The costs of college are rising. According to its 2019 Survey, Trends in College Prices, today’s college education will cost families approximately $25,590 for an in-state public college and $53,980 for a private college, up 6% since last year. Having no plan to pay for college can mean unnecessary student loan debt and stretched home equity lines of credit.
Our experience has shown that families who plan early can save as much as 50% off tuition costs. Here are things you can do to pay for college:
1. File the Free Application for Federal Student Aid (FAFSA).
Many families assume they make too much money to file the FAFSA. In reality, families with incomes up to $175,000 per year are eligible for some form of financial aid. The college industry is booming. There is more than $200 billion in financial assistance from the federal, states, colleges, foundations, and corporations for deserving students.
To qualify for funding, you have to apply for financial aid. The Free Application for Federal Student Aid (FAFSA) is the form required at all colleges that award federal aid. In late-October of your senior year, you can begin the FAFSA by visiting www.studentaid.gov.
Also, check college websites to find out additional forms to complete. Private schools may require the CSS/Financial Aid Profile. States also may have programs, such as the Tuition Assistance Program (TAP), in New York State.
2. Apply for private scholarships.
The majority of the financial aid students get comes from government and college sources. However, you should still consider applying for private scholarships from corporations, local businesses, community groups, and religious institutions to name a few. Many private scholarships are considered “last drop” financial aid because award amounts are typically small, ranging from $500 to $2,000, a small fraction of college expenses. But given how high college costs are, every bit of money you can get counts.
To find scholarships, the best place to start is your school’s college office. Other places to check include:
- Websites like fastweb.com and niche.com
- Your parent’s employer to see if they offer tuition assistance programs and scholarships
- Your church, temple, mosque, or wherever you worship
- Local community groups such as the Lion’s Club, YMCA
- Restaurants such as Burger King, Coca Cola, and McDonald’s
3. Fund a 529 Plan.
Open a 529 account to save for college. A 529 college savings plan is an investment account that you can use to pay for qualified educational expenses. The plan is typically sponsored by states and comes with tax advantages. Earnings from a 529 college savings plan grow tax-deferred. withdrawals can be made for education expenses tax-free. And some states, such as New York, allow account owners to get a state income tax deduction.
To learn more about 529 Plans and its benefits, please consult with your tax advisor.
4. Choose the Right College.
To get a better financial aid award, you have to be a highly desired admissions candidate. This is not the same as your admissions chances. Some times schools will admit a student, but not provide enough financial aid to the family. By doing this, they’re saying, “you can come here, but you’ll have to pay for it.”
If you are a desired candidate, schools will do what they can to make it affordable so that cost is not a factor in your decision.
To get the best aid package, when you’re in the college research process, look for colleges that provide most of their students with some financial aid. Also, look at the average financial aid package. The higher, the better. Next, assess where you fall in their admissions profile. If you are in the top 10%, have a unique background, bring a special skill/talent (e.g. NCAA, performing arts), then you are likely highly favored and can command a better financial aid package.
Keep in mind, that sometimes your initial financial aid offer will be a low-ball offer. But when you begin to negotiate with the financial aid office, you’ll learn your worth. If the school is serious about you attending, they will make a counteroffer that makes the college more affordable for your family. This means you can expect more scholarships and grants and fewer loans that have to be repaid. If not, then you may want to consider other options or accept the offered financial aid award.
I provide step-by-step guidance on how to negotiate a financial aid award letter here.
5. Consider the Type of College.
In-state public schools are affordable options with tuition being half of what it costs to attend a private college.
However, in-state public schools get no private funds and rely heavily on state and federal dollars. Moreover, state schools get thousand of applicants to share a smaller pot of financial aid.
As such, this may make private schools a viable option for optimal funding, for some, such as low-income families. Though not all private schools are created equal and will give you a competitive financial aid package. Look for schools that are well endowed and get a lot of money from alumni and corporations. I have seen many cases where families are paying less for a private college than an in-state college.
Conclusions + Next Steps
College is expensive and costs are expected to increase by 4-6% every year. There are resources you may qualify for to help reduce these costs.
If you are worried about your family’s ability to pay for college, consider finding help. Retain the services of a financial aid expert to help you navigate the process. A financial aid expert can assist with applying for college aid, negotiating a better financial aid package, and finding resources to reduce the financial burden of college. With my own clients, I have helped many save thousands off of tuition costs, an average of $15,000 per year.
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