January 5, 2009

Distance Learning, Part 3: Financial Aid

Welcome to part 3 of our series on distance learning.  You can check out past posts on whether online classes are right for you and what the significance is of accreditation for distance learners.

Today, I am focusing on financial aid for distance learning.

Here’s the good news:  As long as you are attending a nationally accredited program (here’s a link to a list of accredited online schools), you are eligible for the same federal and state financial aid as a student attending a brick and mortar school. This also applies to most private scholarships, although some scholarship committees may chose to give priority to students at a B&M school.  On the other hand, there are a growing number of scholarships specifically designed for distance learners, so you may even be at an advantage when it comes to private aid.

Let’s take a look at the various forms of financial aid available and what you need to do to qualify.

Student Loans
There are a variety of loans designed especially for college students, including federal government loans and private loans.  To qualify for federal loans, which are called the Stafford and Perkins loans, you must complete the FAFSA application, the Free Application for Federal Student Aid.  This form includes information about your and your family’s financial ability to pay for schooling.  You can find the form at www.fafsa.ed.gov or at your school’s financial aid office.

Whether you take out a private loans or federal loans, or some combination of the two, you will be required to pay back the principle of the loan plus interest upon your completion of school.  While you are enrolled in school, you are in so-called grace period, meaning you do not need to make payments on your loan.  With private loans, your interest will start to accrue while you are in school; with some federal loans, interest accrual will also be in a grace period during your studies.  Once you graduate, if you drop out or even if you just take a semester off, your grace period ends and repayment must begin.

As a rule, government loans have lower interest rates and more flexible repayment terms.  However, the total amount you can borrow is capped and it does not always meet the total need of every student.  Many therefore turn to private loans — in addition to or instead of federal loans.  Be sure that you understand all the information about your student loan repayment terms before signing on the dotted line.  Student loans are not bankruptable, so even if you encounter a dire financial emergency, you will still be required to make good on your student loans.

Grants are gifts of money that do not need to be paid back. There are federal, state and private sources of grants. To qualify for a federal grant (the most common is the Pell Grant), you must complete the FAFSA. Most federal grants require that you have extreme financial need and maintain a minimum GPA.

State grants are often available to children of service officers, particularly those who were wounded or killed in the line of duty. There are also a wide variety of grants for minority students. 

The Financial Aid Finder website has a comprehensive list of grants for African American students, grants for Hispanic students, grants for students with disabilities, and grants for women students.

Like a grant, a scholarship is a gift of money that does not need to be repaid. Scholarships are often awarded based on academic ability, athletic ability, or artistic or musical talent. Some scholarships support students from a particular city, heritage or religious background. There are even plenty of unusual scholarships for things as innate as being left-handed or as obscure as wearing duct tape to your senior prom.

Start your research into scholarships at your school’s financial aid office (even online programs now offer financial aid counseling!) or online. But be warned: While there are dozens of reputable online search engines, any site that asks you to pay them for their scholarship info is a scam.  Here are more tips for picking the right scholarship search engine.

That’s it for me on financial aid for distance learners. Questions? Comments? Personal experience with applying financial aid to your online school’s tuition?

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