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Online Student's Guide to Un­der­stand­ing Financial Aid and the FAFSA

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Federal Financial Aid is available for online students enrolled in accredited degree programs.

Whether you’re pursuing a bachelor’s degree as a first-year student beginning your college degree, a nontraditional or professional student, or a graduate student getting a master’s or Ph.D., who has chosen to earn your degree online, you may need some financial help to pay for your program.

No doubt there’s significant sticker shock when students and families begin looking at the cost of a college education. Tuition. Miscellaneous fees. Materials. College costs have increased by 1-2% across the board, and the price tag for an undergraduate degree is challenging for most students and their families.

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In the U.S., help to pay for college dates to the 18th century, and today’s modern investment in college education began following World War II with the establishment of the G.I. Bill in 1944. This program provided stipends to returning veterans to cover college or trade school expenses and tuition. In 1965, President Lyndon Johnson signed the Higher Education Act 1965, which began the development of financial aid as we know it today.

Each year, over $120 billion in work-study, grants, and loans to colleges and universities for students is made available by the U.S. Department of Education. In 2020, nearly $100 billion was invested in student financial assistance by states. Annually, this aid goes to more than 10 million students attending more than 5,600 colleges, community colleges, universities, and technical schools.

College Consensus is here to help explain some of the ends and outs of the financial aid puzzle. This isn’t as complicated as it may seem, but you’ll want to be sure to complete all the steps.

Let’s begin with some common questions:

  • I’m an online student. Do I qualify for aid? (yes)
  • What Financial Aid Is Available?
  • How Do You Apply for Financial Aid?
  • My employer offers tuition reimbursement. Can I still receive financial aid?
  • What is the FAFSA?

What Financial Aid Is Available?

There are some misconceptions about financial aid that we want to dispel. One myth is that online students aren’t eligible to receive financial assistance. Some people believe it’s only for very low-income students. Students sometimes think scholarships are only for students of high academic standing. That grants have to be repaid. All of this is untrue.

Grants – Grants come with the following names and don’t need to be repaid (unless you leave school and owe a refund) :

  • Pell Grants
  • Federal Supplemental Educational Opportunity Grants (FSEOG)
  • Teacher Education Assistance for College and Higher Education (TEACH) Grants
  • Iraq and Afghanistan Service Grants

Scholarships are gifts made by schools, nonprofit organizations, individuals, employers, religious groups, business organizations, etc. Scholarships may pay for your entire education or certain charges (such as tuition, books, etc.) and come in three categories:

  • Merit scholarships are usually based on particular skills, academic achievement, interests, etc., as determined by the person/group funding the scholarship.
  • Need-based scholarships where the student’s financial situation is determined for scholarship consideration
  • Other scholarships are available for certain groups, i.e., minorities, women, etc.

Veterans Benefits – You’ll find many online degree programs are veteran-friendly, have departments dedicated to veteran affairs, and participate in the Yellow Ribbon Program. You’ll want to discuss your eligibility for veterans’ benefits with a financial aid counselor or admission advisor.

Loans – The William D. Ford Federal Direct Loan (Direct Loan) Program are loans you borrow and repay with interest. The federal government serves as the lender for these loans. There’s been much publicity about student loans, and you’ll want to know what type of loan you’re receiving. The four types of student loans include:

  • Direct Subsidized Loans (need-based)
  • Direct Unsubsidized Loans (not need-based)
  • Direct PLUS Loans (graduate, professional students, or dependent undergraduates)
  • Direct Consolidation Loans (allows you to combine all your student loans into a single loan)

College Work-Study – The College Work-Study program isn’t always available for online students. It’s a need-based work program that pays you for part-time work in school departments or nonprofit agencies. These funds can be used for school or living expenses and aren’t repaid.

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Are Online Degrees Less Expensive?

There’s some debate on whether an online degree is cheaper than a traditional degree.

The amount you’ll pay in tuition will depend on various factors, such as location and whether the school is public, private, two-year, or for-profit. Some schools charge online students in-state tuition regardless of residency status, but not all.

Overall as an online student, there are expenses such as on-campus housing, school food service, transportation, etc., that aren’t calculated in what your total costs are for school. However, you may be charged special online fees, which vary from school to school, and may be included by the financial aid staff in determining your Cost of Attendance.

Here’s where it gets complicated. Frequently, online tuition and fees are slightly less than for in-person students. According to U.S. News and World Report in 2020, the average cost for an online bachelor’s degree was between $38,496 and $60,593, or an average of $282 per credit hour or $3,400 for a 12-hour semester (full-time). Fees may run $25-$100 per semester.

National Average Bachelor’s Degree Tuition Cost

For the academic year 2021-22, U.S. News and World Report reported the national average for college tuition (regardless of online or in-person) for an undergraduate bachelor’s degree at public and private schools to be:

Private: $38,185

Public Non-Resident: $22,698

Public Resident: $10,338

National Average Associate Degree Tuition Cost

There’s some good news on the community or technical college tuition front. Recognizing that an educated workforce is a better workforce, more and more states are taking the extra step to provide their in-state students with free tuition and fees at community or technical colleges.

Students also are finding that taking their first two years of college at a less expensive community college saves money and lets them enter a four-year undergraduate program as a junior.

The Education Data Initiative estimated the average tuition cost for a two-year associate degree from a community or technical college:

Public Resident: $4,864

Public Non-Resident: $8,210

Private: $25,000

National Average Master’s/Ph.D. Degree Tuition Cost

Public: $54,500

Private: $81,100

College Consensus is here to help explain some of the ends and outs of the financial aid puzzle and how it may apply to you.

Getting It Together

Completing your FAFSA will be easier if you have all the information together before you begin the form. The Federal Student Aid site recommends you have these seven pieces of information ready:

  • FSA ID
  • Driver’s License Number
  • Social Security Number
  • Federal Income Tax Return (Be sure to have the form for the tax year requested on the FAFSA)
  • Untaxed Income Information (i.e., employer-supported tuition, child support, veterans’ noneducational benefits, interest income)
  • Asset Records (savings, checking, real estate, bonds, stocks, etc.)
  • List of Schools to Receive the FAFSA information

How Do You Apply for Financial Aid As An Online Student?

To qualify for federal financial aid, as an online student, you must complete the Free Application for Federal Student Aid (FAFSA®) available online. It’s a simple, 8-step process:

  1. Create a Federal Student Aid ID account username and password. Both dependent students and their parents each need to create an FSA ID.
  2. Start the FSA by answering whether you’re the student, the parent of a student, or if you’re a preparer completing the form for the student.
  3. Complete the demographics section (legal name, birthdate, etc.) No nicknames. You may go by the name “Bob,” but if your legal name is “Robert,” use that.
  4. List the schools you want to receive your FAFSA information from. Include every school you’re considering here, even if you’ve not applied or been admitted. The form will only be seen by the individual school officials (other schools you’re considering won’t be shown.) You can list up to the ten schools (more, if you need, but there are special instructions for that.) Each school has a number you’ll use on the FAFSA form
  5. Determine your dependency status. This gets tricky since Congress sets the guidelines for dependency. The form asks ten dependency questions and will determine your rate based on your answers. Independent students use only their financial information on the FAFSA form, and dependent students will use their parents’ information.
  6. Provide parental demographic information (if you’re classified as a dependent student)
  7. Income tax information is required. This can easily be transferred by using the IRS Data Retrieval Tool (DRT)
  8. Be sure to sign the FAFSA form. This can be done online with your FSA ID, which is the fastest way.

Deadlines Deadlines Deadlines

Yes. Deadlines for admission and financial aid are critical, especially when it comes to financial assistance. Schools are allocated only so much in federal financial aid based on a variety of factors, and once that pool of money is awarded, it’s gone.

While applying for and receiving financial aid seems daunting, it’s not as difficult as you may think and can have great rewards. Hopefully, this guide gives you an idea of how the process works, what’s available to you as an online student, and what to expect. Some final words of advice:

  • Talk with your high school guidance counselor or school’s financial aid office to see if there are financial options you haven’t thought about
  • Be sure to know your school and state deadlines for making an application for financial aid.You must complete the FAFSA each academic year.
  • Complete the FAFSA even if you don’t think you’ll qualify for aid. You never know if there’s a scholarship or grant you could receive that requests that information.
  • Explore other possible sources of assistance. You may find churches, employers, organizations (think nonprofit clubs in your community), and professional groups that provide scholarships or loans.
  • If you’re working, talk with your direct supervisor or Human Resources Department to see if your employer has a tuition reimbursement, tuition assistance, or student loan program.

You’ll want to complete and submit the FAFSA as soon as it’s available. The FAFSA is available on October 1st. Schools will set their own deadlines for when you must submit all required information to their Financial Aid Office. These will be hard deadlines and are as important as meeting your school’s admission deadline. Be sure you meet any school deadline for additional Financial Aid information.

Now What?

So, you’ve completed and submitted the FAFSA. What happens now?

The FAFSA uses the information on your income, assets, untaxed income, etc., and calculates your Expected Family Contribution (EFC). The EFC is determined and set by law and used by the financial aid staff to award your financial aid package.

What’s Included in the Cost of Attendance Budget?

The financial aid staff develops Cost of Attendance (COA) budgets for their school, which include estimates of tuition and fees, room and board, books, supplies, transportation, child support, costs of disability, etc. Your dependency and residency status, i.e., in-state or out-of-state, are taken into account by the financial aid office when applying a Cost Of Attendance (COA) for you. The school accounts for non-residents who typically pay more in tuition and fees. As an online student, however, many schools don’t charge out-of-state tuition, but that will depend on the school.

Is The COA Different Since I’m An Online Student?

As more first-year and nontraditional students earn degrees online, schools will more than likely have a specialized Cost of Attendance budget that takes that into account. Certain costs that in-person students pay, such as transportation, housing, food, etc., may not be factored into your COA as an online student. Other costs, such as special fees for online students, will be substituted in the COA.

Your financial need will be determined by subtracting your Expected Financial Contribution from the Cost Of Attendance. For example, if your COA is $15,000, your EFC of $11,000 is subtracted, and your financial need at $4,000.

Your financial aid package will be developed to meet your financial need as closely as possible. Schools typically will award need-based programs first, such as grants (Pell Grants, Federal Supplemental Educational Opportunity Grant (FSEOG), state grants, and scholarships.

Once these programs are applied to your financial need, and if additional funding is unmet, schools will offer loan packages (Direct Unsubsidized Loans, PLUS Loans, or Teacher Education Assistance for College and Higher Education (TEACH) Grant (requires a service obligation.) You can accept the aid package as awarded or any part of it. If you don’t want to take out a loan, you can decline that portion of your award package.

A Note To Graduate Students

While graduate students aren’t eligible for federal or state grants, they may receive loans (the FAFSA is required.) Some schools may award online graduate students departmental grants. Frequently, working graduate students may receive assistance in the form of tuition reimbursement from their employer. You’ll want to check with your Human Resources Department to see if there are any funds available to help.

Ready to start your journey?

Ready to start your journey?