A college education is important for many reasons. It often has a major impact on increasing your earning potential for the rest of your life. It can open your eyes to possibilities for your future that you hadn’t previously considered.
It’s a place where you can start developing larger personal and professional networks. It sounds great, but it also takes a years-long commitment of your time, effort, and money.
The simple truth is that sending a child to college is an enormous economic drain on most families. These days the tuition, fees, and room and board for a typical four-year degree can range anywhere from around $17,000 for an in-state, public university to around $38,000 for a private college, annually. That doesn’t include other expenses, such as transportation, books, and supplies, which can add another $5,000 a year to that total.
There are, however, things you can do to help get the money to pay for your, or your child’s, education. The most common mechanisms for this are savings, scholarships, grants, and loans.
If you’re planning on your child going to college, it’s a good idea to start saving as much money as you can, as early as you can, so it’s had some time to build before you need to spend it. One of the best ways to do it is by starting a 529 plan. Every state offers some version of these plans, which are portfolios of mutual funds.
Most states offer tax-free contributions, don’t tax the growth, and even withdrawals are tax-free, provided that the monies are being used for educational expenses. The associated fees and other details can vary from state, and if you don’t like your state’s plan you can open one somewhere else, although states usually give the best tax breaks for their own residents. Depending on the state you live in, you may also have other options for college savings, as well.
Scholarships are individual awards given by schools, states, or organizations, which don’t need to be repaid. Scholarships aren’t just for straight-A students, either. The majority of scholarship money goes to regular students, with regular accomplishments. There is money for students with excellent academic achievements or who excel in sports, but there are also awards offered by professional organizations and many other groups.
If you find yourself thinking that sounds great, but how do you find out what’s out there, and how do you apply, the answer is simple.
There are a few things to keep in mind when trying to get scholarship money.
Keep at it – You won’t get every award you apply for, but if you keep applying chances are good that you will at least get some of them.
Go local – Many communities have alumni organizations, community groups, or religious organizations that offer awards to qualifying students.
Stay on Task – Searching for all the options takes some time, and completing the necessary paperwork does, as well. Speaking of time, paying careful attention to deadlines is critical. Having a great application doesn’t matter if you can’t submit it on time. Donors and organizations need time to determine how they will make their awards, and if yours is late, it won’t be considered.
Finally, when you do send in applications, make sure that you ’ve gone over them carefully, that’s they’re fully complete and free of typos. If a group is considering offering you an award, they want to feel confident that you’ll make responsible use of it, and a sloppy application undermines that image.
Like scholarships, grants are awards that don’t need to be paid back, but there are a few differences between the two types of awards. Grants are monies that come from non-profit organizations. Many are government-sponsored, but foundations and corporations can also offer them. People hoping to receive them generally have to apply by submitting a proposal, and they have to report back to the donor if the award is accepted.
One of the biggest differences between grants and scholarship in terms of paying for school is that grants are usually need-based, and are geared toward lower-income students. Because they are, in a way, free money, most grants will look at your family’s household income, not just the students, in determining financial need. Some grants can be relatively small, others can be for larger amounts.
The first step in pursuing grant money to pay for college is to fill out a FAFSA, a Free Application for Financial Student Aid, which can easily be done online. Completing the form will help colleges figure out how much and what sorts of financial aid you qualify for, including not just grants, but also scholarships, work-study programs, etc.
You can also look into grants from the state through the Department of Education and complete a CSS Profile to have access to grant opportunities from the schools, themselves. Unlike the other options, there is a small financial cost involved in filling out a CSS profile, but if you have the resources, it could be well worth the cost.
Taking on loans to help pay for college should ideally be the last resort, but they are a viable way to cover any shortfall between what a student needs and the resources they’re able to assemble.
Filling out and submitting the FAFSA will automatically put your eligibility for federal loans in the mix, and they’ll be addressed along with your other financial aid options when you receive your financial aid report from the government and/or your financial aid award letters from the colleges you’ve applied to.
In addition to federal education loans, there are also other, private loan options out there which can be found with a quick internet search.
The biggest drawback to taking on loans, of course, is that they do have to be paid back once the student has graduated, and that can take a long time and a lot of money depending on the amount that you owe.
The good news, though, is that student loans aren’t necessarily a problem for your credit rating. Even if you are just paying the minimum, as long as loan repayment is happening regularly and on time, it can actually improve your credit rating.
Paying for college can be a challenge, but if you do your research and make use of all the resources you can find, it doesn’t have to be outreach.