Pay less out of pocket for your education

January 16th, 2008

For many people, an education may seem unobtainable because they believe they cannot afford it. Options for funding an education are out there; all you need to know is where to find them.

Learn how you can afford an education without emptying your piggy bank.

Funding your education is a simple process with many benefits!

The first step is to fill out a federal application for financial aid (FAFSA). Every college requires this form to process your financial aid requests, including scholarships. This form requires the applicants' personal information, including the previous year's income tax documentation. Aid is awarded based on the applicants' financial need.

The earlier the application is submitted, the more financial aid is awarded. The United States Government has a yearly budget for the amount of financial aid they award students. If the application is not submitted in a timely fashion, you may not receive the maximum amount that meets your qualifications. The application processing time varies, but could take up to a month for your awarded amount to be offered. This comes in the form of U.S. Grants, Work Study funds and qualifying loans.

To get a jumpstart on your FAFSA, go to www.fafsa.ed.gov and submit your application.

Know what funds you get to keep and what you have to pay back.

Qualified students can borrow up to $18,500 a year ($8,500 subsidized, $10,000 unsubsidized) in federal loans, according to salliemae.com. Borrowing means you have to repay your loan and in this case, with interest. Be sure you know what interest rate you are accepting and whether it is subsidized or unsubsidized. This will be based on your FAFSA. While you are attending classes, your loan will be on a deferment. A deferment allows you to temporarily postpone payments on your loan. If you have a subsidized loan, including Perkins Loans, you will not be charged interest during the deferment. If your loan is unsubsidized, you will be responsible for the interest on the loan during the deferment. If you don't pay the interest as it accrues, it will be capitalized and increase the amount you will have to repay. When your classes end or you graduate, you are given a six-month grace period before payment on your loan is due.

Grants, unlike loans, do not have to be repaid. There are a few grants awarded by the United States Federal Student Aid. These include the Federal Pell Grant and Federal Supplemental Educational Opportunity Grant (FSEOG).

The maximum Pell Grant award for the 2007 - 2008 award year (July 1, 2007 to June 30, 2008) is $4,310. The maximum can change each award year and depends on program funding. If you qualify for the FSEOG, you can receive between $100 and $4,000 a year, depending on when you apply, your financial need, the funding at the school you're attending, and the policies of the financial aid office at your school.

Think beyond U.S. Financial Aid and loans.

Unlike student loans, scholarships do not have to be repaid. Hundreds of thousands of scholarships from several thousand sponsors are awarded each year.

Don't make the mistake of thinking other students have already cornered the market on getting free money from outside donors. There is plenty available for those seeking degrees at all levels.

There are a number of web sites geared to help would-be students find scholarships. Be sure to use a free scholarship search such as www.fastweb.com or www.scholarships.com.

Did you know that qualifying students receive tax breaks?

According to HRBlock.com, depending on your income and other factors, these tax breaks may include:

The Lifetime Leaning Credit, which allows you to reduce your total takes by an amount equal to 20% of up to $10,000 in tuition and fees.

A deduction for qualified higher education expenses of up to $4,000 per year (you can take either the LLC or the deduction, not both).

A deduction for tuition, books and fees if your graduate work does not train you for a new field but advances you in your current one.

A Student-loan interest deduction of up to $2,500 a year.

Contact a registered public accountant or public accounting firm to obtain more information. You may qualify for one or more of these tax breaks!

Ask your employer about tuition reimbursement!

If you're already working, check with your employer about tuition reimbursement benefits. According to 2007 Kiplinger Washington Editors, General Motors awards about 900 scholarships every year to employees or spouses and children of employees. Make sure that you understand the rules of such gifts. Your employer may limit your study to a field related to your job, or require you to work for the company for a set period of time afterward to reap the full benefit.

The money for your education is out there! You have to be willing to go and get it!

If you're wondering if going back to school is worth the extra expenses, the answer is YES! The effects of continuing your education can be very rewarding. Your career options will expand and your earnings potential will increase. You will never be the same person after you expand your learning base. People will look at you differently and you'll even look at yourself in a new way.