Your high school senior just opened the college acceptance letter and is super excited. You are excited, proud, and scared all at once. When the family is called and the social media posts made, it’s time to pull out the checkbook to pay the enrollment deposit. This will be the first of many payments you will make over the next four years. What is your long-term plan for helping your child pay for college?
The average cost for one-year of in-state tuition in Massachusetts was just over $24,000 in 2016-2017 (http://collegecalc.org/colleges/massachusetts). Most families are not prepared to pay the full costs of a college education. Here is a list of the five most popular ways to pay for a college degree. Obtaining help for college begins with the completion of the FAFSA. This Free Application for Federal Student Aid, known as FAFSA, is an online tool. To complete the FAFSA, every student will need the following items:
- Social Security Number for the student
- Parents’ Social Security Numbers if you are a dependent student
- Your driver’s license number
- Federal tax information for you (if you worked) and your parents
- Records of untaxed income such as child support, interest, and veterans benefits for you and your parents if you are a dependent student
- Information about your assets such as cash, savings, checking accounts, investments, stocks, bonds, etc. for you and your parents
Who is a dependent student? A dependent student is any student who does not meet some specific criteria. Most high school seniors will be dependents of their parents unless they are married, have a child, or joined the military. To find out more about the items you need to complete the FAFSA, visit https://bit.ly/2qUhD8L. The deadline is typically as soon as possible after October 1 of the year before you plan to begin college in the fall to maximize your benefits. For example: If you want to attend college Fall 2018, your FAFSA should already be completed; however, you can complete it as late as June 30.
The Top 5 ways to finance college include:
- Grants: Money that does not need to be repaid. Grants are awarded based upon financial need. Grants are available from the Federal Government, the State Government, and individual schools. Some grants are also available from private and non-profit agencies. For more information about grants, visit http://studentaid.ed.gov/grants-scholarships#how-apply
- Scholarships: Scholarships, unlike grants, are usually awarded based upon merit, not financial need. Many scholarships have few applicants. In many cases, completing the application correctly and on time is enough to be awarded the scholarship. Scholarships are available from schools, employers, individuals, private companies, non-profit agencies, community organizations, religious groups, professional associations, and social groups. To begin the scholarship process, visit the counselor at your high school. Also, visit the U.S. Department of Labor’s Free Scholarship Search Tool at http://careeronestop.org. On April 20, 2018, over 8,100 scholarships were available. Next, visit with the academic advisor for the major you plan to enroll into. Many scholarships are available through the university.
- Work-study or Part-time jobs: Even though college is about academics and freedom, most students can work 15 – 20 hours per week at a part-time job. If you qualify, you may also be able to work on campus through the Federal Work-Study program. Your FAFSA application places you in the pool of workers. Contact the financial aid office at the university or college.
- Savings: If you are lucky enough to have a college savings plan such as a 529 account, the account can be used to pay for educational expenses, including laptops and textbooks. If you have young children, to save $50,000 for college, you would need to save about $225 per month for each child beginning the day the child enters kindergarten.
- Student Loans: Federal student loans are applied for through the FAFSA process. Student loans average $25,00 with a $250 per month payment for 10 years after graduation. Private loans will be much higher than federally-backed student loans. Although student loans are easy to obtain, they should only be used as a last resort. The payments for Federal loans begin six months after graduation or leaving school. Private loan repayments could begin as soon as the loan is approved, depending upon the terms of the loan contract.
College can be expensive; however, grants, scholarships, and part-time jobs can help cover much of the costs for college. In addition, students can often attend a local community college and live at home for the first two years before transferring to a university. Also, many high schools offer AP courses or concurrent enrollment with minimal costs to the students. Visit with your school counselor for more information.
About the blogger: Tamra Davis is an associate professor of business education at Illinois State University. She teaches personal financial literacy for the college student and multiple business courses to future teachers. You can learn more about Dr. Davis at tamra-davis.com.