Whether you or your child is headed to college this year or in five years, it’s never a bad time to think about college financing. The cost of college today is a huge challenge for many families and every little bit of preparation and research helps to handle the expensive cost. While the thought of paying for college might seem very overwhelming, here are some tips to help you start preparing for college financing.
Determine your financial situation
One of the first steps to take when preparing for college financing is to take an honest look at your personal financial situation. It’s important to gain an understanding of whether your family will be able to pay for the tuition with what you have saved or if you will need help from additional financial aid programs and loans. By using a financial aid tool like this one, you can estimate your eligibility for federal student aid.
Understand what your options are
The cost of college tuition rose 179% between 1995 to 2015 and is still continuing to increase to this day. Because of this, many students rely on forms of financial aid to attend school. There are many different types of financial aid including federal student aid, financial aid from the chosen college, and private aid. Federal student aid includes federal loans, grants, and work-study programs and is evaluated based on financial need. Lots of colleges offer their own funds for financial aid, often taking into consideration the student’s merritt. Lastly, many private organizations offer their own scholarships and loans to help students pay for college. When preparing for college financing, it’s crucial to know what these options are and what you or your child may be eligible for.
Make sure you’re saving in the right name
Did you know that college savings can end up detracting from the student’s financial aid package? While putting aside savings for college is always a smart decision, make sure the savings are held in a parent or guardian’s names, rather than the student’s. Savings held in the student’s name is assessed by the federal government at a rate of 20%. This means they will deduct 20 cents to every dollar from the student’s financial aid package. Holding the savings in a parents’ name helps you to avoid receiving less help from federal student aid.
When the time comes, there are tons of scholarship opportunities that students can apply for that offer added financial help. Scholarships typically evaluate students based on a variety of factors including merritt, extracurriculars, and financial need. It’s smart to start researching for potential scholarship opportunities early and keep a list of the ones you are interested in. In addition, keeping track of extracurriculars, community service, and notable school projects throughout high school helps to make filling out scholarship applications easy.
CTFCU is excited to be offering (2) $1,000 scholarships to help current high school seniors pay for college in the fall. Learn more and download the scholarship application here.
Learn more with our Financial Education Center course
Lastly, a great resource to help you learn more about the college financing process is this online course in our Financial Education Center. The interactive course covers everything you need to know about paying for college, including videos on 529 plans, savings, investments and even a college budgeting tool. This course will help you and your family prepare for all of the costs associated with attending college.