Earning your degree, whether in a traditional or online setting, requires a financial commitment. The good news is that there are a number of ways to help you cover the costs. This section is designed to provide you with financing options and help you determine which approach may be the best fit for your needs.

As with traditional programs, enrollment advisors for institutions offering online courses and degree programs are available to assist you throughout the financial aid process.

One of the benefits of online education is that you will not need additional financing for things like rent, food, or transportation since you’ll be involved in distance learning. Also, most online students are not subject to out-of-state tuition fees that may plague traditional university student prospects.

Interesting Facts and Figures

Financial Aid is a big part of America’s higher education process. According to the National Center for Education Statistics:

Types of Aid

Reviewed in this section are the 6 primary types of financial aid that are available for a postsecondary diploma:

Federal Student Aid

The US Department of Education (www.ed.gov) is a government institution that was designed to “promote student achievement and preparation for global competitiveness by fostering educational excellence and ensuring equal access.” With a staff of over 4,200 people and a budget in excess of $68 billion annually, one of the many goals of the Department of Education is to help students afford a postsecondary education.

Federal Student Aid (http://studentaid.ed.gov) is a division of the US Department of Education that has a goal of “ensuring that all eligible individuals benefit from federal financial assistance—grants, loans and work-study programs—for education beyond high school.” Each year the Federal Student Aid (FSA) office provides over $100 billion in new aid to over 14 million students and oversees over $500 billion in outstanding student loans. This is by far the largest source of financial aid in the United States, comprising more than 60% of the total funds used to help students with postsecondary education needs. One of the FSA’s mandates is to make certain that schools, lenders and related services operate fairly and efficiently.

One of the FSA’s most important components is the creation and administration of the Free Application for Federal Student Aid (FAFSA); this is the initial phase to determine if you qualify for financial aid. The FAFSA is the central form used for all federal and government aid, including guaranteed commercial lenders' programs, as well as for many state, regional and private student aid programs. To learn more about FAFSA, the process for applying, and eligibility requirements, click here to learn more.

There are three types of federal student aid including grants, work-study and loans. Learn more about which type(s) of loans you may qualify for and information on filling out the FAFSA form by clicking here

Federal assistance is only available to accredited schools, so you’ll need to make sure that the university you are considering has a national or regional accreditation. Click here to learn more about accreditation.

State Grants

Most states have a system for providing financial aid via grants to residents. See your state’s official government website to learn more about these state grants and how to gain access to yours. In 2003-04, 15% of all undergraduate students received some amount of state grant for their schooling.

Private Loans

If you do not qualify for Federal financial aid, you may also take advantage of private loans, which are not sponsored by the government but rather by banks and non-profit organizations. Private loans contributed $16 billion for postsecondary loans in 2005-2006 versus $69 billion in federal loans during the same period, so they still make up only a fraction of the overall financial aid provided to students.

Eligibility for private loans for postsecondary education generally depends on your credit score and history, much like a traditional car loan, mortgage or credit card. You won’t be required to make any down payment up front, but traditionally this means your loan won’t be secured. Interest rates will likely be higher than some of the federally backed loans, but they will be in line with credit card or auto loan rates.

Private loans are important for many individuals who do not qualify for federal financial aid but still have a need for assistance. Private loans for postsecondary education are growing at a larger rate than federal loans. However, the reality is that most people do depend on private loans for at least a portion of their tuition and schooling costs, and they do serve as a great tool for prospective students.

It’s easy to apply for a private loan online. http://www.salliemae.com/ is a great resource to start with; Sallie Mae is currently a private company, but was originally created as a Government Sponsored Entity before being privatized in 1997. Also, you may want to check with your bank before applying to other institutions as you may receive a better rate being a current customer.

Scholarships

In essence, a scholarship is free money; it does not need to be repaid. It is money granted to prospective students based on merit (normally academic), financial need, or an alliance with a particular group or organization. This money can be used for tuition, textbooks and supplies.

There are literally thousands of scholarships available, and numerous websites designed to help people find and apply for scholarships. It is well worth your time to apply for scholarships. You will have to market yourself in order to obtain a scholarship; you’ll need to be able to thoughtfully express who you are, why you are a good candidate and distinguish yourself from other candidates in the eyes of scholarship committees who determine the winners.

The types of scholarships are often broken down into the following categories with regards to online universities and colleges:

There are many websites dedicated to helping students find and apply to scholarships, including the following:

Military Tuition Assistance

Military Tuition Assistance is a form of financial aid for postsecondary education that is available for each branch of the US Armed Forces, including the Army, Navy, Marines, Air Force, and Coast Guard. It goes without saying that if you are a member of the Armed Forces you should check with your superior officer to find out all of the details and take advantage of this program.

Each branch has their own eligibility requirements for tuition assistance, but all offer eligibility to active duty members and sometimes reserves. 100% tuition coverage is available, along with varying degrees of coverage for items such as enrollment and computer fees.

It is important to note that Military Tuition Assistance is not a loan, but rather should be seen as part of your base compensation as a member of the Armed Services and obviously an amazing opportunity to receive funds for a postsecondary degree.

Many people decide to join the military specifically to take advantage of this program and go on to have very successful careers both in the Armed Forces and the private sector.

Employer Tuition Assistance

Many employers offer full or partial tuition coverage for going back to school, so it’s always a good idea to check with your employer to determine if your company offers Tuition Assistance programs. Generally, the bigger the company, the better the chance that there is some sort of Tuition Assistance program. Even if you work for a smaller company, make sure and check into available options; you never know. Your Human Resources (HR) department should be able to provide details on any programs available and how to qualify. Check your company handbook (if one exists) before talking to HR.

It’s a good idea to approach your manager to discuss how a postsecondary degree can help you become more productive and help the company.

Companies will often determine their levels of assistance based on tax rules. Currently a company can offer up to $5,250 tax free per year per employee. A company can provide more assistance, but this threshold is often used as a guideline and most companies probably won’t exceed this level.

In order to ensure continued assistance from your company you may need to maintain a certain minimum Grade Point Average (GPA) that demonstrates that you are serious about your education. You might also be asked to finish your degree within a given time-frame.

It is important to note that your company may require you to pay for your schooling bills and reimburse you at the end of the semester or year.

Similar to Federal loans and grants, most employers require the school you attend to be accredited by a nationally accredited agency. To learn more about this, read our accreditation section.

Education tax credits and deductions

here are some tax benefits that may not help initially, but will help to pay for your education in the long-run. This sections outlines some of these to consider as you’re figuring out how to pay for your online education.

Currently, there are two tax credits that can mean real money reimbursed against the costs of your postsecondary education. They are the Hope Scholarship Credit and the Lifetime Learning Credit. A tax credit actually reduces the tax burden you have to pay itself as opposed to a deduction which reduces the amount of your income which is taxed – so these credits can be a HUGE savings for you come tax time!

For the Hope Scholarship Credit taxpayers are eligible for a tax credit of 100% of the first $1,000 of tuition costs and 50% of the second $1,000 of tuition costs per student. Students in their first two years of postsecondary education that are enrolled at least half-time are eligible.

The Lifetime Learning Credit is available for those that are past their first two years of college or involved in part-time classes aimed at improving their career. This credit allows for up to $2,000 in tax credits yearly.

Through the 2008 tax year, you can deduct all mandatory and voluntary student loan interest you make, up to $2,500 each year. That means that until you pay off your loan, you can deduct $2,500 worth of interest, as long as the loan was taken out solely for education, your are enrolled at least half-time and not under a qualified employer plan.

It’s also important to note that the government allows penalty free fund withdrawals from Individual Retirement Accounts (often referred to as an IRAs) postsecondary education of the account owner or the account owner’s spouse, child or grandchild. So if you or your family has an IRA you may be able to use those funds without being penalized for your degree.

More current information and tax credits, deductions and advice for paying for education is available at www.irs.gov.

Other Ways to Pay for College

These are few other ideas and thoughts to consider when determining how to pay for your postsecondary education: