Worried about Paying for College? Here Are Our Top Tips
The cost of a four-year education at a private college has skyrocketed to over $200,000 total. This means you will need to earn over $500,000 in pre-tax dollars to send two children to college. Unless you are a recent lottery winner or have a long lost rich uncle, you probably do not have this extra cash laying around. According to a recent Gallup Survey, 73 percent of parents with children under 18 worry about college funding more than any other financial matter.
Parents and children, regardless of income, desperately need strategies to pay LESS for college. Paying for college is a challenge for most families that require an education. You may think that you will not qualify for scholarships or loans. You will be surprised, however, to learn the following strategies for accessing financial aid and softening the impact of sending your children to college.
Clean up your credit
Clean up your credit. Almost every loan, public or private, will be dependent on your credit score. Obtain a free credit report from one of the three major credit agencies: Equifax, Transunion, and Experian. Most banks also provide free credit monitoring services which provide weekly updates to your credit history.
It’s a good practice to close credit cards that you no longer use and consider placing a freeze on your credit for three-to-six months prior to applying for loans. This will prevent any potential fraudulent activity which could negatively affect your credit score. Refer to this article for more information about obtaining a free credit report.
Dive in deep with your financial aid counselor
Become best friends with your student’s financial aid counselor. Every university has a financial aid office and will assign a financial aid counselor to your student if requested. He or she can be a valuable resource if you ask specific questions and can guide you through this long, arduous process.
The financial aid timeline commences the moment your student commits to college and does not end until the funds are disbursed, which usually occurs in late August. Do your homework and due diligence for each school that your child is interested in. Some schools have a good reputation when it comes to awarding financial aid packages.
Every school will boast that they satisfy 100 percent demonstrated need-based financial aid. This is a broad statement. They will often send you to their website to complete their Expected Family Contribution (EFC) Calculator to determine the amount of aid you may be eligible to receive. Read this article for a list of top colleges for financial aid.
Ask for help!
Don’t be afraid to ask for help. Don’t be ashamed to ask for help. You will be surprised to learn how many options are available for your student. Many companies and organizations set aside funds to help students finance their education.
You should start by reaching out to people in your inner circle. People you have relationships with both inside and outside your community are more likely to invest in your child’s education, such as financial advisors, lawyers, clergy, accountants, doctors, and employers. Even if they don’t have funds specifically earmarked for this purpose, they may be inclined to support your young scholar based on your longstanding relationship.
Look into an early decision
Early Decision is still an option. Despite the myth, students are still eligible for financial aid if they choose to apply to a school for the Early Decision deadline. Early Decision acceptances are typically announced in mid-December: three months before financial aid packages are awarded. Most people don’t realize that scholarships, loans, and grants are not awarded until the Spring.
If making an early decision will increase your student’s chance of getting into their dream school, it may make sense to make that commitment, both emotionally and economically. This is a discussion that your family should have together to evaluate the risks and benefits.
Be wary of “too good to be true” offers
Be skeptical of professionals that promise to find you scholarships. We all know that there are no guarantees in life and that includes scholarship support. Obtaining scholarships requires hard work and perseverance. Many institutions require long applications, essays, and interviews.
The potential benefits will ultimately be awarded to your child so it is important to take an active role in this process. If the forms intimidate you, then seek the counsel of your trusted financial advisor or accountant. They will understand your financial position better than anybody else. The best advice is to start this process as early as possible to provide your student with optimal financial aid possibilities.
Take time with FAFSA
Fill out the FAFSA forms. Nearly $2.9 billion in free federal grant money went unclaimed last year because students did not complete the Free Application for Federal Student Aid (FAFSA). Do not make the assumption that your student will not qualify for aid. Middle-class families earning upwards of 200,000 dollars can still qualify for financial aid from generous private colleges.
Most importantly, students who want to apply for scholarships, both merit and need-based, must complete this form to be eligible. Schools want students to maximize their federal aid before awarding merit-based scholarships. The FAFSA for the 2019-2020 academic year will not be available until October 1, 2018. To familiarize yourself with the application, you can check out prior years form. Read this blog published by the U.S. Department of Education to learn what information you will need to complete the FAFSA form.
Look into loans
Loans: After your student submits their application for financial aid, they will receive a financial aid award letter from the college(s) they applied. Typically, this is sent from late March to early April. This letter will outline the different types of aid for which your student has qualified.
If you still need additional support to cover the gap in funding for tuition and fees, you will want to explore loans. There is a multitude of federal and private loan options here that can be overwhelming. I highly recommend searching for non-profit lenders because they offer lower interest rates and have no application, origination, or prepayment fees.
One last word of caution when applying for college loans: be leery of applying for loans from a lender because they were recommended on a schools’ website. The school has no connection to these lenders other than a vehicle for advertising. In my experience, these lenders often advertise misleading low rates and will make a hard inquiry into your credit, which will make it difficult to secure financing from another lender.
Other than a home or car, a college education is one of the largest expenses most families will incur. Don’t be discouraged or let the lack of funds stymie your child’s education.