How to Get Money to go Back to College

Returning to college is exciting. Paying for it, less so.

Those looking to finance a return to college should start by filling out the FAFSA, or Free Application for Federal Student Aid after they have chosen a school to attend. The student’s chosen school will respond with an award letter containing a mix of financial aid and student loans. Some may need to turn to private loans to pay for what Federal loans don’t cover. Students should pay special attention to figuring their eventual monthly payments and measuring that against their future income to see if it’s workable.

The video below from Bank of America lays out all the ins and outs of financing a return to college.

Return to College: Getting Started

As the video above explains, the first step to get money to return to college is to fill out the FAFSA, or the Free Application for Federal Student Aid. The form is available online at Once it’s completed, the school chosen by the applicant on the application form will respond with an award letter. The letter will contain a financial aid package including grants, federal work study and student loans.

Schools award aid packages by analyzing the information entered in the FAFSA. They’ll estimate the cost of tuition and living and figure out the applicant’s expected contribution. The cost of college minus the applicant’s contribution determines the size of the aid package.

FAFSA Finance a Return to College

The FAFSA online: Step one in financing a return to college. Image source:

The package can include federal loans, like direct subsidized loans, unsubsidized loans, PLUS loans and Perkins loans.

Direct Loans for a Return to College

Direct loans can be subsidized or unsubsidized. Subsidized loans are available only to undergraduate applicants in financial need. They have the lowest rates. They’re called “subsidized” loans because the government pays the interest while the student is in school. Unsubsidized loans are for students with less need. They’re offered to undergraduates and graduate students alike. Unsubsidized loans have higher rates. Since they’re unsubsidized, students must start paying interest while they’re still in school.

PLUS Loans for a Return to College

PLUS loans have two types: parent loans and graduate loans. They have fewer limits on how much a student can borrow. They also have higher interest rates and more credit restrictions, and students have to start paying interest right away.

federal student loan rates

This chart shows the current federal student loan rates. Click to expand. Image Source:

Perkins Loans for a Return to College

Perkins loans are low interest loans offered by colleges to undergraduate and graduate students. They’re generally for students who need a lot of help. The nice thing about them is, they don’t start adding on interest until after graduation.

Private Loans for a Return to College

Private College Loans

For financing a return to college, Sallie Mae is one of the largest vendors of private student loans.

What if a student’s financial aid package doesn’t quite cut it? In that case, private loans are an option. They generally have higher interest rates than federal loans. They also depend on the applicant’s credit score. A student with a low credit score might have trouble getting approved for a private loan. Also, even when applicants with low credit scores do get approved for private loans, they often pay higher interest rates than those with higher credit scores.

Another drawback of private student loans is that they often have less repayment options than federal loans. For instance, federal student loans carry an option to tie their monthly payment to the student’s income. Private loans don’t offer this nice perk.

Figure the Eventual Monthly Payments

In some cases, a student gets more financial aid than needed to pay tuition. It can be tempting to see this as free money. It’s not. Whatever any student borrows will have to be repaid with interest. It’s vital to figure out the required monthly payments ahead of time. To do this, go to and use their student loan repayment estimator. A $450 monthly payment on a $40,000 pre tax income might be stretching things too thin.