Financially Inclined March 28, 2025 Transcript

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Yanely Espinal: What’s up, everybody? I’m Yanely Espinal, and this is Financially Inclined from Marketplace. We’re sharing money lessons for living life your own way.

If you’re thinking about going to college, you probably have some questions. And maybe even concerns about how you’re going to pay for it. College is a major financial investment and how you fund it can have serious impacts on your finances even long after college is over. If you get stuck with tens of thousands of dollars in student loans, that could limit your options in the future. Today I’m talking with educator and entrepreneur Teng Yang, about the funding options students have and how to evaluate them. He used to work as a college counselor and over the years, he’s helped so many students figure out how to best finance their college education. So I knew he would have a lot of expert advice to share with us. All right, let’s get into it.

Espinal: Getting college acceptances is like one of probably the most exciting moments. I feel like it’s just like, you’re full of this celebratory energy, right? But then there’s a balance between the celebration of this achievement and like the financial reality that it’s bringing to your life. When you’re working with students and you kind of lay out like a menu, okay, look, you’re about to make a choice. These are all the different financial resources and tools available to help you pay for college. What is that menu of options? 

Teng Yang: Sure, the short end of the menu is that college is funded through a few mechanisms, right? One is like your wallet, how much do your parents, how much do you have, how much can you write the check, right? The next one and the next good one is grants and scholarships. Grants and scholarships are free money. You don’t have to pay it back. Usually there’s no stipulation. And then there’s loans. And I think loans are also another big component. So you fund your education mostly through those three mechanisms. That menu of options is on the table for every student, but depending on students’ financial aid situation, depending on what they can afford, depending on what the government and the schools individually tell the students, that menu can look vastly different for every student. So that’s what I mean by individualized. You cannot be paying attention to anyone else, figure out your lane, look at your numbers, sit down with your family, and figure out what makes sense for you and your family. 

Espinal: How do you know if you’re eligible for some of these resources financially? And then also, how do you actually go about applying if you’re interested in accessing some or all of them? 

Yang: You won’t know until you apply. So one, you should do your research, you should be proactive, see what you qualify for and really apply. And of course, the biggest one and the most important one is the FAFSA, Free Application for Federal Student Aid. That is, I think for the most part, you know, any family should really take advantage of that. The form is just to gather what your family situation is, how much money is in here and there so that the government can, through an algorithm, figure out, okay, based on what you’ve reported to us, this family can afford within our little algorithm this much money, right? And that signals to both the government and the department of education, what they should be helping you and what you qualify for. And it also signals to the schools what your family can technically, theoretically, based on this form pay, right? And so you fill it out, they can basically download all of your financial data and through another series of questions like how many people are in your family? How many people are in college? You know, how much investment do you have here? What are some of your other incomes? Through all of that, they generate what’s called the Student Aid Index. That basically signals to the government that, okay, based on the information that we’ve downloaded from the IRS and what you’ve told us, your family can technically, we think, afford this much. So if you do qualify and you are like a lower income student based on that SAI number, you might qualify for Pell Grant, right? The Pell Grant grant, as the name suggests, free money or at least money that you don’t have to pay back, right? You can qualify for Pell Grant, which can partially fund part of your education. But that index also qualifies you for two really important programs through the government. One is the subsidized program. Not every student qualifies for the subsidized program. Subsidized means that while you are enrolled in college at least half time, the government will be paying for your interest. And then there’s the unsubsidized loan. it’s still a very favorable loan oftentimes much lower interest rate but that money, that loan while you are in college, interest will start to accrue, so you will be responsible and that will be added to your principal interest. And so it also allows you to tap into those two loan programs and so that is why the FAFSA is important. So even if your family is like, you know, we feel like we have two parents and we’re working and we probably won’t qualify for any financial aid, you still want to do the FAFSA because that will open up the opportunity to take out the unsubsidized loans if your family doesn’t qualify for the subsidized loans, which has very favorable rates that will help you pay for college. 

Espinal: So there’s only risks to not completing it. There’s nothing that serves you or benefits you by saying, Oh, well, I’m gonna opt out. I don’t, I’m not gonna do this. It doesn’t help you in any way, right? That’s what you’re saying. 

Yang: Absolutely. So if you’re like a lower income student and you know for sure that we need help, you must do it because you qualify potentially for money. And like, if you’re thinking of getting any kind of financial aid, every college, every technical program is going to want that form in order to qualify for financial aid. And if you’re a more middle, middle upper class family, you know, that that runs the gamut, and you might think like, oh, we’re never going to qualify. You should still do it because that opens you up for potential loans and scholarships.

Espinal: You mentioned federal student loans, some are subsidized, some are unsubsidized, and even grants and scholarships. But oftentimes, if you’ve done everything you could and you still owe money and you can’t get that from the federal government or from a scholarship grant program, ’cause time’s running out, you may then need to go look at private loans. Do you feel like this is like the last resort and how should students approach this step? 

Yang: Absolutely last resort. I think private loans are very difficult for a few reasons. One, the interest rates are often so high that you will be paying so much money back. And two, sometimes you might not even qualify for these private loans. And so it might require you to like, go get someone to co-sign who is like an uncle or an auntie or a family friend. And that can also be really difficult and pose a lot more just emotional, personal, financial hurdles as well, right? You should really, really try to negotiate with your colleges on how you can afford that college without private loans. And I think this is a hot take, but having worked with a lot of students in these kinds of situations, I think if you need private loans already for that college, you should really be questioning if that college is the right place for you. Because I think like our public universities, your parents pay taxes in every state. And so the state that you live in, you should get very favorable in state low options. So it should in theory be fairly affordable. I think like if you go to a private school or any other schools that requires you to take a huge amount of private loans in order to fund it, that should already be a red flag. 

Espinal: Right, right, I like that one. 

Yang: Because there should be other viable options for you to be able to pay for college without hefty private loans. 

Espinal: Yeah, now you’ve seen, you’ve completed FAFSA yourself, you’ve helped so many students complete FAFSA. You have a realistic picture of how it’s changed over time. Tell us like realistically right now, if you sit down to complete the FAFSA, how much time is it gonna take and what do you really need to get it done?

Yang: Yeah, I mean, real talk, I think the hardest part is like registering everything, right? Cause you have to create this thing called the FSA ID, the Federal Student Aid ID. You and your parents. And so you use that to sign your name, you use that to sign and link IRS. And so it’s actually more of like the logistics of registering. I mean, once you do that, if you have your family income and tax forms and all of the forms you need, the FAFSA could take you like 30 minutes. 

Espinal: Oh, wow, that’s great. 

Yang: It could be that easy, you know, they’ve really worked on making it more accessible and easier and more straightforward to gather information. And so the myth of like, Oh, it’s too complicated or convoluted. You register for those accounts and, you know, you just put in the information. They tell you exactly what to put. It’s very straightforward and there’s a lot of help and support there.

Espinal: Okay, so if we have to, like, put together all the most important steps or things to do when you’re making your decision for college, what do you think the top things to do in order would be? 

Yang: I think celebrate. Congratulations. You’ve worked hard. You’ve earned a spot into colleges, right? Gather all your financial aid package. Don’t make any decision without looking at all of your financial aid package, right? Set them side by side. There are a lot of tools online, free tools that you can use where you can literally put in college X, college Y, college Z. How much does it cost? How much grant or scholarship, free money did I get? How much loans? How much this? And they will help you literally track it out, right? You also have buying power. 

Espinal: Yep. 

Yang: So work in negotiation with financial officers, admissions officers to think through your family situation and make it happen for yourself.

Espinal: Teng shared a lot of information in this episode. So I just want to review some of the vocabulary words that he mentioned. 

FAFSA, Free Application for Federal Student Aid. This is the form you fill out to show colleges and the Department of Education how much your family can afford to pay for tuition.

FSA ID, this is your Federal Student Aid ID number, which is a unique identification number that helps you fill out your FAFSA and sign all of the different financial aid forms you’ll be signing. 

SAI, this stands for Student Aid Index. When you fill out your FAFSA, it will calculate your SAI, which is how much your family can afford to pay for college, at least in theory. 

Direct Loan. This is money that you borrow directly from the U.S. Department of Education, and you do have to pay it back, but the interest rate is usually much lower than what you would find anywhere else. And there’s two main types of direct loans, subsidized and unsubsidized. 

Subsidized loan. This is a loan from the government, which as long as you’re enrolled in college, the government will pay the interest for you.

Unsubsidized loan. This is similar, but now the interest does keep accruing while you’re in school. So you’ll actually owe more money than you borrowed by the time you graduate. But at least the interest rate is still really low. 

Private student loans. These are loans that come from private banks, not from the federal government, and they can have way higher interest rates. Teng suggests that this should be the last resort.

Espinal: For our Learn More segment today, I want you to meet Neziah Osayi. He’s a 22 -year -old recent college graduate from the University of Rochester, originally from Washington, D.C., and I invited him to come on and share some of his experiences with paying for college. 

Neziah Osayi: All my life I was told that you’re gonna go to college. Everyone said you’re gonna go to college, but it wasn’t until I got to my senior year of high school and I realized no one had a plan for me to actually pay for college. So, you know, I knew all these different schools I wanted to go to like out west or far away, but I did not know how I was going to actually pay to go to those schools. Fortunately enough, one of my counselors, they had nominated me for a scholarship program called Posse, the Posse Foundation. And I went through that process and I was able to get a full tuition four year scholarship to go to the University of Rochester. And that was huge because tuition is a big part of what you actually pay for to go into school and to be able to get that covered was great. But I would love to say that that was the end all of all my financial worries when it came to college, but it wasn’t because once you get through that process, you realize there’s other things that you have to pay for for school, like housing, books, the day to day of like supplies and meals. And these were things that I did not know at the time. I thought tuition, we’re good, but it was those little expenses that really I had to learn to tackle as a newfound adult. 

Espinal: Okay, Neziah. So you talked about a lot of different things that have helped you, but give us your top few tips for high school students going through this right now. 

Osayi: Absolutely. I’d say the first tip is not being afraid to communicate with the financial aid department at my school. Like they’re seen as like these big bad guys that you don’t want to talk to unless something’s going wrong. I wish I would have emailed them more to learn about maybe more resources or better explain or even appeal my financial aid offer if there was some information that they didn’t get that I didn’t tell them. And then thinking about the resources on campus, at my school and I’m sure at many schools, my school has a food pantry where like you can go there and get free food and it’s like, I did not learn about that until my senior year where it’s like sometimes when your meal plan gets low and you know you get a little bit of hungry and you don’t want to call, you know, family because you don’t want to stress them out. It’s like go to those resources on campus that are like, hey, we are here to help you, but if you don’t ever say anything, you’re not going to get that help. 

Espinal: Right. That’s right. And I remember like that feeling of like, uh, I don’t know. I don’t, it feels like it’s not cool to go to the financial aid office or it’s not cool to go get in line at the food pantry. Or it’s not, it’s not cool to do these things. But at the end of the day what’s also not cool is not being able to manage financially and like being in over your head. And then you’re not talking to anyone to get the help you need and then you can’t come back and register next semester because it’s all out of control. 

Osayi: I think you really hit the hammer with the nail about the price of trying to be cool. You know, I think a lot of money has slipped through my fingers because I was trying to be cool. These schools want you to graduate. They want you to pass your classes because it makes them look good and that’s the point. So asking for help of like talking to your academic counselor, talking to your just your normal counselor, using the mental health services at these schools because you’re paying for them. We are paying. We are customers paying for these resources. So if I had to go back, I would not only look for more money to take out less loans than I did, but I would also take use of the resources that I’m paying for on campus. So it’s just, it’s a hustle. It’s like, college is a hustle and that once you learn that hustle, man, you’ll never stop. 

Espinal: You could use that for the rest of your life. 

Osayi: For the rest of your life. 

Espinal: Okay, thanks for listening to today’s episode with Teng Yang and Neziah Osayi on paying for college. I hope that this gives you more confidence to choose the best funding option for your family situation or help a friend or family member who has to make this big decision. I know you got this. 

And if you have any questions for us or you want to share your own story, our email is financiallyinclined@marketplace.org.

Financially Inclined is brought to you by Marketplace from American Public Media, in collaboration with Next Gen Personal Finance. I’m your host, Yanely Espinal. Our Senior Producer is Zoë Saunders. Our Video Editor is Francesca Manto, and our Graphics Artist is Mallory Brangan. The podcast was edited by Katie Reuther. Gary O’Keefe is our Sound Engineer. Bridget Bodnar is the Director of Podcasts. Francesca Levy is the Executive Director. Neal Scarbrough is the VP & General Manager of Marketplace. Our theme music is by Wonderly.

Financially Inclined is funded in part by the Sy Syms Foundation, partnering with organizations and people working for a better and more just future since 1985. And special thanks to the Ranzetta Family Charitable Fund and Next Gen Personal Finance for continuing to support Marketplace in its work to make younger audiences smarter about the economy.