=Intro bookend=

Hi. 

We have seen that a college education can be pretty a pretty expensive proposition, all things considered. If you have decided that college is the right step for you at this time, one of your main priorities should be to reduce the financial cost associated with this decision.

In this video, we will talk about steps you can take to reduce the out of pocket cost of college, including the details of the different types of available financial aid and how to prioritize them, as well as controlling expenses while in college.

=Learning objectives=

After this lesson, I hope you will be able to do the following:

* Distinguinsh between gift aid and loans
* List types and sources of gift aid
* List types and sources of loan funds
* Explain strategies for maximizing gift aid

and

* Describe techniques for minimizing college costs


=Other benefits of college=

We have seen that a college education can be a good investment in your future, but only if you choose wisely.

Even though some writers suggest that there may be other, non-monetary benefits of college, such as increased job satisfaction, better critical thinking and long term planning skills, the monetary aspect is still very important, due to the sheer magnitude of the costs involved.

You may have heard the saying "money can't buy happiness", but be that as it may, I would posit that the lack of money can sure buy a lot of misery.
So let's discuss the various ways you can reduce the cost of college.

=Gift vs. loan=

We can classify the types of student financial aid into two major groups - gift aid, and loans.
Gift aid, better known as grants and scholarships, is free money that is given to you to help pay for the costs of college. It does not need to be repaid, it really is just free money.

Loans are money that you can borrow to pay for college. They need to be paid back later, with interest. So while they help you raise funding to pay for college now, they only help you spread the cost out over a number of years - you still have to pay this money out of your own pocket, eventually.
Student loans are different from any other loans that you might come across throughout your life, in that they have special provisions making it nearly impossible to escape repayment, even if you file for bankruptcy. It is thus even more important than usual to not take on more debt than you can comfortably repay given your future earnings expectations.

Here are a couple of helpful websites with more information on student aid. We'll be referring to them as we go along.

=Sample bill=

Let's look back again at our sample student bill from Rowan university.
This student paid for most of this semester's bill with gift aid - good job!
There are five different sources of gift aid here.
The first three items are federal and state grants, that we will discuss in a bit. 
The achieving the dream scholarship is a private sector scholarship, and finally the rowan scholars program is a university-sponsored program.

The student also has one loan, which is a federal direct subsidized loan. We will discuss this in more detail as well.

=Gift aid=

Let's talk about the sources and the types of gift aid. 

There are government grants, at the federal and state level, there are scholarships that are offered by the colleges themselves, and then there are all kinds of private scholarships out there.

Merit based aid is given out on the basis of your past academic performance. For example, scholarships could have a certain minimum GPA, or some percentile class rank, or similar criteria.
Need-based aid is given out on the basis of your family's financial condition. This means you need to demonstrate financial need in order to convince them to give you money. Federal grants are need-based, and state grants often but not always are as well. There are usually graduated qualification levels based on the size of your family income.
Finally, there are a lot of special-purpose scholarships, that can be based on just about any characteristic you can think of. There are scholarships based on your race or ethnic origin, sex, the sports or musical instruments you play, the occupation of your parents, and so on. 

It never hurts to apply to as many grants and scholarships as you can possibly qualify for, since you have nothing to lose, and can only gain free money to help you pay for college.

=Gift aid specifics=

Let's dig into some specifics.

The main federal grant programs are the Pell grant, and the Supplemental Educational Opportunity Grant. Both are need-based, your eligibility is determined solely by your family's financial condition.
Additionally, though it is not really free money, through the federal work-study program you can usually get a job at the college you are attending to help you generate some extra money.

States also have their own education assistance programs. If you go to this page on the US department of education website, you can find the available resources in your state.
For example, in NJ, there is the "higher education student assistance authority" which offers several state-level aid programs. These include the TAG, or tuition aid grant, which is need-based, NJ STARS, a merit-based grant for county college attendance, and EOF, the educational opportunity fund, which is also need-based. If you go to the website, you can find out more details about these programs.

Both federal and state grants require you to complete the FAFSA - the free application for federal student aid, wherein you have to disclose your finances - and those of your parents, if you are a dependent. Your eligibility for federal and state need-based aid is determined based on the content of your FAFSA form.

Finally, there are thousands of different scholarships with all kinds of eligibility criteria, as we mentioned earlier. Here are some useful resources to help you sift through the mountains of possibilities to find some subset of opportunities that you can apply for. 
The student aid website from the department of education has some general tips, careerinfonet, sponsored by the us department of labor has a search tool that lets you search through thousands of aid options by different criteria, and the search tool from the college board is pretty good, too.

This is where it really pays off to do your homework - with the right mix of grants and scholarships, you can cover a large part of the direct cost of college.

=Loans=

Now let's discuss the loan options.

Loans can come from federal, state, and private sources. Generally, federal and state loans would carry more favorable terms than private loans, so if you end up needing loans, you should look to those first.

Let's discuss some major loan distinctions.
A subsidized loan does not charge you interest and does not have to start being repaid while you are enrolled in college at least half-time. An unsubsidized loan, also known as "normal loan", is one that starts accruing interest from the day you take it out, and while depending on the loan details you may not have to start repaying it until you are out of school, the interest will keep accruing and adding to your outstanding balance. 
Subsidized loans are offered through federal and some state sources, and your eligibility for them is need-based, again as determined by the contents of your FAFSA. Unsubsidized loans are often available to anyone without having to demonstrate need.
Finally, while most think of student loans as loans that the student takes out, some loans are actually targeted at the parent as the borrower. 

=Loan specifics=

Now let's discuss some specific loan programs.

On the federal level, the Perkins loan is need-based. It is subsidized and generally has attractive terms.
The direct, or stafford loan comes in two types, subsidized and unsubsidized. Subsidized is need-based, while unsubsidized is available to all for the asking.
The PLUS loan is available to the parent or guardian, and the loan application requires a credit check - unlike the other loans that are taken out in the name of the student. There is no specific limit as to the amount of loan that can be taken out, beyond what the parent can qualify for. 

On the state level, many states have their own programs. You can look up your favorite state's resources on the department of education website. New Jersey, for instance, has a loan program called NJ CLASS, which offers terms that are more attractive than private loans or the federal PLUS loan.

Finally, there are a great number of private student loan programs. The student aid website of the department of education will tell you the main differences between private and federal loans - as you will see, federal loans have a lot of perks you don't get with private loans, things like income-based repayment options, forbearance and deferment, and generally lower rates.
If you do need to resort to private loans, the finaid.org website has a decent list of options - and you can find more with your own web search.

=Financial aid step by step=

So, let's put it all together into a step by step process to maximize your benefit from available financial aid.

First, fill out the FAFSA. As mentioned earlier, your eligibility for many attractive federal and state aid offers is determined by the FAFSA. It can now be completed online, without having to resort to paper forms, so why not give it a shot?
Second, aim to max out federal and state gift aid, as well as private gift aid. You want to get all the free money you can qualify for, before you resort to loans.
If after this you still need loans, then prioritize your loans as below. First, try for subsidized options, the Perkins and the Stafford, and consider also anything available from your state that may be subsidized or partially subsidized.
Then, move on to federal unsubsidized loans. If you didn't qualify for any subsidized options, you should always be able to at least get the federal unsubsidized loan, since that is open to everyone.
If you find you need even more loans, then you can resort to the federal PLUS parent loans and any private loans. But really, you should try to avoid having to resort to these.

If after you tally up everything, you end up using loans for part of your financing, make sure to keep track of your loan totals, and how much your estimated payment would be. The student aid website has some helpful tips on repayment options, and links to repayment calculators.

=Minimize college expenses=

In addition to maximizing your aid funds, another important step you can take is to minimize your costs. There are a lot of efficiencies you can squeeze out of the costs of college, which can all add up to non-trivial savings. This may be the difference between having to resort to loans, or getting away scot free with only gift aid!

Earlier, we have talked about university housing. Since the university tends to have somewhat of a captive audience, the cost of living on campus is often significantly higher than living a block or two away off campus. Recall that at Rowan for 2015, the cheapest on-campus housing option was about 8 thousand for the time school is in session - which adds up to about 8 months out of the year. If you live with a roommate off campus, you can just about halve this to around 4 thousand dollars.
We have also discussed earlier the cost of the meal plan. At Rowan, the meal plan for the year - or 8 months of eating, is over 4 thousand dollars. If you cook your own food, you can eat like a king for less than 200 dollars a month. Let's be generous and round that up to 2000 dollars for the 8 months. 
If you hustle, and investigate the option of getting used books and materials online, rather than at the university bookstore, you can often reap significant savings. Where the new edition of a textbook at the bookstore may run to 100 or 200 dollars, you can get a copy that's one or two editions older for 5 or 10 bucks. Let's face it, calculus and world history have not changed dramatically over the course of the past 3 years, the older edition will serve you just as well. This should let you save a good thousand bucks for the year.

Are you keeping track? We have so far saved 4 plus 2 plus 1 = 7 thousand bucks for the year. Not too shabby, eh?

Another important tip - don't leave credits on the table. The base university tuition usually covers a range of possible course loads. At Rowan, your basic tuition and fees allow you to take anywhere from 12 to 17 credits, all for the same price. If you take only 12 credits, you are just throwing away the opportunity to take 5 free credits. 

Relatedly, to graduate in 4 years at Rowan, you need 120 credits, or 40 standard 3-credit courses in total, which means taking 5 courses per semester. If you take only 4 courses per semester, you'd have to either stay around for an extra year - which is really costly, or make up the slack with summer courses - which will also cost you extra money. So don't be a slouch, max out what you pay for and take all the credits you can handle. If it is a choice between staying around an extra year, or taking some extra summer courses though, go for the summer courses, since that will end up cheaper.

Finally, another option to consider is to start your first two years at a county or community college, and then transfer into the four year college. The precise numbers may vary by your state, but in New Jersey, the annual cost of tuition and fees at a county college comes in at between 4 and 5 thousand dollars. Compared to 13K for Rowan, you are saving a good 8 thousand dollars just there. If you can live with your family while there, you are saving the 12K for room and board too, which adds up to a savings of 20K per year! Pretty sweet deal! 
Depending on your course of study, the county college bypass may be a very sensible option.

So, you have a lot of options, both for reducing the sticker price of college, as well as getting others to help you pay for it. 
Spending some hours of your time to apply for a bunch of financial aid, or a few hours to hunt for living quarters off campus, can net you many thousands of dollars. These just might be some of the highest-compensated hours you ever work in your life - so take advantage of the opportunity.

=Additional reading=

One great resource that I have already mentioned bears repeating - the student aid website from the US Department of Education is your friend, and you should spend some time to give it a thorough read.
Additionally, as always, the internet is your friend - if you want to find more college financing guides and tips, scholarship databases, loan repayment options, or anything - just ask your favorite search engine.

I hope the information in this lesson will assist you in taking a methodical and effective approach to paying for college. 
Thank you for your attention.

=Attributions=