Financing Your Online Education

By Annika Wallendahl & Chris Nelson

Getting an online education online is a great way to advance your skills while maintaining a work/life balance. While online learning offers many advantages over traditional classrooms programs, the one thing they share is a price tag. But you shouldn't let cost deter you from earning your degree. There are more financial aid options available than ever for students pursuing online learning programs. And getting financial aid may be easier than you think.

"A university's financial aid department is always going to be the best place to get financial aid information," says Bridget McGuire, Executive Director of Financial Aid at Kaplan University. Kaplan began offering online education for students in 2000. Currently, the university has about 25,000 students that are working toward degree programs taken completely online, according to McGuire.

There are multiple ways to finance your online education, including:

• Federal financial aid
• State financial aid
• Employer scholarships
• Private grants and scholarships

Find Online Degree Programs

Applying for Federal Financial Aid

So you've chosen a school and a program - now what?

"The first step for students who are considering an online program is to fill out a FAFSA," McGuire says. "The FAFSA tells the school what types and amounts of federal aid students are eligible for."

A FAFSA (Free Application for Federal Student Aid) is a form used by the US Department of Education to assess a student's eligibility to receive federal and state financial aid. The FAFSA incorporates many factors of a student's life situation, including age, tax information, marital status, dependents and veteran status.

There is no age limit for receiving federal financial aid, but students must be a US citizen or eligible non-citizen. Students that are not US citizens or eligible non-citizens should still complete the FAFSA, since they may still qualify for state financial aid. FAFSA forms can be completed online at the US Department of Education website, www.fafsa.ed.gov.

There are several types of federal financial aid available. Federal grants (such as Pell grants) and other scholarships do not have to be repaid. Student loans, like Stafford loans, must be repaid, with repayment typically beginning several months after graduation.

"If you have to borrow, federal loans are the best option," McGuire says. This is because federal education loans generally have a much lower interest rate (generally 3 percent to 5 percent) than private bank/lender loans (typically 6 percent to 10 percent) when it comes to repayment.

However, beware of any web site that charges a fee to help you fill out a FAFSA. Prospective students shouldn't have to pay money to complete the FAFSA. "Those are the scams," McGuire warns. You must submit the FAFSA by the date listed for your state of residency or you will not be eligible for financial aid for the entire year. Be sure to follow marked deadlines. To see individual state deadlines, check the FAFSA web site (above) or visit www.finaid.org.

After submitting a FAFSA, the next step is to contact the school's financial aid department and fill out the school's financial aid forms, McGuire says. There may be numerous sources of financial aid available through the school's organizations, including alumni, general scholarship, private contributors, foundations, etc.

If you are a veteran, there are also special federal financial aid options available for you, including tuition assistance, vocational rehabilitation and the Montgomery GI Bill. "Veterans Affairs has a really great website," McGuire says. The US Department of Veterans Affairs website can be found at www.va.gov.

The majority of these financial aid sources will all apply to online education, as long as the online school you wish to attend is properly accredited and certified as a degree-granting institution. To find out more about accreditation, visit the school's website, browse the All Online Schools online accreditation resources or visit the Council for Higher Education Accreditation (CHEA), at www.chea.org.

Find Online Degree Programs

State Financial Aid

In addition to federal financial aid, state financial aid is also an option for students. However, not every state allows its funding dollars to be spent on out-of-state universities, McGuire says.

The FAFSA is used for federal aid, but it also forwards your information to state departments which can find scholarships and loans that you qualify for to supplement federal sources of aid. Another recommendation is to check your local state board or education resources directly (web sites or library references) to access information on available state funding for tuition assistance. Your school of interest may also have specific tips for securing state tuition assistance.

There may be requirements based on the location of the school (in-state or out-of-state), but in most cases you are eligible for state aid as long as the online school you wish to attend is accredited and recognized by the proper educational board.

To review state FAFSA submission deadlines and to find individual state financial aid office contact information as described above, visit the FAFSA website or www.finaid.org.

Financial Aid From Your Employer

Your current professional employer is also a potential funding source for your online education. Some employers are willing to foot the bill if some of your classes or your degree relate to your job. "Ask your company - you never know," encourages McGuire.

Adding an initial or secondary degree or online certification is not only a benefit to you, but it also increases your value as an employee, which often encourages companies to provide tuition assistance in order to broaden employee skill sets and advance the company.

You can approach your company about tuition assistance by consulting your human resources department and seeing if there are any options available for online learning. If you are looking for a new job or career prior to going to school, ask about possible work/school co-op programs or tuition assistance incentives.

Find Online Degree Programs

Local Public and Private Financial Aid

Scholarships are available from other private sources as well. "There are thousands of scholarships out there," McGuire says. Many public and private institutions set up scholarships for a number of reasons. The following are just a few of the sources for these kinds of funding:

• Church or religious organizations
• Businesses, work field panels or corporate groups
• Local foundations
• Community or action groups
• Civic organizations or political affiliations
• Unions or trade organizations
• Memorial committees
• Professional organizations related to your field of study (i.e. American Medical Association, etc.)
• Similar organizations that you may be connected with through family members

These kinds of organizations have a presence in most cities and regions, and you can find information on their specific web sites or browse information at your local library. The best method is to consider what groups and businesses are in your area, make a list of which ones may be helpful, find web sites or informational contacts, and begin researching which ones offer financial aid that you are qualified to receive. You can also use a search engine to find local and national scholarships, but the only search engines you need are the free ones. It should not be necessary to pay money to find scholarships. State and federal education websites often list scholarship resources as well (see below).

Many private scholarships are given out based on ethnicity, religion, gender and even hobbies. Don't forget to ask local businesses, your church or any associations you belong to about educational scholarships, McGuire adds. Some of these can only be applied to in-state schools, but many do not have such restrictions. With so many scholarships available, all you have to do is a little research to find those that fit your needs. As long as the online school you wish to attend is properly accredited, most forms of financial aid can be applied.

Find Online Degree Programs

More Program Choices for Students

Until earlier this year, Congress would only grant federal financial aid to students attending schools that offer at least half of their online degree programs at their traditional, residential campuses as well. This regulation - often called the "50:50 rule" - is being reconsidered, thanks to newly proposed legislation.

While Congress' action doesn't make it easier for students to receive funds (in terms of merit, need and personal circumstances), it does make it easier for schools with online programs to receive funding for students in need. Students in need of financial aid for online programs will have more schools to choose from - since more schools will become eligible to receive funding. Still, the online university must be accredited to be eligible to receive funding, McGuire reiterates. Ultimately, the change in the 50:50 rule gives students more choices about where and how to study online.

Financial Aid Details

According to the College Board, the average costs (2008 – 2009) of a traditional college education are as such, with the credit-hour costs achieved by dividing the annual cost by the average of 32 credits per year:

• Four-year private: $25,143 per year, $786 per credit
• Four-year public (in-state): $6,585 per year, $206 per credit
• Four-year public (out-of-state): $17,442 per year, $545 per credit
• Two-year public (in-state): $2,402 per year, $75 per credit

Note: Cost and aid figures are from the College Board's Trends in College Pricing 2008.

You don't have to be a valedictorian with a perfect test score or a recruited athlete to get scholarships. And you don't have to be poor in order to get financial aid either. You can qualify for loans and scholarships based on a series of factors that demonstrate your need for tuition assistance. These factors include income, estimated family contribution (the amount you and your family will be able to pay out-of-pocket; see the FAFSA web site), the type of institution you are applying to, the number of people in your family who are enrolled in college, etc.

Money paid toward tuition or student loans is also tax deductible. There is a section in the standard tax return form for money paid out for student tuition expenses.

Find Online Degree Programs

Related Reading

• Find Online Schools by Name, Degree or Program
• Financial Aid & Student Loan Resource Center
• Featured Online Education News & Articles
• Online Education Resource Center

News & Events

Financial Aid for Undergraduate & Graduate Students

Scholarships

There are 1,000s of scholarships offered to undergraduate students each year. Begin your custom-
ized scholarship search today!

Stafford Loans

Stafford loans are the most common federal student loan available. They have low fees and simple payback terms.

PLUS Loans

PLUS loans are for parents of under-
graduate students enrolled at least half-time.

Grad PLUS Loans

Grad PLUS Loans are designed for working students returning to school. Take the steps to start a new career.

Private Loans

There are many types of private loans. Begin the application process for an ACT Education loan.

Popular Articles