Paying for College

College can be a great experience for many. The degree you study can help you find a great job. The friend you make can last a lifetime. The time management skills you develop can serve you well in the future. However, a major hurdle for many is the cost of college. In addition to the physical and emotional toll it can take, college costs a lot financially.

Here’s a few examples:

• St. Louis Community College costs up to $6,990 a year in 2024.
• Harris-Stowe State University costs up to $11,074 a year in 2024.
• University of Missouri – St. Louis (UMSL) costs up to $35,820 a year in 2024.

With the cost of college so high, some may question the value of the experience. Considering people can still learn skills, pursue their interests, have a social life, and find a great job without going to college, is it worth the financial investment?

In this guide, we’ll walk you through what you need to know before college, while in college, and after you graduate college about your financial options. If you are saving for college as a high school student or wanting to go back to school with an established career, we have tips for you to make the best financial decisions for your situation.

Tips for Parents with Kids

As someone working on a graduate degree with a husband who also got his undergraduate degree, we want to be able to help pay for our future children’s college expenses. It’s never too early to start thinking about how you can help pay for your child’s college costs.

• Start a little at a time. Money you save now is money you won’t have to worry about later, even if it’s a small amount. If you have room in your budget to put aside $25 or $50 every month for your child’s future education, start saving. This will add up over time and make a large impact for your child, but doesn’t make a large impact on your finances in the moment. It’s a win-win!
• Open a Coverdell Education IRA. This type of account is designed to be used to only cover college expenses including tuition, books, and other materials. When you open a Coverdell Education IRA, you will list your child as the beneficiary to the money. You can contribute up to $2,000 a year into the account until your child turns 18.  Then, your child can withdraw the funds up until they turn 30.
• Save under your name, not your child’s name. If your child has more than $3,000 in their checking or savings account, it can impact their ability to receive federal grants. If they have under that threshold, then they can receive the maximum amount that can be given. There are exceptions to this including if your income already disqualifies your student from receiving need-based financial aid.

Tips for High School Grads

Regardless of whether or not college is in your future, high school grads are adults – and adults have bills to pay. With the world at your fingertips, learning how to manage your finances from the beginning can benefit you greatly in the long run. Check out these tips to start making smart money moves.

• Create a budget. Depending on your situation, you might still live with your parents for a while after graduation. Or, you could find an apartment with roommates. Learning how to create a budget might not seem like a great use of your time if you aren’t financially independent yet. However, how you handle your money now will impact your future decisions. As someone who moved out of my parents’ house a  year and a half ago, I still face the consequences of not making a budget while I lived at home.
• Build your credit score. A high credit score will come with numerous benefits down the road. How do you start building your credit score from nothing. There are lots of ways you can start building your credit score. Any bill you pay on time can increase your credit score. This includes your auto loan, phone, rent, and utilities. Opening a credit card and paying the balance in full each month will increase your credit score too. Any amount you don’t pay off will roll over to the next month with interest.
• Save without stressing. Maybe you find yourself spending most of your paycheck while waiting for the next one just because it’s there. Or you have extra money in your checking account after paying your bills and could easily save some each month. With automatic savings, you can use direct deposit to send a portion of your paycheck into your savings account instead of your checking account. You can also schedule automatic money transfers between your accounts ensuring that money is regularly moving into your savings account. Moving money into your savings account allows it to grow interest. This means that you’ll earn money by not spending the money you already have.

Tips for Incoming College Freshmen

Congratulations! You’re headed off to college. One major aspect of your life that will continue to impact you after you graduate is money. How are you paying for college?

Some receive financial assistance from their family, as mentioned above. If your parents have promised to help pay for your college, your college will still charge you and not them. Regardless of if you are receiving financial help, here are a few ways you can financially prep for college.

• Open your own checking account. Remember, if you have over $3,000 in your account, then you will lose eligibility to receive the maximum amount of federal grants. However, if you are working a job while in college, that money needs to go somewhere. While this can impact the amount of money you receive in a federal grant, you are likely quickly making up this difference by working a few hours during the week. Plus, with a checking account from Alltru, you can get a debit card for easy spending and manage your account from anywhere with mobile banking.
• Save with a high yield online savings account. Once you open a checking account with Alltru and start making monthly deposits, you become eligible to open a high yield online savings account. As you let money sit in your high yield online savings account, it will grow with a competitive interest rate. This is free money! Since the interest grows as a percentage, the more money in your account, the more interest (free money) you’ll earn.
• Create a budget. One of the perks of budgeting while in college is that your expenses can be relatively predictable for a few months at a time. You will usually find out well before your classes start how much your tuition costs, what books and materials you’ll need to purchase, how much you’ll pay for room and board, etc. Since you know how much you will need in each of these areas, you can start budgeting now so you can plan how to pay for these expenses and other everyday needs that arise while in school.
• Consider a small student loan. When you create your budget, you might find that you need more money to cover the costs of attending college. That’s why student loans exist. However, taking out a loan needs to be taken seriously. You can knock down the amount of money you need to borrow by working a job and applying for scholarships.

Paying for College through Grants and Scholarships

Before you jump the gun and apply for a student loan, consider grants and scholarship first. Grants and scholarships are literally free money to you. Sometimes the terms are used interchangeably but they are not the same. Yes, they are both forms of money that you do not have to pay back. The main difference is how you qualify for the awards. Grants are usually awarded based on your financial need. Scholarships are usually awarded based on achievement, such as grades and sports.

Here are a few reasons why you should consider applying for scholarships and grants.

• Scholarships and grants can help eliminate your need for a student loan. While a combination of scholarships and grants likely won’t cover your entire semester, they can make a large dent in how much money you have to pay. Winning these types of awards can result in you taking out a smaller student loan or even being able to wait another semester before needing a student loan.
• Scholarships and grants can create free time. If you are determined not to take out a student loan, you will need to come up with the money to pay for your semester pretty quickly. Many students work at least part-time through a work study job or another job to pay for their expenses. If you receive scholarship and grant money, you can spend less time working to pay for your education since these awards can help cover the costs. (On the other hand, an athletic scholarship will likely take up a lot of your time. Carefully consider the benefits and time cost of the scholarship before accepting.
• Scholarships and grants can expand your network. Many scholarships are connected to niche organizations or groups. If you win, it’s because you fit in the group. This community of like-minded individuals can serve as great resources as you finish your degree and work on your upper-level course work. While grants probably won’t connect you to such a niche group, you may be required to attend an event or two with other grant winners at your college. This allows you to meet new people you can grow with personally and professionally.
• Scholarships and grants can help you land a job. Many students find post-college jobs thanks to someone they know. In addition to the increased network you can gain from your scholarship experience, you can add scholarships to your resume. This is appropriate for trying to find your first job after graduating and can make you stand out from other candidates.

Scholarships in Missouri

Many schools offer scholarships that are unique to the institution. The U.S. Department of Education offers grants that you can use regardless of which college you attend. There are also other scholarships specific to Missouri residents that you can apply for. Here’s a list of a few popular scholarships in Missouri.

• Dual Credit/Dual Enrollment Scholarship. High school students that enroll in dual credit courses can have the entirety of their tuition covered if they meet CPA and financial aid requirements.
• ISL Midwest Senior Scholarship. This $1,000 scholarship is granted to randomly selected seniors that plan to attend an eligible college the following fall.  The deadline to apply is usually in April every year. There are no additional steps to apply, making this an easy application.
• Purdy Emerging Leaders Scholarship. The award amount of this scholarship is up to $5,000 and can be renewed the following year. Upcoming sophomores, juniors, and seniors that are enrolled full-time can apply. Recipients have proven leadership, character, and academic performance.
• A+ Scholarship Program. This merit-based scholarship provides funds to students that meet specific criteria of attending a specific high school, at least a 2.5 GPA, at least a 95% attendance record, performed unpaid tutoring, and more. While there are a lot of requirements, the scholarship amount can be significant. The amount you receive depends on how much you received from federal grants.

Getting a Student Loan

A common way to pay for college is by taking out a student loan. Some use this as their default method, but it doesn’t have to be. While student loans can serve as great tools to help you afford college, the decision to take out a loan should be taken seriously.

Before you make any financial decisions, your first step should be to fill out the FAFSA. The Free Application for Federal Student Aid is a free application that the U.S. Department of Education uses to determine you need for financial aid. The results from your FAFSA can affect the amount of grants, scholarships, and other financial aid you can be eligible for outside of federal funding.

The FAFSA evaluates you need for financial aid based on your tax returns, checking and saving account balances, and other investments. The FAFSA will also evaluate your parents’ financial status if they claim you as a dependent when filing their taxes.

The results of the FAFSA are not taken lightly. Fortunately, you will resubmit your FAFSA every year, so it accounts for your changing financial situation. The application opens on October 1^st and the deadline to apply is typically June 30th, or the end of the academic year, whichever comes first.

To determine your need for a student loan, whether federal or private, you should consider your other types of available financial aid. This includes grants, scholarships, and job status. After evaluating how much money you will receive through grants and scholarships, determine how large of a loan you will need to borrow. If you have determined that you will only need to borrow a couple thousand in a semester, calculate how many hours you could work instead.

If you decide that you would like to take out a student loan, keep reading.

Types of Student Loans

A few months after you submit your FAFSA, your school will reach out to you with a financial aid offer. This offer will include grants and loans from the federal government. You can decide to accept none, some, or all the financial aid.

There are five main types of student loans. Many of these loans depend on the results from your FAFSA and will be included in your financial aid offer from your school. There is an exception.

• Direct Subsidized Loan. This type of loan is available from the federal government to eligible undergraduate students that have demonstrated financial need as determined by the FAFSA. Students can borrow a direct subsidized loan up to $5,500 depending on whether or not they were claimed as a dependent.
• Direct Unsubsidized Loan. This type of loan is available from the federal government to eligible undergraduate, graduate, and professional students that have not necessarily demonstrated financial need as determined by the FAFSA. Students can borrow up to $20,500 depending on how much they borrowed with a direct subsidized loan.
• Direct PLUS Loan. This type of loan is available from the federal government for parents who claim their child as a dependent or graduate or professional students. Borrows can take up to the amount of the school’s cost of attendance minus other financial aid. This means that they cannot borrow more than what the semester will cost.
• Private Student Loans. Third-party organizations such as Sallie Mae and Earnest offer private student loans. While your loan amount and interest rate may be determined by your FAFSA, you are not borrowing money from the government. Organizations like these can also offer fixed or variable rates. The process to pay back a private student loan will differ depending on your loan terms.
• Personal Loan. A personal loan from Alltru can be a great alternative to a federal or private student loan. With Alltru, you start paying off your balance immediately and will pay your balance in full by 24 months. This is a great option if you want to be out of debt quickly. Plus, the results from your FAFSA do not determine your eligibility.

Federal Student Loan Forgiveness

If you have been out of college for a few years, you might have been impacted by student loan payments resuming in October 2023. Unfortunately, if you didn’t take action by then, you cannot take advantage of this forgiveness offer. We still have steps for you to take to help pay off your loan faster. However, there are other student loan forgiveness options for those who have been out of college for several years already.

Teachers may be eligible for Teacher Loan Forgiveness up to $17,500 for their Direct Loan or Federal Family Education Loan if they have taught in low-income schools for five years. If they do not meet eligibility for the Teacher Loan Forgiveness program, they may be eligible for the Public Service Loan Forgiveness if they have a Direct Loan and have made 120 monthly payments toward their balance.

Government employees, not-for-profit workers, and medical professionals may be eligible for the Public Service Loan Forgiveness if they have a Direct Loan and have made 120 monthly payments toward their loan balance.

If you are a current or recent Fontbonne University student, you may be eligible for a Closed School Discharge since the university announced that it will be closing after the summer of 2025. Those may be eligible for a closed school discharge of their federal student loan if you had a Direct Loan, Federal Family Education Loan, or Federal Perkins Loan. Even if you paid off your loan already, you may be eligible for reimbursement.

Paying Back Your Student Loan

Those who can take advantage of the Student Loan Debt Relief Plan have a big weight lifted of their shoulders. If you’re one of those people, you could have some loan balances still to pay for. Or, you might not have been able to have your loans forgiven. Whatever your situation, you still owe money toward your student loan balance.

Here are a few steps you can take to pay back your student loan balance.

• Determine what you owe. By logging in to the Federal Student Aid website, you can find your principle amount, current balance, and interest rate. If you have a student loan through a private lender, you will need to check your balance through their system instead. What does your monthly payment plan look like?
• Consolidate your loans. For many, consolidating all the individual student loans into one payment makes it easier to keep track of knocking down the balance. This may extend the time it takes for your to pay back your student loan balance. However, your monthly payments will be more manageable.
• Talk to Alltru. Our financial advisors can help you evaluate your situation to help you evaluate your payment options. Paying off a loan takes time. But with the right team supporting you, the process will be much easier.

Conclusion

Going to college comes with many opportunities. Wise money management is just one of those. Taking on the responsibility of paying back a student loan is a major commitment. The consequences of taking on a student loan can affect you for years to come. Hopefully, these facts about student loans will help you determine if you need a student loan, what type of loan to borrow, and your payment options.

Like any good thing, it takes time. It doesn’t matter if your parents started saving for your education when you were young or if you spontaneously decide that now is the time to start saving for next semester. The time and effort you put into making wise financial decisions about saving, grants, scholarships, loans, and payment plans will affect you in the future. Hopefully, these decisions will reward you for years down the road with a college degree and great money management skills, all thanks to your student loan.