Financing Your Education

Education beyond high school - and beyond college - can create opportunities that may not otherwise be possible. It can open doors to better careers and allow you to do the things you enjoy the most. With the cost of higher education on the rise, many students and parents turn to financial aid to cover postsecondary education costs they could not otherwise afford.

There is a variety of financial aid available to students and families such as scholarships, grants, work-study, and loans (federal and private).
  • Scholarships - Scholarships are "free money" funding options. They do not have to be repaid and are usually awarded based on financial need, merit and/or special interests.
  • Grants - Grants, like scholarships, are another debt-free option. These are typically given to students who demonstrate financial need.
  • Work-Study - Work-study programs involve earning money either on or off campus during the academic year. These programs provide jobs for students with financial need to defray the cost of college.
  • Student Loans - Federal and state government-sponsored student loans are based on eligibility requirements and must be repaid. When federal and state loans are not enough to cover cost of your education, private student loans are another option.
Other ways of paying for postsecondary education include:
  • Home Equity Loans - Some families opt to take out home equity loans or second mortgages to fund postsecondary education if they have sufficient equity in their home and if they have good credit. The advantage of a home equity loan is that the interest accrued and paid may be deductible on a federal tax return. If you are considering this option, you should consult a tax advisor to determine whether there you can take advantage of any tax benefits.
  • Tuition Payment Plans - Most colleges and universities offer tuition payment plans which allow you to spread tuition costs over several months. When evaluating this option, consider whether a participation fee will be required and how this fee will compare with the costs of liquidating an asset or the interest associated with taking out a student loan.
  • Investment Accounts - Stock portfolios, savings accounts, and IRAs represent another debt-free option. Before liquidating any assets, however, you should determine whether there are associated fees or penalties and tax implications. You should also take into consideration any lost investment earnings.
  • Savings - It is never too early to save for college. If you have time before you or your child goes off to college, one of the more popular ways to save is through 529 plans. These plans are operated by states or educational institutions and are designed to help families save money for future college costs.
There are many options available to students and their families. Keep in mind that most financial aid is awarded on the basis of eligibility and/or financial need. Typically, this is determined by the school you attend based on information you provide on the Free Application for Federal Student Aid or FAFSA and your family's ability to pay for your education.
 

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