The cost of tuition and fees – not including other costs associated with attending school such as books, supplies, room and board, and transportation – for higher education is on the rise. Unfortunately, so is student debt which now exceeds $1 trillion. In 2010, student loan debt surpassed total credit card debt and total auto loan debt for the first time in history. It is essential to explore your educational and financing options before you enroll so that you can make a wise educational investment without necessarily taking on huge debt in order to achieve your educational goals.
Financial Aid
Federal financial aid consists of federal grant and loan programs under Title IV, and other educational benefit programs such as the G.I. Bill which applies to veterans, military personnel and their families.
Depending on your planned program of study, you may be eligible for federal or state grant money which is free aid. Unlike a loan, you are not obligated to repay grant funding unless you don’t complete the program, in which case you may be required to repay a portion or up to the full amount of the grant money you received. Before you decide to use financial aid to attend school, make sure you understand whether you will have to repay the financial aid money.
To apply for grants and other federal financial aid at schools that are eligible to accept Title IV federal funding, you will need to fill out the Free Application for Federal Student Aid (“FAFSA”). A FAFSA must be completed annually for each year you plan to enroll in a post-secondary school. Your financial need as shown by the FAFSA will determine if you are eligible for any federal grants, including Pell Grants. It will also determine your eligibility for federal loans, which typically offer lower interest rates than private loans.
Many states, including Massachusetts, as well as individual schools use the same FAFSA form to determine eligibility for state and/or institutional aid in addition to federal aid. You need to check with each school you apply to about eligibility and application instructions to be considered for each school’s institutional aid. Similarly, other private and non-profit organizations offer scholarship various types of scholarship and financial aid with different eligibility requirements. Separate aid applications may be required in order to be considered for these other types of scholarships.
Be aware of FAFSA deadlines in order to be considered for the various types of aid. The federal FAFSA deadline is June 30th of each calendar year, while the Massachusetts deadline to qualify for state aid is May 1st. You need to check with each school you apply to with regard to about each school’s deadline which can be as early as February 1st of each calendar year.
Military personnel and veterans may apply for educational benefits they’ve earned directly through the G.I. Bill program overseen by the U.S. Department of Veterans Affairs.
Student Loans
There are different types of loans available to finance your education, including federal and state loans, as well loans issued by private lenders. Loans may seem like an attractive option, and in some cases may be a necessity to finance your education. However, before taking out a loan make sure you understand the following:
It’s important that you assess whether you have any realistic hope of being able to make the monthly loan payments and that you choose a school program you can afford to pay off. Many students, especially those who attend for-profit schools, graduate with monthly loan payments that they simply cannot afford.
If you do decide to borrow money to attend school, you should shop around for student loans. As a general rule, there are three types of loans:
Because federal and state loans are typically have lower interest rates than private loans, it is conventional wisdom that you should exhaust your federal and state borrowing options before you resort to taking out private loans.
If you are taking out a private loan, do not allow your school’s financial aid office to decide which lender you will borrow from. You should shop around with a number of different lenders, including MEFA, to find out which lender will offer you the best interest rates and borrower benefits.
- The total amount you will owe once you graduate;
- When you will have to start making payments; and
- How much those payments will be per month.
- Federal loans, which include Stafford, PLUS and Perkins loans;
- State loans, like the Massachusetts No Interest Loan;
- Private loans, like the loans offered by the Massachusetts Higher Education Authority (“MEFA”) - which is a not-for-profit self-financing state authority. (Most other private lenders are for-profit corporations).
Additional Resources
U.S. Department of Education
The U.S. Department of Education is responsible for federal education policy initiatives and overseeing Title IV federal financial aid programs. The department’s vast website includes information about education financing, repayment plans, and the federal student loan application, FAFSA, along with additional tools for federal loan borrowers:
The Federal Student Aid Office (FSA) provides an interactive loan counseling tool for federal student loan borrowers that covers topics ranging from managing a budget to avoiding default. You can use the loan counseling tool by visiting the FSA website. The FSA website also contains a Repayment Estimator that lets borrowers compare what their monthly payment amounts would likely be across all repayment plan options.
National Student Loan Data System (NSLDS) is a database that provides a centralized, integrated view of all of your federal student loans and grants, along with useful information, like your loan servicer contact information, interest rates, and principal balances.
College Scorecard is an interactive tool for prospective students and parents to use to compare the cost, graduation rate, median federal debt of students (not including Parent Plus loans), salary of students ten years after enrolling, and the percentage of students paying down their federal loans -- for any degree-granting post-secondary school.
Consumer Financial Protection Bureau (CFPB)
The CFPB provides general information about making informed financial decisions when paying for college, including finding financial aid, choosing a loan, comparison shopping resources, and guidance on repaying student debt: http://www.consumerfinance.gov/paying-for-college/
The CFPB also provides a section specific to servicemembers and their families, including financing your education, guidance on using GI Bill benefits, and information about unique consumer financial products and services offered: http://www.consumerfinance.gov/servicemembers/
GI Bill Information
This website includes information for veterans, military personnel and their families about U.S. Department of Veteran Affairs-sponsored educational benefit programs. This comprehensive site provides detailed program information, eligibility requirements, how to apply, payment rates, and frequently asked questions.
Massachusetts Public Higher Education System map
There are 29 schools that make up the Massachusetts Public Higher Education System, including six University of Massachusetts campuses, nine state universities and 15 community colleges. In addition, some of these schools have satellite campuses and/or offer online courses in conjunction with the program. Together these public schools offer a wide array of programs that are often more affordable than private, non-profit and for-profit schools.
DOE College Scorecard
This interactive tool recently created by the U.S. Department of Education allows prospective students and parents to compare the cost and value of any degree-granting post-secondary school. (Unfortunately, data for non-degree granting schools is not available.
The College Scorecard is most beneficial when used as one of many tools, rather than the only component when exploring your post-secondary education options. Note, too, that the median debt calculator calculates median debt data from the time students first enroll, regardless of whether a student completes the program. Thus, the true median debt percentage could actually be higher in some instances than what the scorecard indicates depending on a particular school’s drop-out rate. For example, in the case of for-profit schools, in which the drop-out rate is relatively high in comparison to other types of schools, the projected median debt calculator may understate the actual median debt load of students who have attended that school.
College Navigator
To explore education and training options by location, institution, type of program and/or level of award/degree, log on to College Navigator. Run by the National Center for Education Statistics and sponsored by the U.S. Department of Education, College Navigator provides detailed information about all schools that are eligible to receive federal funding through Title IV programs.
Massachusetts Educational Financing Center (MEFA)
MEFA is a not-for-profit quasi-public entity that seeks to increase access and affordability to higher education by helping thousands of families each year plan and pay for college. MEFA offers extensive community outreach and education programs and provides college savings plans and low-cost financing options, including fixed interest rate loans. MEFA Loans are available to Massachusetts residents attending college in-state or out-of-state, as well as students from across the U.S. pursuing higher education in Massachusetts.
Your Plan For The Future
YourPlanForTheFuture is a no-cost, one-stop online portal for students, families, and educators in Massachusetts, created to assist students in customizing and managing their educational and career plans. Rather than a one-size-fits-all approach, YourPlanForTheFuture is tailored to meet the needs of the Commonwealth's diverse student and workforce populations. This portal was developed through a partnership including the Massachusetts Department of Higher Education (DHE), the Massachusetts Department of Elementary and Secondary Education (DESE) and the Massachusetts Educational Financing Authority (MEFA).
One Stop Career Centers
Visit the One Stop Career Centers website to explore careers and learn more about education and training options. This site, sponsored by the U. S. Department of Labor, Employment and Training Administration, will also help you find your local One Stop Career Center.
National Consumer Law Center’s Student Loan Borrower Assistance Project
National Consumer Law Center’s Student Loan Borrower Assistance Project (SLBA) seeks to increase public understanding of student lending issues and to identify policy solutions to promote access to education, lessen student debt burdens and make loan repayment more manageable. The SBLA website has detailed information for borrowers who already have student loans and want to know more about their options and rights.
The Project on Student Debt
The Project on Student Debt aims to increase understanding and provide information about student loans and debt issues for students and families by issuing consumer reports, white papers and policy information. The project is staffed by the Institute for College Access and Success, a non-profit, independent research and policy organization based in Oakland and Washington, DC.