Paying For College
An Investment in Yourself

According to the U.S. Census Bureau, college graduates earn an average of $1 million more during their careers than high-school graduates. That's quite a return on investment. In fact, the value of your investment in a college education will continue to grow for a lifetime. It will pay for itself both personally and professionally. More than simply four years of job training, a college education not only challenges you to broaden your interests and achieve your goals, it opens doors that would otherwise remain closed.

Consider the Advantages

While the cost of higher education may initially be daunting, the advantages are substantial. It's widely recognized that people with a college education get further in their professional lives than those without a college degree. College graduates:

• Can expect to earn about $2.1 million over their lifetimes vs. $1.2 million for people with high school diplomas only.
• Are half as likely to be unemployed vs. high school graduates.
• May earn back as much as $30 for every dollar invested in higher education.
• Experienced an employment increase of 1.8 million jobs in the past decade vs. a loss of almost 700,000 jobs for those with a high school diploma.

A Lifetime of Return

The vast majority of graduates in 2005 can expect to earn increased starting salaries, according to the National Association of Colleges and Employers (NACE) Winter 2005 survey. Overall, 85% of disciplines reported increased starting salaries:

Getting Started

A higher education may pay off in the long run, but how do you pay for it now?

Despite the rising cost of education, a college education remains an affordable choice for most families.

Parents and students who do their homework will find that there is more financial aid available than ever before--over $122 billion in 2004-2005 according to The College Board. Currently, over half the students enrolled in college receive some form of financial aid, including loans, grants, work-study programs and scholarships. By studying your options, you'll find that a college education is certainly within reach.

Regardless of your family's financial situation, it is a good idea to apply for financial aid. Aid is intended to make a college education available to students in many different situations. Since some aid may come in the form of a grant (or "free money") that doesn't require repayment, it is well worth the effort to apply. In addition, student loans - another popular form of financial aid - offer low interest rates and flexible repayment options. By comparing the various options available, you and your family can determine the best way to pay for college.

Financial Aid

Financial aid is designed to provide assistance to pay for college based on financial need. There are three main types of financial aid for college: grants and scholarships, federal student loans and work-study programs.

Grants and Scholarships: Considered "free money" options that don't have to be repaid, grants and scholarships provide a debt-free way of funding all or a portion of an education. Grants are awarded based on a demonstrated financial need, while scholarships are available from private sources based on merit.

Federal Student Loans: These are low interest, long-term loans for undergraduate and graduate students, which offer attractive repayment options including the ability to postpone payments while in school or in times of financial difficulty during repayment. The federal student loan program includes loans for both students and parents. For students, Stafford Loans are a popular choice, while many parents turn to PLUS Loans to help meet funding needs.

Work-Study Programs: This federal program provides students with part-time employment either on or off-campus to earn money for school.

Eligibility for these financing options is determined by the federal government based on the information provided on your Free Application for Federal Student Aid or FAFSA. Regardless of your family's financial situation, keep in mind that aid is intended to make a college education available for students of families in many financial situations. Many families receive aid even when they think their income will disqualify them.

Step 1: Fill out the FAFSA

Be sure to file your FAFSA form as soon as possible after January 1.

When you complete your FAFSA, you will be asked to list the schools to which you are applying. Four to six weeks after you have submitted your FAFSA, you should receive your Student Aid Report (SAR) from the Department of Education's Central Processing System. This report is also sent to the schools you identified on your FAFSA.

Step 2: Determining Your Financial Aid Package

The Financial Aid Office for each school you identified will then determine the amount of financial aid for which you are eligible:

Financial Aid Package Example

Charlene of Asbury Park, New Jersey provided the names of two schools on her FAFSA. One was a state college and the other a private Ivy League university:
State College Private University
Cost to Attend: $9,870 $21,580
Expected Family Contribution (EFC): $3,659 $3,659
Total Aid Needed: $6,211 $17,921

Aid Package:
Pell Grant: 0 0
State Scholarship: 0 1,500
College Grant: 2,000 7,245
Work-study: 0 2,220
Perkins Loan: 0 1,000
Stafford Loan: 2,625 2,625
Total Financial Aid $4,625 $14,590
Amount Not Covered (by aid or EFC) $1,586 $3,331

This makes Charlene's dream of attending the Ivy League university reasonably affordable, with a mere $1,745 more than attending the state college.

Financial aid awards can vary dramatically depending on the school. When you receive your financial aid award letters, you should evaluate them carefully to determine the best choice for you.

Step 3: What To Do About the "GAP"

As in the example above, you may find there is still a "gap" between your total cost of attendance and the financial aid you have been awarded. If you are looking for additional funding after your financial aid resources have been exhausted, or to cover your Expected Family Contribution, you and your family may want to consider the following:

Federal Parent Loan for Undergraduate Students (PLUS): Offered at a low interest rate, this loan allows parents of dependent undergraduate students to borrow up to 100% of the costs (including tuition, room and board and other expenses) to fund their child's education.

Alternative or Private Student Loans: Established by private lenders, these loans require no government forms and are offered at competitive interest rates. Reputable lenders may offer initial credit approval decisions in a matter of minutes, as well as advisors to help you select the best loan to meet your needs.

With the variety of options available to students and families today, higher education is a goal within reach.

Editorial provided by The Student Loan Corporation, Citibank.