a university  later, you can attend a community college first

to complete your general  education credits at a lower cost.

If you decide to take this path, make sure  you understand how the credits you earned

at a community college will  transfer to a university.

Most schools have a transfer  credit tool on their websites

that you can use to evaluate the  number of credits that could transfer.

Earning college credits in high school  like through Advanced Placement courses

or taking low-cost college courses  like ASU’s universal learner courses

is another way to reduce college  costs by earning college credit

before actually starting college.

Also, a major part of this Study Hall Project is

creating videos which are the  foundation for college credit courses.

You can start anytime without  applying to the university,

pay after you complete the course,

and be able to transfer the credit to most  universities. More info is in the description!

You can also look into CLEP, a  College-Level Examination Program

that enables you to complete tests in  lieu of taking introductory courses,

and DANTES, which supports members  of the military in completing exams

to earn high school and college credits.

Planning ahead for college tuition and fees

can help you save more money in the  long run and reduce financial stress.

Less stress means more energy  to focus on your coursework,

create great memories, and  enjoy your college experience.

Thanks for watching this episode  of Crash Course How to College.

This series is part of an expanded  program called Study Hall.

Crash Course has partnered with Arizona State

University to launch Study  Hall on its own channel.

Check out youtube.com/studyhall where you’ll  find more tips about navigating college,

choosing a major, plus foundational courses

connected to college credit  courses that students struggle

most with in their first 2 years.

We hope to see you over there!