Paying for College

Paying for CollegeAre worries about paying for college keeping you up at night? You’re not alone: most parents of high school seniors and college kids are also struggling with this daunting responsibility. It brings up a lot of questions, doesn’t it? How much should you expect to pay for college each year? How much should you pay for? How much should your child pay for? How much financial aid is available, and how much of that aid is truly worth taking advantage of?

Don’t panic. This simple primer will walk you through a five-step plan for paying for college without losing your shirt–or too much sleep.

1. Determine How Much College You Can Afford

Before you do anything else, you’ll need to evaluate your financial situation and determine how much college you can afford to pay for and how much you’ll need your student to cover. You may have been saving for a while, but many parents find themselves facing that first year of college with little or no money saved towards college. You will need to examine your budget to decide how much money you’ll be able to contribute towards your student’s education.

2. Find Out How Much College Costs

Ready for a shock? On average the following estimates are true:

The average cost for a year of college at an in-state public college or university is nearly $9,000.

For an out-of-state public school? Over $20,000.

And the average cost for a year of college at a private collage is over $32,000.

As you can see, the prospect of paying for college can be overwhelming. For help breaking down how much college will actually cost you, read more here.

3. Look Into Financial Aid Options

But what about financial aid, you ask? Won’t that cover most of my student’s expenses?

There’s plenty of financial aid out there, but some aid is better than others. You’ll want to identify the different types of aid that is available and seek out the best financial aid, which is free money in the forms of grants and scholarships.

Grants are usually need-based, meaning they are given out to students whose parents do not make much money. You’ll want to fill out the (Free Application for Federal Student Aid) FAFSA form as soon as possible to determine how much money the government thinks you should be able to afford to pay towards college. This number determines how much financial aid (and what types of financial aid) colleges will offer you.

Scholarships may be merit-based or need-based (sometimes determined by both factors.) Your student can begin applying for and willing scholarships while in high school, but most scholarships are aimed at seniors in high school and college students. You’ll want to look into the many scholarships that are available and make applying to scholarships a “part time job” for your student.

Student loans are also available, but you really want to limit how much you (or your student) take out in loans each year. It’s especially important to evaluate how much debt your student would have to pay off after graduation if he or she borrows at a steady rate throughout his or her college career. Set a limit as to how much your student will borrow for college.

4. Decide Where Your Student Can Afford to Go

Now that you have an idea of how much you can contribute and how much financial aid your student can expect to receive, you’ll want to look at your college options. You can use this handy, free online tool provided by CNN Money to compare college expenses (including room and board.) Then check out the statistics on how much financial aid each college option typically provides.

You’ll discover that certain colleges offer more or less financial aid than others. When you get these numbers, drill down into what kind of financial aid each college offers, and look for options that will apply to your family situation. You may find that academic achievement, athletic skill, race, ethnicity, religion and financial circumstances will all affect how much and what kind of aid your student will qualify for.

5. Talk to Your Student About Your Expectations

It’s important to communicate with your student. This will most likely be an educational experience for both of you, so make sure to carve out a significant amount of time to discuss the topic and come up with a plan. Perhaps your child will need to work part time to offset expenses? Consider a less expensive college? Work extra during the summer so he or she can afford to focus on class work during the school year?

You will also discover that there are more options than you probably realized previously. Most high school kids get fixated on a couple popular college options, ignoring the less popular ones. They’ve heard their classmates talk about a certain school, and they don’t even know the other options exist.

You’ll want to talk through options like online college, community college (for the first year or two), living at home (even if just for a year or two), taking AP courses while in high school and testing out of courses (which costs a fraction of the actual college course.)

Paying for college is a challenge, but you and your student can figure it out. This challenge is a good first life lesson—one you can overcome together as you set your student up for a successful college career.

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