College costs are continuing to rise and at a pace higher than the rate of inflation. This trend, which shows no sign of abating, is a cause of concern for plenty of parents including those with young children. Suddenly, being a part of the Marquette Class of 2022 doesn’t seem all that attainable never mind Georgetown 2012.
For parents wanting their children to attend the school of their choice, coming up with a plan to cover college costs is essential or settling on some lower cost schooling options may be the way to go. Let’s take a look at ways you can turn the college financing nightmare into a good dream come true.
Unless your son or daughter is already a high school junior or senior, the following information could change by the time your child reaches college age. For parents of younger children, setting aside funds in a 529 account which is a tax-advantaged savings plan designed to encourage saving for future college costs, is a good place to start. There is no telling what college costs will be by the time your child is ready for college and what other relief will be available at that time.
Your Financial Aid Road Map
We’ve developed an eight-step guide to help parents finance and pay for college. One or more of these steps can be used to finance your child’s education and help you understand the financial aid options for undergrads. The steps are as follows:
1. Review Financial Aid Steps — Before applying for aid, you should fill out the Free Application for Federal Student Aid (FAFSA) form and submit it to the federal government. Based on the information provided, the government will create a Student Aid Report (SAR) which will be submitted to the student’s college of choice and a copy to sent to the student’s family.
The college then takes the SAR and creates a financial award letter that lists the aid the student will receive. The difference between the cost and the award given is the family’s expected contribution towards the cost of education. Once that information is known then the student and his or her family will be able to determine the steps they will need to take provide the remaining funding.
2. Scholarships — Billions of dollars in scholarships are awarded annually therefore scholarships are an important way for families to close the funding gap. Scholarships can depend on financial background, race, ethnicity, course of study, school attended, and a host of other factors. Apply for as many scholarships as eligible as this can be an important way to finance higher education.
3. View Financial Aid Charts — Trying to estimate college costs beyond school expenses can be difficult. Using supplied online tools can help you keep everything in order.
4. Apply For Federal Stafford Student Loans — The federal government is a huge funder of higher education and Stafford Student Loans (SSL) are a great way to help pay for education. However, eligibility requirements are tight, therefore you will want to learn if your son or daughter is eligible as soon as possible.
5. View Other Aid Options — Grants, using your home equity, 529 funds, withdrawing IRA money, tax credits, military service, work-study programs, and loan forgiveness are options worth exploring.
6. PLUS Loans for Grads and Parents — These are government guaranteed, fixed rate student loans that can cover up to 100% of a dependent child’s cost of education, less any financial aid awarded.
7. Use Private Student Loans to Close the Gap — Families can borrow up to $30,000 annually and in some cases up to $40,000 thanks to private student lending. Private student loans are easier to get than Stafford Student Loans with a higher interest rate charged, but favorable pay back options available.
8. Manage Your Money During School — Finally, once your child is in school managing college money is essential toward collegiate success. A budget can go a long way to helping maintain financial accountability.
Once you have gone through the college admission process, then following the financial aid road map will help you achieve your goals in a timely manner. College costs are rising, but a well executed plan involving a combination of choices could be the way to go.
- New Student Loan Model Launches (saycampuslife.com)
- Look Before You Leap: Student Loan Shopping Tips (education.com)
- Your First Choice College Didn’t Offer Enough Financial aid – Now What (boldstate.com)
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