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- Calculate the estimated four-year cost
- Fill out the FAFSA
- Figure out how much free aid you have available
- Think about how much savings are available
- Calculate the income that’s available to pay for college every year
- Decide how much in federal student loans you will need – if any
- If necessary, explore private student loan options
7 Steps to Take When Paying for College
Dealing with paying for college can be one of the most stressful parts of family financial planning – it’s no easy feat trying to save money, figure out exactly what you’ll have to pay, and plan for the possible need to take out loans. If you have more than one child who wants to go to college, it makes matters even more complex – and expensive.
The best way to pay for college is to plan as early as possible while taking advantage of free scholarship and grant money – and making sure that you don’t miss any deadlines.
Taking the steps below will ensure you’re on the right path to funding college.
1. Calculate the Estimated Four-Year Cost
Whether you’re taking a one-year vocational course, getting started with a two-year degree at a community college, or jumping right into a university program, you need to sit down and realistically figure out what your college options are going to cost you.
Colleges vary a lot when it comes to the cost of yearly tuition, books, housing, parking, and other fees. Fortunately, every school provides those costs on their website. Simply go to each of your prospective schools’ websites and take note of how much each of these things are expected to cost.
Then factor in things like:
- Costs for commuting, parking, and trips to visit home
- Entertainment expenses
- Extracurricular acitivities
- Anything else you can think of that you will need to pre-plan for
There are online calculators available, but the best and most accurate way to sort this all out is to do it yourself and include as many details as possible in your budget.
Having at least a rough understanding of how much you’d have to pay for each of the schools you want to go to is a necessary first step in planning for college costs.
2. Fill Out the FAFSA
If you’ve filled out a Free Application for Federal Student Aid (FAFSA) before, then you already know what a headache it is to complete. If you’ve never heard of it before, the FAFSA is simply the application that each college student in the country needs to fill out in order to be eligible for federal financial aid – like grants that don’t need to be repaid, work-study funding, and low-interest loans for both parents and students.
If the FAFSA isn’t filed, your only loan options for the next academic year will be in the private sector – which typically come with much higher interest rates than federal student loans. The FAFSA is also necessary for a lot of other purposes, like university-specific scholarships and grants.
Completing the FAFSA is one of the most important parts of this process, because it helps provide students with the most options. The application period opens in October of each year and closes June 30 of the academic year (although states and schools also have their own deadlines). And students need to re-do the application every year that they’re in college.
3. Figure Out How Much Free Aid You Have Available
Throughout your high school and college career, you should be regularly applying for scholarships and grants that you are eligible for, outside of what becomes available to you when you fill out the FAFSA the year you are applying to colleges. These will often have their own eligibility requirements and application procedures – often involving some sort of essay or final project/presentation.
Around the time that you start hearing back from colleges as to whether you’ve been accepted, they will also send you the information on the results of your financial aid applications – detailing what you will or won’t be awarded. Remember that some schools have their own application, outside of the FAFSA, so pay attention to each individual college’s requirements and deadlines.
Once you know how much free aid you’re getting, you’ll have a much better idea of how much more you’ll be paying for college.
But that doesn’t mean that you should stop applying for scholarships. Keep searching around for that free money just sitting there for the taking, even as the end of the academic year approaches. Scholarship deadlines go throughout the year.
4. Think About How Much Savings Are Available
Here’s where your past saving habits will come to light: sorting out exactly how much cash you or your family has stacked up specifically to put toward college. How much of your savings can you dedicate to college expenses? Have you contributed to a state-sponsored 529 tuition savings plan?
Figure out how much you need to pay upfront and where that money will come from – then figure out when the next payments will be due for the remainder of the first academic year.
5. Calculate the Income That is Available to Pay for College Every Year
Understanding your short-term costs are essential, but it’s also important to get a full-length blueprint for all two to four years of your costs. Can any income be set aside right now for next year? How much money will you have to save in the next calendar year in order to be financially ready for the next payment?
Wrapping your mind around what you’ll need for the next four years may not be a pleasant experience, but you will thank yourself later if you plan well early on.
6. Decide How Much in Federal Student Loans You Will Need
After you have scrounged up as much savings and free money (government-backed or from the private sector) to pay for college, you can determine if you will need to take out one or more loans to cover the difference.
Taking out a loan isn’t anyone’s first choice – but it may mean the difference between going or not going to school at all. Luckily, for families with financial need, the government provides subsidized loans at a very discounted interest rate – including PLUS loans for parents.
Going the federal loan route will certainly get you the best rates outside of getting a personal loan from a family member.
7. If Necessary, Explore Private Student Loan Options
Every student’s and every family’s situation is different – so if federal student loans, grants, scholarships, and savings can’t cover all of your costs, then you might have to turn to a private student loan. Private student loans can have higher interest rates than federal loans, so just be aware that you will be shouldering a lot more debt this way. It will likely take many years to fully pay it off, possibly with higher monthly payments.
Make sure you only go to private student loan providers after exhausting all other options – and shop around for the absolute best rate if it comes to that.
Author: Jeff Gitlen
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