How to Bridge the Gap Between College Costs and Financial Aid

You’ve worked to apply and get accepted into college, but now you’re worrying about all the costs. Even if you’ve been given a generous financial aid package, it’s common to feel concerned about your inevitable tuition and expenses.

In this article, we discuss bridging the gap between the cost of college and your financial aid. We talk about the hidden costs many students fail to consider and how to leverage free money, part-time jobs, and student loans to fill the gaps. But to start, we explain what the financial aid gap is.

The Financial Aid Gap

Most students find that their financial aid package falls short of covering all their education costs. The difference between the two is the financial aid gap. These gaps are a problem because few students can afford to write a check when they’re left with outstanding balances.

Plus, there’s so much more than tuition that you’re required to cover. These mounting expenses can leave students feeling like they can't afford college or wondering if it’s even worth it. But it is, so stay with us as we explain how to make everything work.

We never want education to be out of reach, and one way we work to support students is with our $1,000 easy-to-apply scholarship. We offer it every month, and there’s no essay or GPA required to apply.

Recognize the Hidden Costs of College

To start, it’s essential that you are realistic about the total costs associated with college and getting your degree. If you’re not, you’ll underestimate the money you need to cover tuition and living expenses.

Let’s look at a few of the most commonly overlooked costs now.    

• Transportation

You’ll need to get around, right? Traveling across campus for classes and to and from social events and shopping is a given. Then, if you’re not close to home, you might want to go back to see your family from time to time. For these reasons, you’ll likely have the added cost of public transportation, sharing rides, or keeping up your own vehicle. If it’s your car, that could include insurance, gas, maintenance, and parking passes.

• Books & Supplies

Textbooks are one of the most significant hidden costs around. Researchers found that, on average, college students spend between $628 and $1,471 each year on textbooks alone. Hard-cover college textbooks can cost as much as $400 each! On top of that, you might need to buy a computer, printer, and basics like paper, pens, and highlighters.

• Fees

Whether it’s through Greek life, sports, or lab fees, you’ll need to anticipate having to cover some fees. To get an idea of how much it will cost to participate in a sorority or fraternity, you can check out this Bankrate breakdown.

4 Steps to Bridge the Gap

Now that you know the cost of your tuition and have a handle on all the hidden expenses, it’s time to talk about strategies for closing the gap.

Focus on Scholarships, Grants, and Other Free Money First

Ideally, it would help if you started by securing as much free money (in the form of gift aid) as possible. Gift aid is money that does not need to be repaid, such as grants and scholarships. It makes the most sense to focus on these free money sources when looking for ways to pay for your tuition and expenses.

• Grants

Grants are usually based on financial need. We always recommend filing the Free Application for Federal Student Aid (FAFSA) to qualify for government grants, even if you don’t think you’ll be eligible. Financial aid formulas are complicated enough that subtle differences can significantly impact eligibility for need-based aid. For example, simultaneously increasing the number of children in college can cause substantial decreases in the expected family contribution (EFC).

• Scholarships

Scholarships are usually based on merit, such as academic, artistic, or athletic talent. Apply to every you are eligible for, no matter how small, even if it requires writing an essay. Continue searching for scholarships after you get into college. There are some scholarships you can win only after you’re enrolled in college.

• Education Tax Benefits

Education tax benefits include tax credits and deductions claimed on your (or your parents’) federal income tax return. This can save you hundreds or even thousands of dollars, depending on how much you spend on school expenses. Examples include the American Opportunity Tax Credit, Lifetime Learning Tax Credit, and the Student Loan Interest Deduction.

Work to Earn Money for College

Working a part-time job during the academic term and summer break can help cover part of your college costs. Every dollar you earn is less you’ll have to borrow. Just note:

• You can earn up to about $6,400 without affecting your financial aid.
• Check the box on the FAFSA to say that you are interested in Federal Work-Study jobs. This doesn’t commit you to work during the school year, but it may give you the option if it’s available. Federal Work-Study jobs can include working with a professor on a research project and maybe earning college credit, not just working in the college cafeteria.
• Also, look for jobs off campus. There are many jobs convenient to campus that may pay better than a work-study job. This may be a good option for working during the summer since some jobs may not be able to schedule around your classes.

Break Up Big College Bills

If you can’t afford to pay your tuition bill in one lump sum, ask whether the college offers a payment plan.

• Tuition Installment Plans

Tuition installment plans are an excellent alternative to long-term debt. Many colleges offer tuition payment plans, which split the college bill into 12 monthly installments. Tuition installment plans do not charge any interest but may charge an up-front fee, typically less than $100.

Finance Remaining Costs with Student Loans

If you still have a gap between college costs, financial aid, and other resources, consider looking at student loans.

Federal student loans

You should always borrow through federal loans first because federal student loans are cheaper, more available, and have better repayment terms. Federal student loans have lower fixed interest rates and more flexible repayment options too.

If you exhaust the Federal Stafford loan limits, there’s a good chance that you are borrowing too much money. Many experts say that your total student loan debt at graduation should be less than your annual starting salary. If your total student loan debt is less than your yearly income, you should be able to afford to repay your student loans in ten years or less, which is considered a reasonable amount of time.  

If you need to borrow beyond the federal student loan limits, the main options are the Federal Parent PLUS loan and private student loans.  

Federal parent loans

The Federal Parent PLUS loan is available to the parents of dependent undergraduate students to help pay for the student’s remaining education costs.

The annual limit is up to the full cost of education minus any other aid. Borrowers must not have an adverse credit history, such as a recent delinquency or bankruptcy discharge, foreclosure, repossession, tax lien, wage garnishment, or default determination within the last five years.

But Federal Parent PLUS loans do not depend on credit scores or debt-to-income ratios.  So they can be a more accessible source of funding.

Private student loans: Unlike federal parent loans, a private student loan is borrowed by the student. However, more than 90% of private student loans require a creditworthy cosigner, often the parent. If the borrower or cosigner has excellent credit, it can yield a lower interest rate and fees on a private student loan than on a Federal Parent PLUS loan.

Banks and other financial institutions offer private student loans; there are many options for financing college costs. Be sure to shop around to find the best loan for your specific circumstances.

Private parent loans: Private parent loans are like private student loans but without the student on the loan. Some parents prefer private parent loans because the parent’s credit history could give them access to a better interest rate.

Additional Thoughts on Closing the Financial Aid Gap

In addition to these steps, you can look at ways to cut college costs while in school. Some options include enrolling at a lower-cost college, minimizing the number of trips home from college, taking a heavier course load to finish quicker, getting a roommate to split the rent, and buying cheaper textbooks.

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