Financial Aid for Psychology Students
If you’ve been calculating how much it will cost to earn a psychology degree, you know they don’t come cheap. And if your financial resources are limited, even state school expenses may seem out of reach.
Take heart. While you may know the costs related to earning a psychology degree, it’s unlikely you know the full range of financial options available to you. In addition to the federal and state loan, grant, and scholarship programs open to most college students, there’s also a wide array of financial aid options targeted specifically to psychology undergraduate and graduate students.
Types of Federal Financial Aid Programs
There are a variety of federal financial aid programs with varying income eligibility requirements open to undergraduate and graduate students. Some federal financial aid options don’t require repayment, while others may need to be fully or partially paid back. Learn more about the different types of federal financial aid below.
Unlike loans, grants don’t have to be repaid so they are a great option if you have limited financial resources. Grants are typically need-based, though some also have additional requirements. Here are the types of grants offered by the U.S. Department of Education:
|Name of Grant||Program Description||Eligibility||Key Terms of the Aid|
|Pell Grant||A need-based grant that can be awarded for up to 12 semesters. The maximum yearly award amount may vary by year.||Usually awarded to undergrad students with exceptional financial need||Repayment can be required if, for example, the student does not complete the term|
|Federal Supplemental Educational Opportunity Grant (FSEOG)||A need-based grant of between $100 and $4000 per year||Usually awarded to undergrad students with exceptional financial need||Funds are limited each year so students should apply as early as possible|
|TEACH Grant||A grant of up to $4,000 per year for students committed to teaching in a high-need field or low-income area||Usually awarded to undergrad or graduate students in a TEACH-Grant approved program who can commit to the program’s teaching requirements||All grant money received will be converted to a federal direct unsubsidized loan if the student doesn’t follow the program’s service commitments|
|Iraq and Afghanistan Service Grant||A grant for students with a servicemember parent or guardian who died in Iraq or Afghanistan after 9/11||Usually awarded to students who don’t meet the income eligibility requirements for the Pell Grant but meet all other requirements||Students will need to fill out the FAFSA each year to continue to be eligible|
Federal Student Loans
When you take out a student loan, you borrow money to pay for your education and typically pay it back with interest. The federal government offers a few different loans to eligible students.
The federal government is the direct lender for federal loans. Since the terms and conditions are set by law, they include many benefits that are not typically offered with private loans. Here are a few things you should know:
- Federal loans are generally not due until you graduate.
- Federal loans allow you flexibility in your repayment plans. For instance, the Department of Education offers different varieties of repayment plans that take your income into account—so if things don’t exactly go as planned after graduation, you have options before worrying about defaulting on your payments.
- Interest rates on federal loans are fixed.
The following are the types of federal loans offered by the Department of Education:
|Name of Program||Program Description||Eligibility||Key Terms of the Aid|
|Direct Subsidized Loans||A federal loan for the cost of attendance where the ED pays the interest while a student is in school and for the first six months after graduation||Open to undergrad students with financial need||In certain enrollment circumstances, a student may be responsible for paying the interest on the loan while still in school|
|Direct Unsubsidized Loans||A loan for the cost of attendance not covered by other financial aid||Open to undergrad and graduate students with no financial need requirement||Students are responsible for paying for the interest on the loan|
|PLUS Loans||A loan for the cost of attendance not covered by other financial aid||Open to undergrad and graduate students, plus parents of dependent undergrad students||Parents have to apply for loans for dependent undergrads; first payment due 60 days after disbursement|
Federal Work Study Program
The Federal Work Study Program can connect you to part-time work while you’re enrolled in school to help you pay for education costs. Jobs are available on and off campus and are often related to your major. The program is open to full and part-time undergraduate and graduate students with financial need. The financial aid department can let you know if your school participates in this program and if you’re eligible.
What Is the FAFSA?
FAFSA stands for the Free Application for Federal Student Aid. By completing a FAFSA form, you’ll learn which federal grants, work study programs, or loans you’re eligible for. Many schools also use the information from your FAFSA form to determine other forms of aid you may be eligible for, such as state, school, and private financial aid.
No matter your family’s income or the type of aid you’re interested in, you should always fill out the FAFSA form when applying for college.
FAFSA applications are accepted beginning in October the year before you’ll start college and close on June 30th of your first year of planned attendance. For example, if you plan on attending college in the 2019 to 2020 school year, the FAFSA application period will begin October 1, 2018 and will close on June 30th, 2020.
However, your state or college may have earlier deadlines, so it’s recommended you submit the FAFSA as early as possible. You can find your state’s application deadline on the Federal Student Aid website and your school’s deadline on its website.
Filling Out the FAFSA
You can fill out the FAFSA form online. You can also print it out or order a hard copy. Be prepared with important pieces of information and documents, including your:
- Social security number
- Parents’ social security numbers if you’re still a dependent
- Driver’s license number
- Federal tax information or tax return for either you or your parents
- Records of untaxed income or other investments
- Alien registration number if you’re not a U.S. citizen
Why Choosing an Accredited Program Is Important
When choosing a school, you probably aren’t thinking about where the school received its accreditation to offer its programs. However, this is much more important than you think. Why? If the school you choose is not accredited with an agency recognized by the U.S. Department of Education, you won’t be eligible for federal financial aid programs, period. Which means you’ll lose access to one of the most valuable sets of programs to help you pay for school.
Attending a non-accredited school won’t just bar you from federal aid, it can also disqualify you from certain private scholarships. Play it safe when choosing a school and double-check its accreditation status. You can find this information by looking at the school’s website or by going to the federal ED website, which allows you to type in a college’s name or search across your home state or region.
Private Student Loans
Private loans are offered by lenders such as banks, credit unions, state agencies, or a school. The terms and conditions of private loans are set by the lenders and are generally more expensive than federal loans. Here’s what you need to know about private student loans:
- Unlike with federal loans, many private lenders (though not all) require payments while you’re still in school.
- Private loans may have variable interest rates or fixed rates that are higher than federal loans.
- You may be responsible for paying all of the interest on your loan if you take out an unsubsidized private loan. Subsidized federal loans may pay part or all of your interest during certain periods.
- There may be penalties for pre-paying your loan.
You can learn more about the difference between private and federal loans from the Department of Education.
Grants and Education Benefits for Veterans
The U.S. Department of Veterans Affairs offers a variety of education benefits to members of Active Duty, Selected Reserve, and National Guard Armed Forces and their families. These programs help service members and eligible veterans cover education and training costs. Each program is administrated differently, depending on a person’s eligibility and duty status.
The following links include information on some of the programs available, including eligibility requirements and payment amounts:
- Post-9/11 GI Bill
- Montgomery GI Bill Active Duty
- Montgomery GI Bill Selected Reserve
- Vocational Rehabilitation and Employment (VR&E)
Programs available to survivors of service members who die in the line of duty or dependents of totally disabled veterans:
Tax Credits for Student Loans
There are tax benefits and designated savings plans that can reduce your federal tax bills. For example, the American Opportunity Credit allows you to claim up to $2,500 per student, per year for the first four years of higher education. Or, the Lifetime Learning Credit permits a claim of up to $2,000 per student per year for any college or career school’s tuition or fees, as well as for any required books, supplies, or equipment.
You can also get a tax deduction for interest paid on student loans that you took out for yourself, a spouse, or a dependent. This goes for both private and federal loans. The maximum deduction is $2,500 per year.
In the tax benefit section of the FAFSA website, you can find information on tax benefits associated with using IRA withdrawals for college expenses and education-related savings plans.
Financial Aid from Schools
Colleges and universities often offer scholarships, grants, or fellowships to help students pay expenses. Remember that schools use the information from your FAFSA form to determine financial aid eligibility and amounts, so you should send in your FAFSA if you’re pursuing this kind of aid.
Scholarships tend to be highly competitive, especially in psychology. Research what your school offers by visiting the financial aid office or website. Also, check with each school’s psychology department, which may offer scholarships or fellowships to psychology students.
Some schools also offer what they call interest-free tuition payment plans. These plans are short-term (12 months or less) installment plans that split your college bills into equal monthly payments. Many plans are essentially interest-free, but some have fees or finance charges. In most cases the fees are less than $100. Check with the schools’ financial aid offices to see if they offer these plans and what they cost.
Tuition installment plans can be a reasonable alternative to education loans if you can afford to pay tuition, just not in a lump sum at the start of the semester. Most tuition installment plans allow you to set up an automatic direct debit from your bank account to pay the monthly bills.
Tuition Reimbursement and Loan Forgiveness
Depending on the type of career you pursue, you may be able to get some help making tuition payments or paying off your student loans.
Under the Public Service Loan Forgiveness (PSLF) program, college graduates who work in a government agency or some non-profits may have part of their student loan debt forgiven if they meet certain eligibility requirements. The government offers this program because it draws graduates into underserved public service careers, be it healthcare, legal assistance, or teaching. However, as CNBC notes, only a small percentage of graduates who apply for PSLF get approved for the program.
On the plus side, there’s a new National Health Service Corps program that can help qualified health care professionals, including those in behavioral health, repay student loans to the tune of $75,000. Its goal is to help attack two national epidemics: student debt and opioid addiction. Applicants must agree to work three years, full-time, at an approved substance abuse disorder site.
An additional option is working for an employer who offers tuition reimbursement. Companies have several incentives for offering you this perk. Like any benefit, it helps attract and retain the best employees. Tuition reimbursement is also tax deductible up to $5,250 per employee per year, making this an affordable benefit. Find out more about how tuition assistance works and some of the major companies that offer it.
Paying for college may seem impossible, but if you take advantage of the programs available to you, it may not be as tough as you think.