How Financial Aid for Online Degrees Works

Applying for and Receiving Financial Aid

Since you're planning to study online, you'll master the online financial aid process with no sweat. The first step is to complete the Free Application for Federal Student Aid or FAFSA that we just mentioned. The step-by-step application determines your ability to pay for school, and your eligibility to qualify for need-based loans and grants from the federal government. You can submit this application starting on Jan. 1; apply early and remember that federal, state and school application deadlines are often different, so be aware of the time lines.

Within three weeks of submitting the federal application, you and your prospective college(s) will receive what's called a Student Aid Report (SAR). At this point, school financial aid officers will review your application for aid to determine how much the institution will give you in scholarship and aid, and help you secure federal loans.

After being accepted to an online program and offered financial aid, you'll want to compare the offers before making a commitment. No two online colleges charge the same amount for the same degree. Similarly, not all schools will offer you the same financial aid package or terms. A school that wants you as a student will make a greater effort to put together the financing you need. Carefully compare interest rates, terms and benefits, and remember you may not even need a loan if you choose a less expensive online school.

If you do plan to take out a government or private loan, your school's financial aid office should assist you in the application process. College financial aid officers are prohibited from guiding prospective students to "preferred lenders," but will help you find the loans for your situation. Don't feel pressure to take out a loan, especially if it's tied to enrollment. Again, compare admission and loan offers simultaneously to determine the best aid package and education [source:].

If you're earning your online degree while working, ask your employer to pay for a part of your tuition. Many members of the military earn college degrees online as a benefit of their service, and recently, the U.S. Department of Defense expanded the benefit to include spouses, paying up to $6,000 for post-secondary education including distance learning.

Finally, look for other ways to finance your online degree. The College Board's Web site has a database of more than 2,300 sources of college funding, totaling nearly $3 billion in available aid.

Keep the online experience going and explore the related links on the next page.

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