The following tips are a collection of statements financial aid offices, and not just those for online universities, will tell you while you are having difficulties applying for financial aid. Don’t get pulled into the hype. Remember, if you hear the following statements don’t worry – there is a way out! “Our low tuition rate means less financial aid.” Many parents who haven’t saved enough for college tell their gifted high school seniors not to consider pricey private schools. Ironically, those colleges may actually be the more affordable alternative. “The more expensive and prestigious the school,” says Bedford, Mass., financial planner Tom Brooks, “the more likely it is well endowed and can meet 100% of need,” thanks to alumni donation campaigns. “You might be sending your kid to a state school that [for you] costs more than a Harvard or an MIT or a Stanford.” To estimate how likely it is that your preferred schools will give you substantial aid, check a few statistics with the colleges themselves or using the annual “America’s Best Colleges” survey in U.S. News & World Report, available at usnews.com for $14.95. Look for two figures: the percentage of undergraduates receiving grants meeting financial need, and the college’s average discount, which is the percentage of a student’s total costs — including tuition, room and board, and books — covered by grants. If they’re both 50% or better, you can feel assured that your needs will be fairly met. “You’ll pay dearly for early decision.” Early decision is a big temptation at elite colleges: Students can apply months before other applicants, as long as they promise to attend if admitted. In most cases, the college offers these applicants a better chance of acceptance. But when it comes to getting aid, early decision can backfire. Why? Your commitment to attend if accepted means you have less leverage. “If you went to an auto dealership and threw yourself across the hood of a car and told them you would do anything to have that car, you’re not in a very good negotiating position,” says Linda P. Taylor, a certified college planning specialist in Agoura Hills, Calif. If aid is your top priority, you’re better off skipping early decision. Especially if your kid’s SAT scores and GPA are above the college median, and she excels in extracurricular activities. If she applies in the spring and gets admitted, she’ll have a better shot at negotiating a rich aid package. “We don’t buy your pauper act.” Every year parents are tempted to cheat the aid system by trying to look poorer on paper — by going on a spending spree, perhaps. There are, however, some perfectly acceptable ways to adjust your assets to maximize your aid potential. Step one is to trim any assets held in the child’s name — in particular, custodial accounts (UGMAs or UTMAs), up to 35% of which the aid system will say should go toward next year’s tuition. For assets in the parents’ names, the rate is a much lower 5.65%. “Technically, parents can’t touch UGMAs except for the benefit of the child, above and beyond food and clothing,” says Tom Brooks. But “you can use the UGMA to pay for things like summer camp, tutoring, school trips or a car [for the kid], thus diminishing the account.” But if you’re looking to sock away some free-floating cash in your name, you could give up to $11,000 each — any more will trigger the gift tax — to grandparents or other relatives outside your household, who could then help pay tuition bills; aid officers can’t touch their assets. If your kid is a few years from college, be sure to contribute the maximum to 401(k)s or IRAs. Colleges won’t expect you to tap retirement savings to pay your share of tuition. “We’ll judge you by your house . . . and your car.” Fortunately for homeowners, the value of your house doesn’t get considered in most aid formulas. On the flip side, if you’re paying a fat mortgage or sky-high property taxes to live in an elite suburb, colleges likely won’t be too sympathetic. Here’s why: To determine aid, colleges calculate your expected family contribution from your adjusted gross income and assets. They usually don’t consider what your real disposable income is or how cash-strapped you might be after paying your stack of bills. “A moderately high-earning family spending most of its income on housing and other necessities may find that their expected family contribution is difficult or impossible to meet,” says Roger Dooley, co-owner of Web site CollegeConfidential.com. All is not lost, however. While most colleges do not automatically factor in regional cost-of-living discrepancies, some may if you ask. When writing or speaking to an aid officer during the application process, emphasize “involuntary” costs like taxes over voluntary ones like your mortgage, Dooley suggests. Your car is normally considered an involuntary expense, but elite schools sometimes ask what cars you own and when you bought them. If they’re too new and too swank, they may be considered voluntary expenses. “We’ll let you borrow more than you can afford.” Vickie Hampton, an associate professor of financial planning at Texas Tech University, knows that being well educated can make you poor. A colleague of hers, she says, racked up more than $100,000 in debt while earning a Ph.D. in English. “There’s very little probability of her paying that off in her lifetime!” Hampton says. The predicament isn’t unique, as more students take on excessive debt to finance degrees that lead to jobs in relatively low-paying fields. Unfortunately, college financial aid offices rarely discourage these decisions. While there are statutory limits on certain government loans — based on lifetime borrowing caps — there are fewer limits on loans from private lenders such as Sallie Mae, KeyBank or Citibank, three of the biggest players. If your student must borrow, exhaust federal programs first. Perkins loans or subsidized Stafford loans — both of which you may be offered after filing a Fafsa — are best; their 5 and 5.3% rates, respectively, blow others out of the water, and interest doesn’t accrue until the borrower leaves school. The Perkins, which you pay back directly to your school, is the slightly more flexible of the two, offering longer grace periods. Beware of unsubsidized Stafford loans, which your college may offer if your family doesn’t qualify for subsidized loans. Although these loans have similar low rates, interest will accrue from the moment the loan is made, even though payments aren’t yet required. While parents may also consider a federal Parent Loan for Undergraduate Students (PLUS) — which currently carries a 6.1% rate and has a rate ceiling of 9% — a home equity line may be a better bet, as it offers more generous tax benefits. Find more information on government loans at www.studentaid.ed.gov.

What’s that old saying? With the good come the bad? Take it with a grain of salt? No good deed goes unpunished? Unfortunately, they seem to be true in the light of the 42 online financial aid fraud rings that have been convicted since 2005. With the increase of online university enrollment comes the higher possibility for online financial aid fraud. According to a new report by the Department of Education’s Office of the Inspector General, there have been 215 fraud participants since 2005, cashing in about $7.5 million in restitution and fees to the online universities they swindle.  In fact, about 17% of the Office of the Inspector General’s cases involves financial aid scams. Why is this happening now? The reason online universities have seen an upswing in the amount of financial aid fraud is because federal aid laws were changed in 2005 to coincide with the boom of online learning.  Previous to 2005 colleges could not participate in federal aid programs if more than half of their student body were enrolled in distance-learning, or online, courses. Many of these fraudulent rings apply for financial aid for individuals who do not intend to take classes at all, or who are completely unaware of the application. One case involved an inmate of a South Carolinian prison who applied for $467,500 in aid in the names of her fellow inmates. The funds were al sent to the same address in the form of checks or debit cards, and the inmates were none the wiser that their names were helping their fellow inmate cash in on some big bucks. Colleges are fighting back To prevent this onslaught of financial aid fraud colleges are fighting back. Stricter identification verification techniques are being implemented, as are requirements of participation, grades, etc. to receive financial aid at online universities. Many online universities and community colleges have also hired teams with the specific job of identifying and exposing fraudulent cases in applications for the Pell grant.  

When covering the expense of an online university education, most students consider the online financial aid options of online grants, online scholarships and online student loans. Along with these private and federally funded programs, there is also the benefit of a tax credit that most students may not even realize. The federal government now offers several tax credits for students to help relieve the financial burden of pursuing a degree - including online university degrees. With these programs you may be able to save thousands of dollars on your tax return just by proving you’re an eligible student.

Federal Tax Credits for Online University Students

What is an Educated-Related Expense?

• tuition billed
• payments received
• scholarships
• current status

Financially affording a degree can be one of the biggest challenges of going back to school. After finding the time and motivation to pursue more education, you certainly don’t want finances to be the only thing holding you back. There are always online grants and online scholarships as well as online student loans, but what if you didn’t have to worry about any of that? What if your employer would foot the bill for an online university degree?

Employers Want to Pay for Your Online Degree

• Additional knowledge and skills. Employers want to ensure that their employees have the knowledge and skills necessary to not only do their job but to do it well. Earning an undergraduate or graduate degree in your field can provide you with the tools to do your job even better than before. In the process, your company gets a better educated employee without having to replace you.
• Retention. Employees are less likely to go searching for another job while their current employer is funding their education. There is increased loyalty to companies that are willing to provide such a huge benefit. Some employers add a caveat to their education reimbursement policies stating that the employee must stay for a certain period upon completion of the degree in order to get it all paid for.
• Continued work through classes. The one huge benefit of an online university education is that employees can continue to keep their work schedules since online courses are so very flexible. Employers get the benefit of having a more knowledgeable employee that can still work full-time.

What Employers Offer Tuition Reimbursement?

How do You Qualify for the Tuition Reimbursement Program?

• Time of Employment – You may need to have worked there for a certain period of time before or after your education. You may also need to meet a minimum number of hours per week if you aren’t a full-time employee.
• Accreditation – Some employers will only provide assistance if you attend an accredited online university. (Accreditation is an important characteristic of a college or university so be sure to look into that prior to enrolling.)
• Area of Study – Employers will want to know that the area of study that you are pursuing correlates to your current position. In other words, if you are an accountant you probably won’t be able to get a degree in psychology.

Starting your search for a traditional or accredited online university can often lead to concern about how to pay for your education. A great deal of time and energy as well as money is put into saving up for an online degree. If you’ve already considered a few school options you may be aware of what tuition will be and what your financial aid options are. You’ve armed yourself with all the information you could about what charges and fees you will incur while in school. That’s why when application time rolls around the idea of an application fee is just another headache that you may not have planned for. The experts at University Facts don’t want you to be surprised during the application process. Generally, online universities have done an excellent job at keeping application fees relatively low for prospective students. The goal is never to scare away someone because of a fee to just be considered.

Online University Application Fees

By the time most students have reached their intended college or online university they have, no doubt, heard about the importance of good credit. It is a life lesson that cannot be echoed enough. Starting off your credit history on the right foot sets the stage for all of your future financial decisions. It may not seem important to you now, but after graduation you’ll likely be looking for housing, a car, a job and maybe even another loan. Many of these may get tricky without any type of credit history. Many students are in the same boat when they start school – they’ve never had a credit card or needed to take out a loan. They have had a savings account since they were little and never overdrew their account. Most would believe their sound financial decisions would help start them off with an excellent credit score. They would be wrong. Just like the conundrum of entry-level positions requiring experience, getting credit requires having prior credit. In order to build a credit history you need to have some past credit: making payments on a loan, credit card or utility bill. The question then becomes how does a student loan reflect on your credit score?

Can Student Loans Help or Hurt your Credit?

How to Build Credit While at an Online University

• Open a checking account. Most students do this anyway, but keeping your account in good standing will help to start a credit history.
• A genuine student credit card is a good option. The offers you receive in the mail or online are generally cards directed at students that have high interest rates and large late fees. Avoid these, but instead look at legitimate student credit cards offered by your local bank or credit union. These institutions are not looking to take advantage of you. If you are unable to qualify, you could get someone to co-sign or they may even offer secured cards (basically a debit card that helps you build credit).
• Use your credit. If you have a credit card or checking account, use it. Even if it’s a cup of coffee or a pizza dinner, try to use your card or account from time to time. Make your payments in full and on time to build a solid credit history.
• Renting an apartment? If you have your name on a lease and send your rent check in on time this will have a positive impact on your credit.
• Put a utility (cable, electric, cell phone, internet) in your name. Any payment that you make on a monthly basis will help your credit score.
• That being said…pay all of your bills on time! One late payment can be reported to the credit bureaus and mess up your credit, even for a very small amount.
• Use good judgment! Don’t fall victim to credit card offers that seem too good to be true or sign-up because of the cool t-shirt they’re giving away. If you have a card already, don’t go over your credit limit and always make payments – the more you can pay towards the balance the better.

Saving money is a top priority for almost all college students. An online university education can certainly help reduce your costs, since their tuition and fees are so much lower than that of a traditional brick-and-mortar school. Nonetheless, student loans are still a reality for many students no matter what school they attend. The financial impact of a student loan generally isn’t felt until after graduation when most repayment plans begin. That first bill can come as a real shock, especially if you weren’t expecting it or didn’t calculate the interest. Affording a student loan payment can be a challenge for a freshly graduated student; most are in entry-level positions or haven’t yet found a job. It’s a time when young adults are trying to get settled, often in a new apartment or even a new city. Other bills become priority: the rent, a car loan, insurance, cell phone plan. A student loan bill may be last on your list of what gets paid each month. Unfortunately, the consequences of not paying that bill can be just as severe as not paying something that seems much more important.

Defaulting on a Student Loan

• A negative impact on your credit score affecting your chances of qualifying for a future loan or mortgage
• Automatic deductions from your paycheck
• Withheld income tax refunds
• Accumulation of late fees on the amount you owe
• Denial of additional financial assistance if you ever decide to go back to school

What is Student Loan Consolidation?

Should You Consolidate?

• Do you have trouble making your payments each month?
• Do you have multiple student loan payments that get lost in the shuffle?
• Are any of your interest rates variable?
• Are you many years away from paying off your student loans?

How do You Consolidate?

While an online university degree comes at a much lower price than a traditional school it can still take a toll on your wallet.  Most students enrolled in online universities have some additional financial needs after exhausting all of their scholarship and grant opportunities. Inevitably, student loans become a popular option for financing an online university education. Applying for online university student loans is a process that is done rather quickly to fill that need for extra financial assistance. It makes sense then that many students don’t give their loans a second thought until after graduation (unless, of course, they don’t receive a loan check on time!). It is important to know how your loan repayment will work so that you don’t get stuck with a big loan bill right after receiving your online degree or even before!

Know Your Repayment Terms

Federal Student Loans

• Interest accrues on a daily basis, so the amount of interest charged on your loan each month may vary.
• You may be able to reduce your interest rate by making payments electronically. Check into this option as soon as you begin repaying your loans. Every little bit you can save helps!
• A deferment allows you to temporarily stop making payments on your loan if you meet the eligibility requirements.
• Loan forgiveness is available to certain teachers and public service employees. Be certain to check into this possibility as it could save you thousands!
• Look into loan consolidation options if you have multiple student loans – it could reduce your payments.

Private Student Loans

Make Payments on Time

• Notification of national credit bureaus leading to a lower credit score
• Payments could be deducted automatically from your paycheck
• Income tax refunds could be withheld
• Late fees will accumulate adding to the amount you already owe
• You will be denied for additional financial aid if you ever decide to go back to school

Taking the time to get educated on student loans now can help keep hundreds (or even thousands) of dollars in your wallet after graduation. Don’t let finances be your reason for not continuing your education. With the advent of online universities, it has never been easier to work full-time and still go to school. Plus, there are a growing number of student loan programs available to help you receive that education.

Federal Student Loans vs. Private Student Loans

Federal Student Loans

• Funded through the U.S. Department of Education through the Direct Loan Program
• Include Stafford, Perkins, Parent PLUS, and GradPLUS loans (each are described below)
• You must complete a FAFSA to receive federal student loans
• Interest rates are fixed
• Given directly to the student from the chosen school instead of from the lender
• Loan forgiveness programs exist for some students who choose to teach in designated low-income schools or work in public sector jobs

Types of Federal Loans

Private Student Loans

• Funded through a private lender such as a bank or credit union
• Can be taken out in the student’s or parent’s name
• Will require a credit check and often a co-signer
• Usually has a variable interest rate which is higher than federal student loans
• Has higher borrowing limits than federal student loans
• Commonly referred to as alternative student loans

Subsidized vs. Unsubsidized Student Loans