Financial Aid for Online Colleges

In 2018, more than 33% of college students studied online, and projections indicate that more learners will choose online learning in the next decade. Factors making online learning appealing include a school’s reputation, generous transfer credit policy, and greater selection of degree and certificate programs. Also, many degree-seekers enroll in an online program for its potential cost savings.

Although online colleges and universities help learners save money, the average cost of a college education in the U.S. exceeds $35,000 annually. Many online students struggle to pay out of pocket. As a result, they must still navigate the financial aid process.

Fortunately, online degree-seekers typically qualify for the same aid as their on-campus peers. This includes federal grants and loans, institutional financial aid for online college, and private scholarships. Financial aid helps online degree-seekers avoid student debt, a challenge facing millions of working Americans in the 21st century.

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Financial Benefits of Online College



Online college offers multiple benefits for recent high school graduates and nontraditional learners, such as a flexible schedule, no commute, and lower tuition.


  • Flexible Schedule

    Many online colleges feature asynchronous learning, wherein professors do not schedule set meeting times. Students view lectures and complete assignments around their schedule. Also, some schools offer an optional accelerated curriculum that allows motivated degree-seekers to complete as many courses as possible within a six-month term. As learners pay by the term and not course, they save money compared to their full-time and part-time peers.


  • No Commute

    Students enrolled online do not commute to campus, saving them time they can direct toward learning or other responsibilities. Benefits include cost savings, as degree-seekers do not pay for fuel, automobile maintenance, or a commuter pass. These learners also experience less stress than students who commute.


  • Lower Tuition

    Many colleges and universities charge online learners less in tuition than on-campus degree-seekers. Colleges do so because on-campus learning costs exceed that of online learning. And even though public schools often charge out-of-state distance learners a higher tuition rate than in-state degree-seekers, their tuition structure significantly favors online learners.


Are Online Colleges Accredited?

Reputable online colleges possess the same regional accreditation as the nation’s top schools with on-campus programs. The U.S. Department of Education charters six regional accreditation agencies to review colleges’ curricula using strict academic standards. Regional accreditation’s benefits include seamless credit transfer and corporate tuition reimbursement eligibility.

Schools with online programs also need national accreditation from the Distance Education Accrediting Commission (DEAC). DEAC ensures that online students receive the same high-quality education as on-campus degree-seekers. Also, online programs may possess programmatic accreditation from a private agency. These agencies recognize top degrees in one or more academic subjects.

Find Out How Affordable College Is for You



Prospective students unsure about their ability to pay for a degree out of pocket should use the college affordability calculator. The form asks users to provide their income, cost of living, expected financial aid, and related expenses. The calculator uses this data to produce an estimated monthly payment.

Open Cost Calculator

Types of Financial Aid



Financial aid for online colleges includes federal aid, state aid, college scholarships, loans, and employer assistance. Qualifying for aid starts with completing the FAFSA and researching different school’s institutional and departmental funding opportunities. Advisors help applicants and newly enrolled students navigate this sometimes difficult process.


  • Federal Aid

    The federal government supports students with financial need by providing them with four grant opportunities. Degree-seekers do not pay back federal grants as long as they remain in school and do not receive additional outside financial aid. As of 2021, Federal Pell Grants awards nearly $6,500 annually to qualified undergraduates.

    Students who exhaust federal grants but still need financial aid turn to federal Direct Subsidized and Unsubsidized Loans. Subsidized loans do not incur interest until recipients graduate.


  • State Aid

    States aid programs vary but require the FAFSA or a similar form. Some states award aid on a first-come, first-serve basis, meaning high school seniors and enrolled college students should apply early.

    State aid may include a lottery scholarship program, which renews automatically as long as degree-seekers maintain a satisfactory undergraduate GPA. Recipients who become ineligible due to poor performance do not pay back the scholarship. Other aid opportunities may include free community college.


  • Scholarships

    The internet gives prospective and current degree-seekers access to various college scholarships. Private agencies and organizations sponsor these awards to help academically gifted students and learners from a disadvantaged background. Typical application requirements include a competitive high school or undergraduate GPA, recommendation letters, and an essay.

    Before searching the internet for scholarship search tools, degree-seekers should determine whether their school maintains a scholarship database. Many professional organizations also provide student members with a private scholarship database.


  • Loans

    In addition to the federal government, banks and other financial institutions offer students loans. Each institution sets unique interest rates and may ask applicants to make interest payments before graduation. Private student loans carry additional risk, as individuals cannot discharge them in bankruptcy. Degree-seekers should consider loans only after exploring all other financial aid options.

    College students considering loans should speak with a financial aid counselor to learn more about reputable lenders and their repayment policies.


  • Employer Assistance

    College students may not need to apply for financial aid if they work for a company offering a tuition reimbursement program. Companies and organizations use tuition reimbursement to promote a talented workforce. Typical requirements include earning good grades and graduating on time.

    Workers interested in tuition reimbursement should research their company’s policies, as they may need to pay back some, if not all, tuition expenses if they change employers within a certain number of years after earning a degree.


Completing the FAFSA



Students interested in financial aid for online college should make completing the FAFSA their top priority. The FAFSA results indicate someone’s ability to pay for college in the following academic year, a term the FAFSA refers to as the estimated family contribution (EFC). An EFC lower than tuition may qualify learners for federal and institutional financial aid programs.


  • Eligibility

    Basic eligibility criteria for federal student aid include demonstrating financial need, possessing U.S. citizenship or permanent residency, taking courses at least part time, and enrolling in an accredited school. All men ages 18-25 must also register for the Selective Service System. Not meeting just one of these requirements makes learners ineligible for federal aid.

    Students maintain eligibility by submitting the FAFSA annually and making satisfactory academic progress (SAP). Each college and university’s SAP policy differs but may include maintaining good grades and satisfying credit requirements every semester. Although degree-seekers may lose eligibility due to changing financial or academic circumstances, they can regain it the following year.


  • Application

    Prospective and current degree-seekers start the FAFSA process by creating an FSA ID. Parents fill out the FAFSA if they claim the prospective student as a dependent. In both cases, required information includes a social security number and federal tax information from the previous year. Learners with a driver’s license or Alien Registration Number also submit that information. Degree-seekers or their parents complete the FAFSA entirely online.

    The federal government also provides detailed answers to common questions when completing the FAFSA. Articles cover correcting the FAFSA, retrieving an FSA ID and password, and using the IRS Data Retrieval Tool.


  • Deadlines

    The federal government accepts FAFSA applications Oct. 1 – June 30. Over the next two months, students or their parents may correct mistakes or provide additional information if their financial circumstances change. Degree-seekers should also keep their state’s unique application deadline in mind. States such as Alaska, California, and Florida use an earlier deadline due to their financial aid policies.

    Like some states, many colleges also impose different financial aid deadlines. College applicants and current students should inquire about whether their school’s deadline indicates FAFSA submission or acceptance. A school using the latter policy may not accept the FAFSA results submitted by the deadline.


  • Submission

    Submitting the FAFSA involves more than just pressing a button. After submission, the myStudentAid website gives students or their parents processing updates. Accurate FAFSA submissions produce a Student Aid Report (SAR) in 3-21 days. The SAR includes the EFC for the following academic year.

    Students or their parents should review the SAR for any mistakes. The FAFSA allows users with an incorrect SAR to amend information online. The SAR may also include a verification request, a process wherein a school asks to see learners’ or their parents’ financial documents. Some colleges and universities ask all degree-seekers to undergo required verification.


Portrait of Thomas Broderick

Thomas Broderick

Thomas Broderick is a freelance writer and the owner of Broderick Writer LLC. He creates study guides, informational websites, and blog posts for clients in the education field. Thomas is also a published author of over 20 short stories and a member of the Science Fiction & Fantasy Writers of America.

See more articles by Thomas

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