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The Economics of Your Education

"Any informed borrower is simply less vulnerable to fraud and abuse."

— Alan Greenspan

"Any informed borrower is simply less vulnerable to fraud and abuse." — Alan Greenspan

The decision to attend a university, either online or at a traditional brick-and-mortar campus, is life-changing. You have taken control of your future by deciding to improve your skills, develop your intellect, and challenge yourself to achieve great success.

Unfortunately, the overwhelming amount of work you have to do to get into a college and then figure out how to pay for it can put a damper on this new phase of your life. But you do not need to feel overwhelmed because there are as many resources that can help you answer all your questions. There are more ways to find funding for your college education than ever before, but before you take advantage of these avenues, it's a good idea to establish a basic understanding of the financial aid process.

The most important thing to know about college costs is that you don't have to be a millionaire to go to college, nor do you need wealthy parents to fund your education. Even though there are many sites that will provide you with an "average" cost of a college education in America today, you must remember that there really is no standard figure. It all depends on which college you decide to attend and how much you are willing and able to pay.

Some students choose very expensive colleges, hoping that the school's reputation and the connections they make there will help them land higher paying jobs when they complete their degree. Others need to pay more attention to the cost now, rather than any potential payoff in the future. The truth is that you can get a great college education at any size or cost college — it all depends on what you put into your education through your work, internships, and networking.

These are the steps anyone considering college must take to organize the process and put together all the materials necessary to successfully secure a college-funding package.

Gather Basic Financial Information

Gather your personal income tax information for the past year as well as your parents' tax information if they are going to be contributing toward the costs of your education. This information is important because it helps the federal government and the colleges you want to attend to determine what kinds of financial aid you might be eligible to receive. Afterwards, fill out the Free Application for Federal Financial Aid (FAFSA) form. This is a free application from the Federal Student Aid office of the United States Department of Education, which administers federal grants, low-interest student loans guaranteed by the federal government, and work-study programs.

The FAFSA will be accessed by all the schools you apply to, so it's a one-stop shop that saves you time and prevents you from having to fill out more financial forms with each college. Every student, no matter what their financial background, should fill this out. There are different deadlines based on your location and school year, and because financial aid is often on a "first-come, first-served basis," if you miss the deadlines, you might find yourself without enough funding to enroll.

Think about your potential career after college and how much you might earn every year. This will give you a ballpark figure of how much money you can afford to pay in student loan repayment, in addition to living expenses. Chances are that you will need to take out student loans even if you qualify for Pell Grants or other forms of aid.

Research Different Kinds of Financial Aid

  • Scholarships. Most scholarships are private sources of funds offered by universities, alumni who have a special interest in a specific kind of academic program, and by private organizations based on criteria such as ethnicity, location, area of study, academic skill level, etc. For example, there is a scholarship for tall people, one for short students named after the well-known actor Billy Barty, scholarships for Star Trek fans, and even one sponsored by the National Potato Industry. Scholarships are a prized form of aid, because they do not have to be paid back. Most colleges offer assistance in locating scholarships, but you can also search online at a site such as, or ask your local librarian for help.
  • Grants. Usually awarded on the basis of financial need (which is why you need to have your tax information available), grants do not need to be paid back. The most well-known grants are Pell Grants awarded by the federal government, but there are many other grants available. Check out the College Grants Database to find grants you might qualify for according to field of study, gender, ethnicity and many other categories.
  • Federal Loans. Loans are a contract between you and a lending agency, and must be repaid when you leave college, even if you have not completed a degree. Federal Loan programs are secured by the federal government and usually offer low interest rates and longer repayment terms. Types of federal loans include the Federal Perkins Loan, Direct Stafford Loans, and PLUS Loans that can be taken out by parents. One important thing to remember about loans is that eligibility is not limited to two- and four- year university students. Students at trade and technical schools are also eligible for federal student loans.
  • Private Education Loans. Also known as "alternative loans," these are offered by private financial institutions and are based on your credit standing. These loans often have higher interest rates than federal loans, and they should only be used when you have exhausted all other forms of financial aid. Usually, students take out private loans to cover any costs remaining that cannot be paid for by other sources of aid.

Complete Your Financial Aid Picture

Now that you have a big picture of how to get started, it's time to make the best financial decision for your future. Contact the Financial Aid Offices at Your Chosen Schools. Speak directly with financial aid officers at the universities you've chosen to investigate further, and find out if any of these schools offer special scholarships in the different programs, in the Honors program, or through local or alumni associations.

Create a cost comparison chart that includes all the information on the schools you examine, to give you a snapshot of all your data. Remember to include in your comparison chart costs that are not included in tuition, such as textbooks, lab materials, commuting costs, room and board if you decide to live on campus, or rent if you plan on living off campus or have to move to a new location to attend school. offers a useful list of university costs to consider in your calculations.

Determine if you need a private loan or not. You may need more money than what is available through financial aid, grants or scholarships. This predicament is increasingly common as university budgets are slashed and tuition rises. Students, even those with bad credit, are able to apply for private loans through banks, credit unions, and other financial institutions, but sifting through all that information can be confusing. Some lending institutions are more predatory than others and charge high interest rates and offer short terms in which you can pay back the loan without incurring a penalty. The Loan Analyzer offered by, which compares loans based on APR, pay-back time, and interest rates, to help you find the best deal for the amount you want to borrow.

Remember, you are about to embark on a great adventure that will enhance and improve your life — do not hesitate to take control of the decision-making process and to take on your university funding head-on so that you get exactly what you want out of your educational experience.

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