Financing Your Online Education

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By Annika Wallendahl & Chris Nelson

Getting an 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 financing an online education. 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.

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

Applying for Federal Financial Aid

"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 U.S. 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 U.S. citizen or eligible non-citizen. Students that are not U.S. 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 U.S. 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 – 5 percent) than private bank/lender loans (typically 6 percent – 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 U.S. 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.

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

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.

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.