The Different Ways Families Purchase College

How to cover college is one of the biggest necessity of families today. And although students assume a few of the responsibility for the cost, nearly all many times, it falls towards the parents.

There are some ways to plan and invest in your child's higher education, including 529 plans, regular savings, inheritance, income, scholarships, and loans. Many families end up utilizing a combination of methods to foot the balance.

From parent Susan M:

From parent Laura M:

Regardless of where you stand within the planning process, here are some helpful paying-for-college tips, along with real-life strategies shared by members of our Paying for College 101 Facebook group. (Strategies are edited for clarity and flow.)

 

Federal Loans and Federal and College Need-Based Grants

Many parents rely on federal Direct Loans to pay for a percentage of their child's expenses. These come in two forms: either as subsidized loans (typically available to individuals with more demonstrated need) or as unsubsidized loans, for those families without demonstrated need. It's important to arrange and maximize these kinds of loans first, before exploring any other education loan options. That is because Direct Loans are the only loans that students can borrow without the need for a cosigner, and they have among the lowest interest rates open to students.

 

How Are you eligible for Federal Loans?

The student of any family that submits FAFSA is eligible for a Direct Loan. Access to federal loans is among the primary advantages of filling out FAFSA.

From parent Gretchen M:

For many students who qualify, Pell Grants could be a way to get more money for college, with the added benefit that the Pell Grant needn't be repaid. Obviously, it's not just the federal government that provides need-based aid; lots of campuses will mix scholarships and grants in to the educational funding package.

 

Parent PLUS Loans and Cash Flow Solutions

Many families are willing to pay for college expenses but wish to extend the payment process. If you have problems with income but be prepared to be able to cover the remaining cost of attendance over the next few months, many colleges offer payment plans, either for free or for a nominal fee.

For parents who'd prefer to help shoulder the cost of college but would rather spread it over a matter of years, Parent PLUS loans provide that option, along with the option to borrow as much as the full price of attendance. Remember that while a parent or gaurdian PLUS loan can not be transferred to the student, many families will refinance within the student's name after graduation.

From parent Claire S:

From parent Heather D:

 

When To Consider Private Student education loans

Beyond scholarships and Federal loans, you will find private loans. Parents usually co-sign of these kinds of loans. Almost all of them offer a deferment during enrollment, and therefore students do not possess to begin paying back the loan until they graduate, or until they finish graduate school if they continue their studies. Interest, however, accrues from the time the borrowed funds is dispersed. As with any loan, you need to have a conversation together with your child about how exactly rates of interest work, and also the expected amount they'll need to pay each month.

If you're researching borrowing money for school, College Ave Student education loans might help. College Ave provides a number of private education loan choices to help your family pay for college. Besides competitive interest rates and multiple repayment options, they provide useful tools similar to their free credit pre-qualification tool which allows you to see whether you be eligible for a financing and just what interest rates you can expect without impacting your credit rating.

From parent Lauren S:

 

529 Plans and Other Kinds of Savings

Another way parents are saving for college, after which paying for it is by using a 529 College Savings Plan. These plans permit you to take out the cash tax-free provided you utilize it to cover college-related expenses.

Some costs (for example transportation) might have to be paid through other means, such as savings.

From parent Michelle M:

From parent Lauren S:

From parent Christine H:

From parent Kathleen M:

We refinanced our home and took spend.

From parent Christine A:

We only have one child. Neither my husband nor I visited college, so it's our dream that our daughter can go without worry. We're paying for her full undergraduate degree from 529s and stocks. Anything remaining can be used as graduate school. We sacrificed many vacations along with a nicer home to be able to do this.

 

How Grandparents or Inheritance Assist in paying for College

Not many of us may have a rich uncle, but extended family members are often happy to help, either through a gift or through inheritance. Even if it's not enough for everything, a grandparent's gift might help subsidize other sources, for example savings.

From parent Rima K:

 

What Are Merit Scholarships and Scholarships?

Merit scholarships are awarded to students based on their achievements–academic, extracurricular, or talent. Schools award merit scholarships using their own institutional funds and this type of scholarship will probably be the largest supply of scholarship money for many students.

Private scholarships come from nonprofits, businesses, or individuals. While big-name private scholarships may pay more, the possibilities greater for locating smaller scholarships inside the student's own community. College Ave Student Loans offers a $1,000 monthly scholarship. They choose one winner every month, so that you can enter monthly for a chance to win.

Keep in your mind that for financial planning purposes it is best to formulate a strategy based on what you realistically are able to afford for pay. Families can estimate merit scholarships by seeing when the college shares specific criteria on their website, for example how the University of Alabama shares these details.

If a college isn't as transparent about how they offer merit scholarships, look for the school’s Common Data Set–specifically, the number of students without need receiving merit scholarships, and also the average quantity of a merit scholarship. Road2College's College Insights tool allows families to simply find all of this information. You may also do reverse look-ups by entering search criteria. You'll get a listing of schools where your student is most likely to get merit scholarships.

 

What Are Public Scholarships?

For students in some states, like Florida or Georgia, heavily subsidized tuition can be obtained if they want to stay in-state and visit a public university. In Florida, for example, Bright Futures scholarships pay for a portion, or in some cases all, of the student's tuition and costs. Note that these do not cover room and board. Still, for many families, it is a good deal and a great opportunity.

From parent Daniella S:

 

Can Students Work During College?

For students today, it's a lot more hard to cover a large amount of their very own education by working during school. That said, a part-time or summer job can still be very useful.

From parent Sandy H:

There's more than one way of making the dream of sending your son or daughter to college a real possibility. Even though so just a few lucky families will have a single solution to the task of paying for school, every tiny bit from every little source accumulates. So do your research, then set a financial goal and craft an agenda that your family can work towards together.