Finance a Gap Year

If a family member is not going to pay for your gap year, you may need to be inventive to figure out how you will finance it. The sort of gap year you want to take will determine the funding possibilities available to you; often, school-based gap year programs provide more flexible financing alternatives than self-directed gap years do. Here are methods to finance a gap year, including the ones you should avoid at all costs.

Use Financial Aid

If you choose a gap year program that allows you to earn college credit, you may be eligible for some financial help. This assistance could come from government grants and private student loans. The best strategy to keep initial gap year expenditures low while avoiding toxic debt, like personal loans with interest rates that are more than 36%, is to apply for and receive financial help.

In most cases, qualifying programs are directly sponsored by educational institutions such as colleges. For instance, Tufts University allows its students to participate in a 1+4 Bridge Year Program that enables them to work in a foreign country while simultaneously taking one subject online and completing language training locally. Other programs are directed by third-party providers that work in collaboration with colleges. One such program is Verto Education, which collaborates with more than 40 colleges to provide students with the opportunity to take full-time classes while participating in program activities in another country.

If you choose to participate in a program offered by a third party, check with the registrar's office at your current institution to see whether or not the credits you earn will be accepted at the college of your choice. This information might help determine whether or not you should take a gap year with that program.

Get a Scholarship or Grant

Depending on goals you want to accomplish during gap year and the organizations you are affiliated with, you may be eligible for a private grant or scholarship. In addition, some gap year programs provide their participants with financial aid through scholarships or other forms of help.

For instance, "gappers" who join the Omprakash learning community and volunteer overseas with one of its partner organizations are eligible for Omprakash Ethical Global Engagement Grant, which offers funding of up to $2,500 to cover their housing and travel costs. To help students afford the gap year program offered by Winterline Global Education, the organization provides scholarships worth up to $25,000. To be considered, you must show both a financial need and merit by their standards.

Use a 529 Account or College Savings

You may also be allowed to utilize funds from a 529 plan for gap year programs that allow students to earn college credit. For the program to be qualified, it must either be a component of a school approved by the Department of Education or collaborate with one of these schools.

If you want to take a gap year and pay for it out of your college funds, you should have enough money to pay for school when you go back. Be sure to check that any college credits you acquire may be used toward your degree at the institution where you want to enroll in the end.

Get a Job

If you do not participate in a gap year program, you may be allowed to work during this time to pay for your independent gap year activities. This strategy can be successful if you get employment in the setting where you choose to spend your gap years, such as a beach or ski resort.

If you keep your total living expenditures low during your gap year by staying with family or sharing a room with other people, getting a job during that time is also an efficient strategy to save money for college. However, you should exercise caution if you want to take a gap year after obtaining student loans. If you do so, you run the risk of exceeding the length of your grace period and having to begin making payments on your loan earlier than intended.

What to Avoid

Although some "gappers" may qualify for a personal loan, we don't advise going that route. Depending on several factors, the interest rates attached to personal loans may range widely. If a borrower has a spotty credit history or is unemployed, the rates attached to their loan will be much higher. Because of this, "gappers" run the risk of taking on dangerous levels of debt.

Using a personal loan to finance a gap year is fraught with many of the same risks as using a personal loan to finance higher education. In contrast to student loans, which often come with a grace period of six months, personal loan repayment normally begins one month after the loan has been paid out.