Federal student aid programs recognize students who learn online.
College isn't cheap, no matter how you frame it. But if you want to prep for a good career or even learn for personal enjoyment, college is the logical first step. Fortunately, financing your education isn't as challenging as you might imagine, even for online or distance learning.
Students who learn online generally have the same financial aid options as those attending college in a classroom setting, explains the Sallie Mae Fund, a charitable organization supporting programs that help students have access to a college education. Just one thing to keep in mind: Not all colleges accept federal financial aid, so you need to do your research.
Obtaining loans for online learning isn't a huge stumbling block, but there are still a number of things to decide. Here are five decisions you might need to make.
Decision #1: Which College Should You Attend?
The volume of online colleges and traditional colleges that offer online degrees isn't slim by any stretch of the imagination. In fact, 62.4 percent of schools offered full online programs in 2012, according to a 2013 report titled "Changing course: Ten Years of Tracking Online Education in the United States" by the Babson Survey Research Group. But if you need student aid, the pool of choices might shrink a bit.
While many colleges accept financial aid, some may not. And to decide which college you should attend, you need to learn their policy. Sallie Mae suggests asking the school's financial aid office what types of programs meet financial aid eligibility. But federal financial aid isn't the only option. Some colleges also offer in-house financial aid.
Decision #2: Would Private Loans Be a Better Choice Than Federal Loans?
Students aren't limited to federal student aid. If the online college you want doesn't accept traditional student aid, a private loan could open the door. For example, a home equity loan could, in some cases, be used to finance college, as could a personal loan that's obtained solely for college tuition.
However, keep in mind that rates and availability factor largely into whether private loans are a good choice. According to the U.S. Department of Education's Federal Student Aid Office, "the interest rate [for federal loans] is fixed and is often lower than private loans."
Decision #3: How Much Aid Do You Need?
You might be surprised to learn just how much aid you can qualify for. For example, the Federal Student Aid Office says a first-year undergrad student can borrow as much as $5,500, or $9,500 in federal aid if the student isn't a dependent. The amount can be less if the college guidelines don't allow students to borrow more than a certain amount.
However, you want to make sure you don't get more financial aid than you actually need. Federal and private loans accrue interest, usually for years. So you're not just paying back the amount you borrowed for tuition, you're also going to pay back the interest. So decide how much you can save and pay on your own. Even if you can't save the full amount, every little bit helps. For each dollar you save and pay out of pocket, the amount you'll borrow and pay interest on shrinks.
Decision #4: Which Type of Federal Loan Might I Receive?
There are two types of federal student loans: subsidized and unsubsidized.
Subsidized loans are offered to undergraduate students with a specific financial need, which they'll have to prove, according to the Federal Student Aid Office. These loans have better terms than unsubsidized loans. On the other hand, to apply for an unsubsidized loan, you are not required to prove financial need, but the terms are different.
Decision #5: Should I Borrow Extra?
Paying tuition is just part of the job. You'll also need to pay for books, software, and supplies. And if you can't afford to pay for school materials, you may consider borrowing more.
But be sure to use discretion. Decide whether you'll want to pay interest on an ink pen or even a textbook for numerous years, or if those expenses are better paid for out of pocket.