Whether you’re ready to head back into the classroom or embarking on higher education for the first time, figuring out how to finance your education is likely top of mind. As a working professional, you already have a busy life, other financial obligations and financial aid jargon can be exhausting to navigate.

Don’t let your questions about tuition and aid prevent you from earning your degree. Keep reading for a concise guide that will help you understand important financial aid terms so you can confidently navigate the process now that you’re ready to go back to school.

Applying for financial aid

1. FAFSA

You may be able to get school or government assistance to help fund your education. But first, you must complete the Free Application for Federal Student Aid (FAFSA®) form. The Federal Student Aid website makes it easy to apply for aid and breaks down the process step by step. You must fill it out every school year to determine your eligibility for grants and loans.

According to Scott Saltman, director of One Stop Student Services at University of Massachusetts Global, the most common misconception students have about FAFSA is that by submitting the form, you’re signing up for loan debt. “It’s my job to tell them that you’re just filling out an application; you’re not actually committing to anything at that time,” Saltman explains.

2. Master Promissory Note (MPN)

The Master Promissory Note (MPN) for Direct Subsidized Loans and Direct Unsubsidized Loans is a legal document in which you promise to repay your loan(s) and any accrued interest and fees to the U.S. Department of Education. It also explains the terms and conditions of your loan(s).

You may receive more than one loan under an MPN over a period of up to 10 years to pay for your educational costs if the school is authorized to use the MPN and chooses to do so.

Types of student loans

3. Direct Subsidized Loans

Direct Subsidized Loans are available only to low-income undergraduate students. Your school determines the amount you can borrow, and the amount may not exceed your financial need.

These loans are more favorable for borrowers because the U.S. Department of Education pays the interest on a Direct Subsidized Loan while you’re in school at least half time, for the first six months after you leave school (referred to as a grace period) and during deferment.

4. Direct Unsubsidized Loans

Direct Unsubsidized Loans are available to undergraduate and graduate students and are NOT distributed based on financial need. This type of loan accrues interest while the student is in school and during grace and deferment periods. Interest accrued during these periods will be added onto the principal amount borrowed when the student drops below half-time enrollment.

Students are given the option of making interest payments during the in-school period. If you choose not to pay the interest while you are in school, your interest will accumulate and be added to the principal amount of your loan.

5. Direct Parent PLUS loans

PLUS loans are federal loans that parents of dependent undergraduate students can take out on their child’s behalf to help pay for school. The U.S. Department of Education is the lender and determines if the parent(s) are eligible borrowers.

The maximum loan amount is the student’s cost of attendance (decided by the school) minus any other financial aid received. If a parent borrower is unable to secure a PLUS loan, the undergraduate dependent student may be eligible for additional unsubsidized loans to help pay for their education.

6. Private loans

Private student loans are made available to students through banks, savings and loans, credit unions and other financial institutions. Although regulated by the federal government, these loans are not subsidized or guaranteed by the government. They are instead a private arrangement between you and the lender.

University of Massachusetts Global does not recommend any specific lenders. A private student loan should be funding of last resort. We encourage you to exhaust all financial aid sources before pursuing this option.

Grants and scholarships

7. Pell Grant

Federal Pell Grants are awarded only to undergraduate students who display exceptional financial need and have not previously earned a bachelor's, graduate or professional degree. This grant does not need to be repaid.

In general, grants are free money except under rare circumstances. For example, some programs require students to pay back some or all of their grant money if they do not complete a degree or fail to comply with other conditions.

8. TEACH Grant

The TEACH Grant program provides grants of up to $4,000 a year to students who are completing/plan to complete coursework that is required to become a teacher. Participants agree to teach full time in a high-need field at an educational service agency or school for low-income students for at least four years.

9. Federal Supplemental Education Opportunity Grant (FSEOG)

The FSEOG is a need-based grant that assists low-income, undergraduate students earning a baccalaureate degree. You can receive between $100 and $4,000 a year, depending on your financial need, when you apply, the amount of other aid you get and the availability of funds at your school.

This program is administered directly by the financial aid office at each participating institution. Check with your school to find out if it offers the FSEOG.

10. Loan forgiveness programs

Student loan forgiveness is offered to encourage certain types of employment (i.e., teachers, public servants, military service members and AmeriCorps volunteers). A loan may be fully or partially forgiven after a certain number of years of qualifying employment.

However, there are specific eligibility requirements you must meet to qualify for loan forgiveness or to receive help with repayment. Failure to fulfill conditions of the loan might mean you will have to pay some or all of it back to the lender.

11. Scholarships

Scholarships are another great source of free money to help fund your education. They do not need to be repaid and may be merit based, need based or awarded based upon your background, place of residence, course of study, athletic ability, personal talents, religious/nonreligious beliefs or community service, to name just a few.

Students often underestimate scholarship opportunities because they require some research to find. Saltman advises his students to “reach out to companies and organizations you have a relationship with. They might be able to provide additional resources, partnerships, scholarships, benefits or other funding you may never have considered.”

Check with your institution first to see if they offer any scholarships internally. UMass Global, for example, provides students a with a list of local school-specific scholarships.

For outside scholarships, consider searching the following reputable websites:

• Fastweb.com — Best all-around search, it's free, and you can set up a mailbox that will be continually updated with new scholarships according to your user profile.
• BigFuture — Free database search created by The College Board and updated annually.
• Student Loan Hero — Free database search and lots of helpful articles.

12. Tuition assistance

One potential source of funding that many people overlook is employer assistance. Check with your organization to see if they have any education benefits programs that will help you pay for higher education. Some companies even offer programs to pay tuition for their employees’ children and spouses.

If you’re employer doesn’t have a tuition reimbursement program yet, don’t give up. Read “How to get your employer to pay for college” for tips on how to make your case.

Managing Your Finances

13. Entrance and exit counseling

All students who are taking out Direct Loans must complete entrance counseling with an advisor who can explain your rights and obligations. You'll learn what a loan is, how interest works, your options for repayment, and how to avoid delinquency and default.

Upon graduation, you will go through exit counseling to make sure you’re prepared to repay your loans. You'll learn what your payments will look like after school, and your advisor will recommend a repayment strategy that best suits your plans and goals.

14. Deferment/forbearance

There may come a time when you need to pause or reduce your monthly loan payments. To make sure you stay on the right track and don’t default on your loans, you can apply for a deferment or forbearance. Deferment is a temporary postponement of payment wherein interest does not accrue on Direct Subsidized Loans.

If you are willing but unable to make loan payments due to certain types of financial hardships, your lender may grant you a forbearance, a temporary suspension or reduction of your principal payments. Interest continues to accrue and will be added to the principal balance (capitalized) of your loan(s), increasing the total amount you owe.

Fund your future

Now that you’re more knowledgeable about important financial aid definitions, hopefully you feel better equipped to start your higher ed journey. It is wise to do your research up front so you have a better understanding. Saltman explains “Our goal is always to be transparent and answer all your questions to ensure you’re making an informed decision,” and urges students to:

 

Start working with your financial aid office from day one.

For more advice on how to fund your educational goals, check out our article “The working professional’s guide to paying for college.”