Financing your Online Education

Your Guide to Paying for an Online Education

The cost of getting a higher education these days has gotten fairly pricey and the increase shows no signs of slowing. While there are savings to be had in getting your education through distance learning and online classes, there are still considerable costs to keep in mind. Fortunately, however, the legitimacy of online education allows students to choose from all of the financing options available to traditional students as well.

It used to be that colleges had to follow a "fifty percent rule" in order to make their online course offerings eligible for federal financial aid. This rule stipulated that the school had to offer at least half of its courses for a program onsite at the school in a traditional manner for the other half (or less) of the courses to be eligible. In 2005, the Higher Education Reconciliation Act changed all of that, however by putting an end to the "fifty percent rule" and allowing universities to offer online degrees and programs exclusively and still have their students eligible for federal aid. Special accreditation is required by the school for their programs that are offered online, but this is not generally a problem for universities that are already have accreditation by the state.

Federal Financial Aid

Federal financial aid is a need-based system of providing loans to students in order to help them finance every aspect of their education. These loans are specialized in that they do not have to be repaid until after the student graduates from college or drops below part-time attendance. Federal financial aid loans come in both subsidized and unsubsidized formats, the subsidized loans being "interest-free" until after graduation when the loan repayment begins. Unsubsidized loans, on the other hand, will begin to accrue interest against them from the moment the loan is secured and will continue to do so until it is paid off.

Scholarships and Grants

Scholarships and educational grants are money given to advance a student's education based on various factors. They do not have to be repaid by the student and may or may not be available every semester the student is in school.

• Scholarships: Scholarships are usually given to students based on a particular merit, such as academic or athletic ability. Other scholarships may be given based on need, writing an essay, being of a particular race or gender or even sometimes just for luck. The amount of a particular scholarship can be anything from $25.00 to a "full-ride" scholarship which pays all expenses for school for four or five years.
• Grants: Grants are usually given based on need - they are money donated by various institutions or non-profit organizations in order to help fund education for those in need. You should check with your school's financial aid office to see if you are eligible for an educational grant.

Private Student Loans

Private student loans, unlike federal student loans, are based on your creditworthiness and are acquired through a bank, credit union or other financial lender by filling out an application for a loan. Like federal student loans, they may be subsidized (rarely) or unsubsidized, and do not have to be repaid until after the student leaves college. This option is best for those whose parents are still claiming them on their tax returns or who make a substantial living at other employment and are therefore ineligible for federal loans and/or who cannot get a scholarship or grant for whatever reason. If you have any inquiries, please visit our Frequently Asked Questions page.