The Parent’s & Guardian’s Guide to Financial Aid

Despite what you hear about never-ending tuition hikes and mounting college debt, investing in a college degree is still a worthwhile investment. Over a lifetime, today’s college graduates earn 85 percent more than their counterparts with just a high school diploma. Even community colleges can offer a great return on investment with some two-year degrees out-earning four-year degree holders in certain fields.

Still, there is no denying college is expensive. The online route, however, can offer substantial savings, especially on big-ticket items like room, board, and tuition. This article aims to identify the real costs of how much an online education program should cost, as well as some effective ways for parents and students to pay for a quality online education.

How Much Will it Cost?

The sticker price for college tuition is often significantly higher than the net price most will actually pay. While there are a lot of scary tuition numbers out there, there are plenty of financial aid options that make college far less expensive. Since it is often a challenge to determine the net price of a school, don’t rule out any based on its sticker price alone — not until you get the financial aid offer.

Sure the price for a college education has skyrocketed in the last five years, but grants and scholarships have grown at a similar rate, so the average net price of a college degree has grown much more slowly than most people think. In fact, the net price of a private college has actually dropped over the last five years, from an annual sticker price of $24,770 and a net price of $13,520 in 2006-2007 to a sticker price of $28,500 but a lower net price of $12,970 in the 2011- 2012 school year.

The sticker price of public colleges and universities doubled from $4,280 in 1996-1997 to $8,240 in 2011, but the net price saw a much smaller jump: from $1,910 in 1996 to just $2,490 in 2011, according to NPR’s Planet Money.

The Highest and Lowest Priced Schools

Looking at average college costs gives a broad picture of the price of online undergraduate programs, but it can obscure how widely tuition ranges.

Assuming a credit load of 15 credits per semester, here are five of the cheapest programs by per credit tuition, according to the U.S. News and World Report.

  1. Oklahoma Panhandle State University: $115 per in-state credit hour and $185 for out-of-state. Semester in-state total is $1,725, while out-of-state total is $2,775.
  2. Northern State University (S.D.): $124 per in-state credit hour, for a semester total of $1,860. O$186 for per out-of-state credit hour, for a semester total of $2,790.
  3. Lee University (Tenn.): $175 per credit hour for both in-state and out-of-state students; the semester total is $2,625.
  4. Fort Hays State University (Kan.): $178 per credit hour for both in-state and out-of-state students; the semester total is $2,670.
  5. Arkansas State University: $181 per credit hour for both in-state and out-of-state students; the semester total is $2,715.

Here are five of the most expensive programs by per credit tuition, according to the U.S. News and World Report.

  1. Davenport University (Mich.): Tuition per credit is $1,267, bringing the total up to $19,005 per semester.
  2. St. John’s University (N.Y.): Tuition per credit is $1,158, which totals $17,730 for the semester.
  3. Lawrence Technological University (Mich.): Tuition is $910 per credit, $13,650 for the semester.
  4. Graceland University (Iowa): Tuition per credit is $710, adding up to $10,650 for the semester.
  5. Savannah College of Art and Design: Tuition per credit is $709, while the semester total is $10,635.

Online Savings

Students can save a significant amount of money when they join onto an online educational program. Skipping out on the dorm room can save thousands on its own. The average cost of a dorm room was around $4,600 during the 2009-10 school year, plus another $4,000 for boarding over the same year.

Online tuition is often cheaper than traditional options, especially among newer online colleges and public universities — but not always. For example, Colorado State University charges in-state students a rate of $1,050 for a three-credit course, which is nearly $100 more than a three-credit course offered at the school’s brick-and-mortar campus.

How You Pay For It

While the sticker price alone doesn’t necessarily determine the cost of a degree, it will undoubtedly cost you something. There are many options for financing a program, and it’s important to note online programs qualify for the same federal aid as brick-and-mortar programs.

Here is a quick overview of finance options.

  • Federal Pell Grants: Unlike a loan, grants don’t have to be repaid. The maximum Federal Pell Grant award is $5,550 for the 2012–13 award year; the amount of the grant depends on need, cost of attendance, and a student’s status. To be eligible, students need to fill out the Free Application for Federal Student Aid (FAFSA).
  • Institutional Need-Based Grants: Many institutions offer their own need-based grants using income data collected through the FAFSA application process. For instance, students are automatically considered for the University of North Carolina Need-Based Grant when they submit their FAFSA and list UNC as their college of choice. Check with your state or institution financial aid office to see what other grants may exist.
  • Institutional Scholarships: Similar to grants, many institutions offer a range of scholarships for eligible students. Some are based on need, others merit, and a few are given out for criteria like minority status or a specialized field. The award amounts vary from a full-ride covering tuition and books to just a few hundred dollars per year. Many institutions consider applicants for scholarships when they submit their application, but you should check to see if there is a separate scholarship application process — many are in the late winter or early spring prior to enrollment in the fall.
  • Local Scholarships: There are thousands of local scholarships available to students. Local scholarships often use financial data from the FAFSA, but require a separate application process. Browse scholarship databases such as the OEDB financial aid guide or the FastWeb scholarship search to check your eligibility. Scholarships are based on both need and merit — and the awards can range from several hundred dollars to more than $10,000.
  • Federal Loans
    • Parent Plus Loans: PLUS loans are federal loans that a parent of a dependent undergraduate student can use to help pay school expenses. Parents can take up to the total cost of a student’s cost of attendance, minus any other financial aid received. The school itself will determine the student’s cost of attendance through the FAFSA, and parents can opt to take out a Plus Loan to cover anything else that financial aid isn’t able to cover.
    • Stafford Loans: Subsidized and unsubsidized federal Stafford Loans are two of the most common ways to pay for college. Direct Subsidized Loans have slightly better terms than the unsubsidized, and are based on need. The school determines the actual loan amount the student is eligible to receive each academic year. Student’s will be considered through the FAFSA.
    • Perkins Loans: Undergraduate and graduate students with exceptional financial need may be eligible for low-interest federal student loans. Undergraduate students can borrow up to $5,500 a year – up to a total of $27,500.
  • Private Loans: Private loans are generally to be used only after a student or parent has exhausted all available federal options. Lending options in the private loan industry can vary in terms of borrowing limits, interest rate, and minimum payments. Use this guide to research potential options including loan limits, interest rates, fees, and loan term for the most popular private student loan programs.

College is a major investment that should be carefully calculated and considered. There are many ways to finance a degree, and if you’re considering online programs, you should be spending less than your brick-and-mortar counterparts.