Financing Your College Education: Good, Better, Best

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When it comes to financing a college education, not all funding is created equal. While it’s true that student loans make up the majority of the financing, it is certainly not the only option. Students today are graduating college with record amounts of debt, and with parents trying to live on impossibly strict budgets so that they can help finance their children’s schooling. The question that many parents want to have answered is: what are the options to help ease this burden?
Certainly, there are other options to explore. Here’s our list along with resources that can help you map out your financial path:

  • Scholarships and grants – These are the best options, when available, because they provide funding that does not have to be repaid. Scholarships are generally given when a student excels in a particular arena, whether it’s academics, sports, or another skill. But don’t write this option off just because you weren’t a 4.0 student! Many schools have scholarships for children of members in sororities, fraternities, or for specific majors. Grants are generally given to those who show specific need, often including low income. But again, what constitutes as “low income” varies by college and each individual grant, so don’t be shy about applying. Other grants are given as funding to help with a particular project, such as writing a thesis. As with all options, making friends in your student aid office and with your major professor is a huge help, but websites such as and are great resources. The federal education website also has great educational material about the different types of federal grants available.
  • Work Study or Off-campus Co-operative – I’ve known many parents who want their children to be able to “focus 100% of their time on their studies” so they don’t encourage them to take a job while in college. (Though, let’s be honest – what college student is really going to study every hour of the day?) Multiple studies have shown that students who work – even up to 20 hours a week – have better GPAs than those who don’t. Plus, it gives you experience in having a work schedule, a supervisor, and balancing education and employment. It also provides funding for school and all those other things students enjoy while not studying.
  • Federal loans – The vast majority of students who attend higher education institutions will graduate with at least some student loan debt. But even within that broad spectrum, some loans are better than others. Given the choice, pick subsidized over unsubsidized. ‘Subsidized’ means that the government pays the interest on the loans while you are in school or they are otherwise deferred. It may not sound like a lot, but if you wind up with $40,000 in student loans, even 3% interest a year is $1200. Why pay that if you don’t have to? The other thing to note here is that you don’t have to take the full amount of loans that are offered. Now is the time to plan a realistic budget so you know whether you need that full $4000 a semester or if $2000 really will do. Less loans = less interest = less pain come repayment time.
  • Private loans – Private loans should be a last resort for assistance. The interest rates are generally higher than federal loans and the repayment terms are generally less flexible. There are usually fewer options for rehabilitation plans if you fall behind or default on your loans. If you do have to take out private loans, shop around for good interest rates and terms. You may be promising 10 to 20 years of payments to this company – similar to a mortgage – so take as much care with your choice!
  • Waiting a year (or two) – While I realize not all families will agree, I strongly believe it warrants mention. Particularly for students who do not yet have a major or are not sure what they wish to accomplish after college, taking a year or two after high school to develop that plan is priceless. Find out what you really enjoy. Get experience in what you think you will enjoy. Work, intern, or volunteer. Don’t just fantasize about what you think the work is like, but find out about actual hours, the job description, and what the environment entails. Ask yourself hard questions: What will keep you motivated long-term? What are the types of clients you will work with? What is the monetary compensation? Will your career choice give you a sense of leadership and accomplishment? Does the profession have a future? Check out occupational statistics in the Occupational Outlook Handbook to see if your preferred career path is likely to be viable in the years to come. That way once you do enter college, if you choose to, you have a plan and are motivated to make the most of that time and money in your life.
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