Financing your education in a tough economy

According to The Consumer Financial Protection Bureau, outstanding student loan debt is now more than $1.2 trillion, and an average student borrower has $26,000 in debt.  The National Center for Education Statistics reports that this debt is a good investment, as young adults with bachelor’s degrees earn, on average, $15,000 more annually than those with a high school diploma. But, the growing prominence of student loans makes wise counsel for college-bound students and families more important than ever. 

“Financial aid advisors from the 119 United Methodist colleges and universities are available to help students navigate through the complex maze of financing their education,” said Gerald D. Lord, Associate General Secretary, Division of Higher Education of the General Board of Higher Education and Ministry of The United Methodist Church. “The goal is to help students graduate without drowning in debt.”

Alan D. Jackson, director of financial aid at Wiley College, Kristen Gibbs, director of financial assistance at Central Methodist University and Denise Fudge, vice president for educational outreach and student financial services at Lindsey Wilson College offer their best tips.

Start early

The process should begin early in high school. Focus on academics.

“If you don’t make the grade, you don’t get the aid,” said Jackson. “Students who excel in the classroom at a high level qualify for additional money, thus making college more affordable.”

Start saving portions of your birthday and holiday cash.

“People don’t think they make enough or have enough to put aside, but if you just put aside $10 a month, you’ve saved $120 a year,” said Gibbs. “That will buy a book. Every time you get money from grandma, put five or ten percent aside so that it accumulates.”

Gibbs knows her stuff. She financed one hundred percent of her own education through frugal living, hard work and outside scholarships.

“If a student spends an hour for one hundred Saturday mornings filling out scholarship applications and they even just get a $1,000 scholarship, they’ve made $10 an hour. That’s better than minimum wage,” she said.

Another tip is to think beyond academics and athletics. Gibbs says businesses and organizations offer scholarships for all sorts of eligibility. Included, the General Board of Higher Education and Ministry offers scholarships and low interest loans for students, and local congregations often offer additional assistance.

“There are definitely ways you can utilize your membership and relationship with the Church,” she said. “Beyond the obvious, the service that you do with the church may open up additional opportunities. As an example, you may be eligible for scholarships because of your history of service. So, there are direct and indirect ways to get financial aid through the church.”

Evaluate what you can afford

During your senior year of high school, fill out the Free Application for Federal Student Aid (FAFSA). Advisors say to submit the form as soon as possible after January 1 prior to the fall that you plan to start college.

“The latest I recommend filling it out is February 15,” said Gibbs. “Many schools have federal programs with limited funding that require a school match. Those funds are generally need-based, but they run out very quickly, so you don’t want to wait to fill out your FAFSA after you do your taxes. Base it on your W-2 or last year’s tax returns and you can go back in and correct it after your taxes are finished.”

Additionally during your senior year, contact the university you plan to attend to find out what institutional assistance you might be eligible for and what steps are required to get it.

If there is still a financial gap at that point, it’s time to explore opportunities. That’s where the financial aid office comes into play. Ask about any interest-free payment plans that your university might offer and research student loans.

Use loans responsibly

“Student loans are there for a purpose,” said Gibbs. “The average national student loan debt is $26,000. Many students will spend more than that on their first car, and that’s an investment that depreciates. It’s hard to find a bachelor’s or master’s degree that depreciates. Education is something that can’t be taken away from you.”

Denise Fudge says to be mindful of the debt you will have when you graduate and to borrow only what you need. “Just because you’re eligible for $5,000 doesn’t mean you have to take it,” she said. “You might only need $3,000 for your expenses. Just borrow the $3,000.”

Fudge also recommends researching on-campus work-study programs and off-campus part-time jobs.

It’s a marathon, not a sprint

Remember that the financial aid process doesn’t end when you step onto campus in your freshman year. You have to fill out the FAFSA every year.

Continue to focus on your grades to ensure you keep any merit-based scholarships and increase your chances for other funds in later semesters.

“The school that you attend may have additional scholarship opportunities based on your major,” said Fudge. “There could be internal and external opportunities based on your career goals.”

Also, continue to save and be aware of any unnecessary expenses that could cost you in the end.

“The biggest college saving tip for students is to avoid dropping class,” said Jackson. “When a student drops a class, both time and money have been wasted. The student is required to repay for the class in a subsequent semester prior to graduation.”

Adds Gibbs, “The old adage about a poor college student eating ramen noodles for four years so you can eat prime rib for the rest of your life came about for a reason.”

To learn more about United Methodist-related colleges and universities, visit the Division of Higher Education at http://public.gbhem.org/findyourplace/.

*Bannon is a Public Relations Specialist at United Methodist Communications in Nashville, Tenn.

Contact: Natalie Bannon, Nashville, Tenn., (615) 742-5413 or [email protected]

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