6 steps to fund a degree: advice from a Capella financing specialist

Estimated reading time: 4 minutes

Earning a degree may require a significant commitment of financial resources – whether you pursue a bachelor’s, master’s or doctoral degree. However, you shouldn’t let tuition figures stop you from pursuing your goals. With some time and research, you can create a smart finance plan that may even include ways to help reduce your overall educational expenses.

Chelsea, a specialist from the Capella University Financial Aid Support Team, suggests a six-step plan to budget for the next stage in your educational journey.

Step 1: Submit your Free Application for Federal Student Aid (FAFSA) for the upcoming year

Wondering whether you can get financial aid for your degree? Completing a FAFSA form allows you to see what federal financial aid you qualify for. This includes work-study, grants or federal loans.

Chelsea says having your FAFSA completed before speaking to a university financing specialist streamlines the process. Knowing exactly what you qualify for helps you and your financing advisor determine how much extra you may need to borrow.

Step 2: Know your maximum loan amount

All loans have specific requirements, including a maximum borrowing amount. These amounts vary depending on degree level, dependency status and other factors. Depending on whether you plan to pursue a bachelor’s, master’s or doctoral degree, do some research to find out the maximum amounts you can borrow in Federal Direct subsidized or unsubsidized loans.

Be careful with these limits. According to Chelsea, “If you qualify for the maximum amount, don’t immediately jump into borrowing that much. Understanding how much you could take out will help you create a prudent plan for borrowing what you cannot cover out of pocket.”

Step 3: Research non-loan options

Chelsea suggests imagining your financing as a bucket. She tells students that as much of the bucket as possible should contain financial aid that doesn’t require repayment, such as employer tuition assistance, scholarships or Federal Work Study. The rest of the bucket may be topped off with loans as a last resort.

Searching for scholarships, grants and other non-repayable funding before taking out a loan can also help reduce your total borrowing cost. For example, you may be eligible for a tuition discount through an affiliation your employer has with your university, through military service, or if you have a degree from an affiliated college.

Explore other ways to help reduce your overall degree costs. If you pursue a Capella bachelor’s degree program in the GuidedPath learning format, you can complete no-cost general education courses during your program through our affiliate Sophia to potentially reduce the time and cost of your degree. If you want to enroll in a Capella bachelor’s degree in the FlexPath learning format, any Sophia courses must be completed and graded before you begin your program. You may be able to transfer credits from other accredited universities. Depending on your previous work experience or industry certifications, you may be able to earn credit for prior learning toward select bachelor’s or master’s programs.*

*All transfer and credit for prior learning must be completed prior to starting any program in the FlexPath format. Any professional certification or external courses taken concurrently with FlexPath enrollment cannot be recognized in the Capella degree program.

Step 4: Understand what you will need to borrow

Once you’ve found any non-loan options, you’re ready to calculate the total amount you’ll still need.

“When figuring total cost, remember to total direct and indirect costs,” says Chelsea. Direct costs are tuition and fees, while indirect costs may include living expenses, transportation, books and other expenses.

Subtract the amount of non-loan funding you qualify for, along with any out-of-pocket contributions you can make, from the total amount you’ll need. This will help you determine how much extra you may need to borrow. Use the Capella Net Price Calculator to help estimate what funding you may be eligible for.

Step 5: Figure out repayment plans

Now that you’re ready to explore your loan options, it’s important to compare repayment plans you might qualify for. You may have options as to how you can repay. With fixed and income-driven plans, you can determine what’s best for you. If you explore private loan options, make sure to research repayment plans.

“Some loans have a six-month grace period after graduation,” explains Chelsea. “Once that period is over, you will be responsible for monthly payments. Think about how much you can realistically afford, and choose the loan repayment plan that works best for your budget.”

Chelsea recommends using the loan simulator at studentaid.gov to help you determine your payment plan.

Step 6: Decide if it makes sense to borrow to fund any remaining costs

Once you’ve done your research, it’s time to determine exactly how much you want to borrow.

“Be in the driver’s seat,” Chelsea says. “Understand what you have and what you want to borrow. What does this look like for your future self?”

If your monthly loan repayment will be a burden on your household budget, reconsider. Creating a budget of your expected expenses and income, and then weighing it against your loan repayment, can help you build a financial plan as you explore how to pay for a degree.

Learn more about scholarships and explore online degrees at Capella University.