College costs have risen over the past several decades, which means the majority of college students pursuing higher education are in need of financial assistance. In addition to tuition costs, students must pay hefty prices for textbooks, dorms or residence halls, meal plans, parking, and other associated expenses. Luckily, students can find several options to help pay for college. They should start researching these options early on, creating a financial aid plan long before they step foot on campus.
Every student should fill out the Free Application for Financial Student Aid (FAFSA) to learn whether they qualify for loans or grants from the federal government. They should also thoroughly explore all of their scholarship, fellowship, and assistantship options from their schools, professional associations, and nonprofit organizations. However, the more money students can save beforehand, the less they need to worry about discovering other avenues to finance their college education.
Free Application for Federal Student Aid (FAFSA) for Psychology Students
The FAFSA serves as a one-stop-shop for students to learn whether they qualify for grants, work-study, or loans from the federal government. The U.S. Department of Education (ED) encourages every student to fill out the the FAFSA, regardless of age, income status, major, or level of education. The ED has set Oct. 1 through June 30 as the window for filling out the FAFSA, but each state has its own deadline so students should be sure to check the FAFSA website for specifics.
The easiest way for students to apply is to fill out the application online, but students may opt to print out or order a physical copy of the application as well. Applicants need several documents and important pieces of information to help them fill out the form, including the following: a social security number; parents' social security numbers if the student is a dependent; a driver's license number; federal tax information or tax returns for either the student or the student's parents; records of untaxed income; information about other investments; and an alien registration number if the student is not a U.S. citizen. Applicants are not required to send any of these documents in to the federal government, but the information from these documents is important in determining whether students receive federal aid.
Using Savings to Pay for Your Psychology Degree
Personal and Family Savings
One common college fund is the 529 plan, which allows parents to put money aside in a specific account for their children's higher education expenses. States, state agencies, and schools sponsor the college savings plans, and parents receive tax exemptions, deferments, or other benefits for these funds. Students with 529 plans can only spend this money on higher education expenses.
Students might also consider beginning personal savings accounts for themselves. These savings accounts serve as a financial base for tuition or other education expenses, and students should consider how exactly they want to distribute these funds in terms of their overall living costs. For instance, if a student saved $10,000 in high school and invested every penny into tuition, he or she would have nothing left in the case of an unexpected medical emergency.
Parents might also opt to pull money from their retirement funds to pay for their child's higher education tuition. Adult students headed to university later in life or returning to graduate school may want to dip into their retirement funds as well. Although the IRS fines people under retirement age who withdraw from their Roth IRAs with a 10% penalty, there are exceptions for people withdraw specifically to pay for college. However, people who withdraw from traditional IRAs are still subject to federal and state tax.
Students and parents considering dipping into retirement savings should keep in mind that this may impact their chances of qualifying for financial aid. IRA withdrawals count as taxable income and must be listed on a FAFSA. If students report greater income levels, the federal government offers up smaller loans than the students may have otherwise received.
Free Money for Your Psychology Program
Psychology students seeking help with finances should apply for graduate psychology scholarships and undergraduate psychology scholarships, which are essentially gifts from various organizations. In other words, students are not obligated to return the money. Scholarships for psychology majors may be sponsored by professional associations (which offer money to students pursuing a major within a particular field), private companies, nonprofit organizations, local groups and community foundations, and religious organizations. Colleges and universities offer scholarships as well, but since these groups typically have limited funds or a finite number of awards available, scholarships are extremely competitive. Selection committees often examine students' academic and extracurricular records. Sometimes, scholarship contests require students to write an essay or compete in some other creative endeavor.
Many students view scholarships as the ideal financial aid option, especially since they have no impetus to return the money. Students should remember that some competitive scholarships -- like those that require applicants to write essays -- can consume a considerable amount of time. Scholarship applicants, therefore, should be strategic when considering which scholarship contests to enter. Students may optimize their chances of landing scholarships by applying to those that will likely attract a smaller number of applicants, such as niche scholarships or those sponsored by local organizations.
Psychology Undergraduate Scholarships
Who Can Apply: The American Addictions Center gives out three scholarships to students enrolled in an academic program concerning mental health. To apply, students must have a minimum 3.2 GPA and will need to write a first-person essay about mental health, behavioral sciences, or addiction.
Who Can Apply: Each year, the National Institutes of Health offer scholarships to undergraduate students who are studying biomedical or behavioral health and come from low-income backgrounds. Applicants must have a minimum 3.3 GPA and show "exceptional financial need." In addition to a scholarship, winners receive paid research training and employment at the NIH after graduation.
Amount Up to $20,000
Who Can Apply: Undergraduate students studying psychology in good academic standing may apply for the Psi Chi Undergraduate Scholarships. Eight scholarships are awarded to undergraduate students each year.
Psychology Master's Scholarships
Who Can Apply: The Melanie Foundation offers scholarships each year to four or five recipients. Candidates must be enrolled in a master's or doctoral program in the mental health field at an accredited university. Along with a transcript, CV, and two letters of reference, applicants must submit an essay about why they chose to go into the mental health profession.
Who Can Apply: This scholarship, presented by the American Psychological Association (APA) of Graduate Students, gives $1,000 and a round-trip ticket to the APA's annual convention to one student member. Candidates must write a paper about psychology and ethics (25 pages maximum) to apply. Applicants must be psychology graduate students in good academic standing.
Who Can Apply: Eight scholarships are awarded each year to graduate students studying psychology. Candidates must be Psi Chi members and in exceptional academic standing.
Psychology students may apply for grants, which typically come from a government organization or nonprofit institution. Grants sometimes require that applicants write an essay or proposal to compete for the award. Organizations usually give out grants for a particular purpose -- for example, a grant recipient might agree to write a research paper for the sponsoring organization. Other grants may be need-based and offered to low-income or disadvantaged students who can demonstrate that they need grant money to pay tuition and other education costs.
To track down grants, students should research whether different public agencies, nonprofit organizations, or professional associations offer any grant awards. Psychology students might try the APA, which offers grants and hosts a search portal for grants on its website. Much like scholarships, grants appeal to students who would rather avoid taking out loans and paying them back with interest. However, some grants demand a considerable amount of time from students, as students may be expected to write a proposal and then carry out the research. Not only that, but students are not guaranteed to receive the competitive grants, which may mean investing a lot of time into an application without any reward. Therefore, competitive grants may not be the best option for students with other commitments and time constraints.
Fellowships and Assistantships
Typically reserved for graduate students, fellowships and assistantships offer funds and other potential benefits such as health insurance or living stipends. Assistantships allow graduate students to work on campus by teaching beginning undergraduate-level classes or engaging in research with a department. Graduate students with assistantships receive salaries to help cover education expenses. Students may also receive tuition waivers, in which case they may spend their salaries on other living expenses. Some schools give health insurance to students with assistantships as well.
While assistantships are generally sponsored by schools, fellowship programs may be run by schools or professional associations. Fellowships come in the form of scholarships that students can use to pay for education or living expenses. Some organizations offer fellowships that involve no other requirements beyond pursuing a particular major, while others dictate that students must complete a research project or some other commitment before graduation. Students should check with schools on what types of scholarships and assistantships are available.
Federal Student Aid Programs
Federal financial aid consists of money that comes from the federal government through loans, grants, or work-study opportunities. Psychology students can identify what type of aid they qualify for and how much funding they can receive through federal programs by filling out a FAFSA. Specifics about the different types of federal financial assistance available are explained below.
Federal Direct Loan Programs
The William D. Ford Federal Direct Loan Program allows students to borrow money from the federal government, which in turn serves as students' lender. This program offers four types of student loans: subsidized loans, unsubsidized loans, PLUS loans, and consolidation loans. Low-income undergraduate students who can demonstrate that they need financial help qualify for subsidized loans, and the ED pays the interest as students pay back the loans. Undergraduate and graduate students may take out unsubsidized loans whether they have financial need or not. Upon graduation, students must pay back both the initial sum and accrued interest. PLUS loans cover whatever education costs are not covered by other financial aid. Undergraduate and graduate students may participate in the PLUS loan program, as well as parents who support undergraduate students as dependents. The direct consolidation loan program allows students to bind all of their loans together through one loan servicer.
Undergraduate students may borrow $5,500 to $12,500 in subsidized and unsubsidized loans each year. Graduate students qualify to take out more -- up to $20,500 in unsubsidized loans per year. Students should keep in mind that if they take out unsubsidized loans, they must pay back interest once they've graduated; however, direct federal loan programs don't require graduates to start paying back their loans until one year after college. In addition, federal interest rates are always lower than interest rates on private loans.
Federal Perkins Loans
Students with financial need may be eligible for the federal Perkins Loan program, which presents low-interest loans to low-income undergraduate and graduate students. Undergraduate loan recipients may receive up to $5,500 per year, or $27,500 over the course of the student's program. Graduate students may borrow up to $8,000 a year, or a maximum of $60,000.
Students should apply by filling out the FAFSA. Although this is a federally sponsored program, the student's school serves as the lender. The school applies the money to a student's tuition or other education-related expenses. Federal Perkins loans may work as good options for students without other financial resources upon enrolling in college, but students should have a plan for paying back the money, plus interest, after graduation. Loan recipients have a nine-month grace period after graduation before they must begin a repayment plan.
Federal Work-Study Program
Colleges and universities participating in the Federal Work-Study Program offer part-time jobs to students, and wages earned are meant to help students pay for school expenses. Jobs vary, but the program encourages schools to hire students in a position related to their majors and future careers. Students may find jobs either on campus, where they are paid by their schools, or off campus. Off-campus work is typically with nonprofit organizations or public government agencies.
The number of hours worked per week varies, but students cannot work overtime, nor can they receive more pay than their federal work-study awards allow. Wages also vary, but students always receive at least the federal minimum wage. Specific salaries depend on the student's experience level and the amount of funds available to the employer. Schools pay undergraduate students by the hour, but graduate students may either be hourly or earn a salary. Employers participating in the work-study program pay students at least once a month.
School-Based Financial Aid
Universities and colleges frequently offer scholarships, grants, or fellowships to help students pay for their tuition expenses. These scholarships are often competitive and created for students with high academic achievement, those who are athletically gifted, or those who excel in another skilled area such as music or art. Students should research available awards by visiting their schools' financial aid office or reading up on their financial aid page online. They should also check with the school's psychology department, which may present scholarships or fellowships specifically to students pursuing a psychology degree. Like any other competitive scholarship, school-based financial assistance may require students to write an essay, research proposal, or to submit letters of recommendation. Therefore, students should make note of deadlines and give themselves plenty of time to prepare their applications beforehand.
Students also have the option of applying for state-sponsored aid. Many states offer programs that cover college costs for students who reach elevated academic standards in high school. If students earn a certain GPA and meet other eligibility requirements, the state may pay for some of their college education, or they may issue loans. Details differ per state. Some states require students to participate in extracurricular activities or complete a certain number of community service hours on top of graduating with high academic achievement. Other states will only pay for tuition at certain schools, like community colleges or public land grant universities.
To find out what type of financial aid a specific state offers, students should look into the public higher education departments or commissions for their state. Students should also research via the National Association of State Student Aid and Grant Programs (NASSGAP), which lists an online directory and conducts research studies about how much aid is given out in each state. Students who want to attend a community college or a public university often consider state-sponsored aid to be a useful program. However, students who aim to pursue their psychology degrees at private universities likely will not benefit from state aid.
Post-9/11 GI Bill®
The Post-9/11 GI Bill dictates that military service members may receive up to 36 months of tuition and fees funded by the federal government. They may also receive a monthly housing allowance as well as a $1,000 stipend for books and supplies. To qualify for the program, candidates must have served a minimum of 90 days on active duty after September 10, 2001. They may also qualify if they served 30 consecutive days after the same date, but were honorably discharged after their service ended in injury or disability in the line of duty. Not every veteran is qualified for the award; only those who have served for 36 months qualify for the full 36 months of tuition coverage. Veterans who have not served 36 months still receive financial aid, but at a percentage of the tuition. The U.S. Department of Veterans Affairs provides a benefits calculator and an application online so veterans can learn exactly what benefits they qualify for.
The GI Bill has several other components and assets as well. For one, if veterans don't use all of their tuition coverage, they may transfer their unused benefits to their spouses or dependents. Leftover benefits can also count toward a second degree. This means that students who graduate with a bachelor's degree in psychology may use any leftover tuition credits to cover a master's degree as well. Veterans may also use their tuition benefits at foreign schools that have been approved by the VA. In addition, students who receive benefits through the GI BIll may apply for additional federal aid through FAFSA.
Private Student Loan Options
If students find themselves ineligible for federal or state financial aid -- or if they've received some help but have crunched the numbers and realized their funds still don't cover the cost of tuition -- they might consider taking out private student loans. In essence, private student loans come from nongovernment entities. Although they may cover the difference when students have exhausted their federal assistance options, interest rates for private loans are often much higher than federal loans. Additionally, the lender may require the student borrowers to pay extra fees, and If a student (or the student's parents) have a low credit score, they may be disqualified from borrowing money.
Given the uncertainties, students should be as informed as possible if they decide to take out a private student loan. They should consider factors such as whether they get a grace period before needing to set up repayments and whether the interest rates are fixed or variable. Fixed interest rates give students a predictable way to pay back their loans, while variable interest rates mean that the interest rate changes depending on the markets. In other words, students don't know how much they will pay back with a variable interest rate; it could end up being a smaller sum of money than a loan with a fixed interest rate or a much larger sum. These factors make private loans riskier than federally issued loans.
Financial Institution Loans
Students have the option of applying for loans from financial institutions, such as banks, credit unions, and other monetary lenders. Loans from financial institutions offer higher interest rates than federal loans, and they require borrowers to pay fees and have a good credit history. Therefore, these types of loans are tougher for college students to acquire.
Students should do their share of research before applying for a private loan from a bank or lending institution. Before they agree to take out a loan, students should know whether the interest rates are fixed or variable, whether they get a grace period, what lenders consider the minimum loan allowance, how much they need to pay in origination and processing fees, and how the lender issues penalties.
Loans From Family and Friends
Students may also consider borrowing money from family and/or friends. These types of loans can be tricky depending on the type of relationship the student has with the lender. Asking for money might be awkward, and students always run the risk of having a falling out, especially if the loan is a large sum of money that needs to be paid back over a long period of time. Students should establish a specific payment plan when they borrow the money, long before they need to pay it back, so that both parties are on the same page when the day to repay comes along.
* GI Bill® is a registered trademark of the U.S. Department of Veterans Affairs (VA). More information about education benefits offered by VA is available at the official U.S. government website at http://www.benefits.va.gov/gibill