The planning process to send your child to college is a long one. Planning the educational expenses of college is the biggest financial project that an average US family undertakes. Four years of college education can cost you thousands of dollars. The average annual expense at private US college is around $35,636. You, as a parent, must be wondering as to how you can afford to send your child through college.
If you have a high school bound child, it is not too late to plan for his/her future. It is better to start planning early so that paying the college tuition is manageable. It is certainly not going to be easy. However, if it is done with proper planning, it can be manageable and affordable.
There are two ways to pay for college:
- Start saving early and gather enough before your child enrolls for college.
- Apply for loans like the 529 plan. Start repaying the loan, once your child graduates.
There are various financial aids that are available now, including earn & learn employment, scholarships, need based financial aid etc.
Need based Financial Aid:
Almost two third of full time college students receive need based aid. It’s eligibility is determined by two basic calculations: The total educational cost (tuition fees, living expenses & boarding charges) and the family’s affordability. The educational cost definitely varies from institution to institution.
To apply for the need based financial aid, your family must fill up the free application for financial aid (FAFSA). This is of utmost importance, since this document is used later to determine how much a family can contribute towards the college expenses.
Applying for loans:
Borrow money for college only when after checking all the available resources and options, there is still a shortage of money,
There are many private companies offering loans with interest rates ranging at variety degrees. All these loans require a prior credit check. It also requires your debt to income ratio.
The college grants are not required to be payed back, and hence, they are the best form of financial aid. The grants are awarded by government, both state & federal as well as colleges.
Earn & learn employment:
Another financial aid option is a job funded by the federal work-study program. Your child can earn thousands of dollars toward tuitions with the help of this program. In this kind of program, the college directly pays your child. Then the government reimburses the college. The major benefit of such a work-study program is that, it gives priority to your child’s education. The average work-study schedule is anything between 10 to 15 hours a week.
Merit based scholarships are not based on financial need. It is awarded to students with strong academic background, specialized abilities like music, arts etc. The most important things to know about the merit based scholarships are:
- These are offered by very few colleges. So, before enrolling, check out the details thoroughly from the financial aid office of the college.
- Deadlines for merit scholarships are extremely important. You must know when and how to apply for such a scholarship.
Few Financial Aid tips to remember:
- Start saving now. The more you save, the less you borrow. The less you borrow, the lesser are your chances of getting into debts.
- Look into the net cost of education in a particular college. Do not eliminate a college from the list of prospective institutions just because it is expensive. You might find assistance from unexpected places.
- Involve your child in paying for college at an early age. Ask them to save up during school and work during college years. This way, they will learn to value money too and would not waste.
- Create a budget that fits your circumstances and follow it religiously. Remember, there is no easy way to pay for college.