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What Happens When You Run Out of Money for College (and How You Can Avoid It)

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Alicia Graves was already walking a financial tightrope to afford college when a severe illness led to her losing her merit scholarship, forcing her to drop most of her classes.

“When I lost my merit award, my adviser from my journalism class helped pay for me to take a few terms of only two classes out of her own pocket,” said Graves, a freelance journalist and photographer from Oregon, adding that the stress of managing school finances caused many sleepless nights.

“At times, I had no idea if I’d have enough gas to make it to my classes. I had to watch how much my food cost,” she said. “There was a couple of months where my power was shut off and I had to come up with the funds to get it turned back on.”

Graves, who went on to complete her associate’s degree in 2018 and has plans to pursue a bachelor’s degree in the future, is one of the millions of American college students who have had to drop classes or postpone a degree for financial reasons. It took her three years to complete a two-year program.

The high cost of tuition, a generation faced with crushing student loan debt, and a cap on federal borrowing has left many students scrambling to secure any type of funding that will keep them in school, or simply dropping out without a degree.

Financial Barriers Mount for Many College Students

More than 30% of students who start at 4-year colleges haven’t completed their degree after six years, according to the National Student Clearinghouse Research Center. While 9.4% were still enrolled after six years, nearly 23% had dropped out.

Leaving school entirely, experts say, can be disastrous down the line. College graduates earn more money than non-degree holders and are on better footing to pay off their debts.

Students who leave before completing their degree are “more likely to default on their student loans, and potentially facing future complications when trying to re-enroll and later complete their degree,” said Eleanor Eckerson Peters, assistant director of policy research at the Institute for Higher Education Policy.

Peters co-authored the recent IHEP report, The Cost of Opportunity: Student Stories of College Affordability, and found that dropping out of a degree program for financial reasons disproportionately affects students from low-income backgrounds, first-generation students, students of color, returning adult students, parenting or caretaking students, and students who are working full-time.

And the financial barriers go way beyond just being able to afford the tuition, which currently averages $34,740 per year for a four-year private college, $9,970 for in-state students at a public university and $25,620 per year for out-of-state students.

“Beyond the high cost of tuition, these challenges included non-tuition costs such as housing, books, food, childcare, transportation, healthcare, and emergency expenses,” Peters said. “Many students were forced to make difficult trade-offs that put their college success at risk and took a toll on their well-being, including skipping meals, taking on student loan and credit card debt, and working multiple jobs.”

Financial Aid No Longer Enough for Some Students

The ever-increasing cost of college tuition, declining financial aid awards and a changing student body that is more economically diverse are all factors in the college affordability game.

Jay Murray is the president and founder of Solutions for Tuition, a Colorado-based college funding firm that has worked with more than 1,400 students all over the country.

“We are seeing an increase in the number of students who are starting to really drill down into the funding process and figure out how they’re going to pay for this,” he said. That means researching every opportunity from scholarships to private student loans. “Even the lending space is becoming more and more competitive.”

It’s just not getting into college, it’s completing the degree that’s paramount, especially when it comes time to job hunt.

The median weekly earnings for an employee with a bachelor’s degree is $1,173, according to the Bureau of Labor Statistics, compared to $774 for someone who has some college education, but no degree.

“In this day and age of automated employment applications, often prospective employers are inundated with resumes,” he said. “In that situation, let’s say an employer has four job openings and they receive 4,000 applications. Often times the first cut is, let’s eliminate someone that doesn’t have a bachelor’s degree.”

Graves considers herself fortunate. Just before the final year of her program, she received four scholarships through her college’s foundation that allowed her to complete her degree.

“The total,” she said, “ was enough to cover my entire year.”

Where to Find Financial Help

There are several financial aid options to investigate if you are faced with dropping classes or, worse, dropping out entirely. Here’s what our experts recommended:

Always fill out the FAFSA

Even if you think you won’t qualify or if you think you won’t need it, always fill out the Free Application for Federal Student Aid (FAFSA) from the US Department of Education. Forgoing those forms, he said, can send a message to your school’s financial aid office that you have the college savings you need, making any type of financial help next to impossible.

“There’s an inherent belief that if you don’t fill out the financial aid forms,” he said, “[you] don’t have financial need.” Gift aid with the FAFSA is free money for college expenses, students should max out their federal aid each year.

You will also need to fill out the FAFSA to apply for any federal student loans, work-study or Parent Plus loans. These loan options have a set interest rate that isn’t based on your credit score and can be a great option for students.

Talk to the financial aid office if you are struggling to pay college costs

You never know what scholarships might be available that you don’t know about or other aid packages that can help you save money.

“Colleges, when faced with losing the students, may help them,” Murray said. “They don’t want to lose a student in the middle of their college career, because it affects their graduation rates and because they genuinely care about their students.”

When Graves spoke up about her own financial struggles, she found out there was a fund to help students pay their education expenses.

“Think outside the box,” she said. “ I was lucky in having a wonderfully supportive team and an adviser who were willing to help me out. But a lot of that was because I was willing to talk about what was going on. I didn’t know there was a fund to help out with bills until I said something about my needs.”

Sign up for a work-study program

Work-study jobs can have benefits far beyond a paycheck. “Properly used, it can allow the student to create relationships that might lead to further opportunities,” Murray said. “It allows the student to demonstrate that they’re willing to work. Oftentimes, if the student is likable, the people in the department will go out of their way to help them.”

Becoming a resident assistant, or RA, he added is “the mother of all scholarships,” since it covers room and board which can easily run between $10,000 and $20,000, and it looks great on your first resume.

There are several other ways to earn money or be awarded extra funding

Ask your financial aid office and scour the internet for mid-degree scholarships. There are plenty to go around, Murray said. Consider an off-campus side hustle or a part-time job that won’t interfere with your studies. Sign up for the ROTC if you are interested in the military option.

Graves is hopeful that something will change so that all students can get a fair chance at graduating with a degree. “I truly believe that unless something changes in the near future, college will be less obtainable for many.”

Disclaimer: The opinions expressed by the interview subjects are not necessarily those of Earnest.

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Disclaimer: This blog post provides personal finance educational information, and it is not intended to provide legal, financial, or tax advice.