If your child is going to college, you probably have a lot of questions, like how to pay for it. You might be surprised by how many different sources you’ll use to pay for tuition, room and board, books, fees, travel, and other costs. A recent study found that parents used more than a dozen different ways to help pay for their kids’ education. The College Ave Student Loans survey found that 97% of parents are helping their child pay for college or are planning to do so.
Here are the most common ways to pay for the biggest investment in your child’s future you’ll make.
Fill out the Free Application for Federal Student Aid (FAFSA) at FAFSA.gov. This is the first step in getting financial aid. It’s important to fill out the FAFSA as early as possible every year, since some aid is given to the first people who apply. Based on the information you put on the FAFSA, your child may be eligible for grants, work-study, federal student loans, and other things.
Grants and scholarships
In the survey, 70% of parents said that their children were using scholarships or grants to help pay for school. How do you get money from this important source? First, by filling out the FAFSA to get grants or scholarships from the government or your school.
But there are a lot of scholarships you can get from community groups, your home state, and online sources. Your child should talk to the guidance counselor at their high school and the financial aid office at their college to find out about other options. Then look at sites like Fastweb, Cappex, and Big Future by College Board. Not all opportunities are based on how well you do in school. Many depend on things like your extracurricular interests, where you come from, or even just luck. At CollegeAve.com, for example, you can enter a $1,000 scholarship sweepstakes every month.
Grants do not have to be paid back, just like scholarships. You can get some of them if you fill out the FAFSA, like the government-funded Pell Grants that are based on how much money you need. Some may only be available in your state, so check out the website for your state’s Department of Education.
Income and savings
In the College Ave survey, 62% of parents said that they were paying for their child’s college with regular savings and income, and 40% said that they were using a 529 savings plan. Now is a good time to look over your budget and see where you might be able to find extra money to put toward college costs. You may also find that your budget doesn’t give you as much freedom. Have an honest talk with your child now about how money can affect their school choice and if they need to help pay for their education.
Some students may have saved money from jobs they had in high school that they can use to pay for things. For many college students, having a part-time job will also help pay for school. Some students also think about getting full-time summer jobs. As your child gets older, they may also look for paid internships in the field they want to work in. 37% of families got money from a student’s job, according to the study. By filling out the FAFSA, many students are able to get part-time work-study jobs on campus.
Federal student loans
Over half (55%) of the parents surveyed said that their child’s education was helped by student loans. How do you qualify for a federal student loan? The FAFSA, you guessed it.
Mark Kantrowitz, an expert on student loans, says, “Take out federal loans in the student’s name first. These have low fixed interest rates and unique benefits, like flexible, income-based payment plans.” “But federal student loans have limits on how much you can borrow each year. If the amount you can borrow is less than the total cost, you may need more money.”
Private student loans can help make up the difference between how much financial aid your family gets and how much you need to pay for school. Use the student loan calculator on CollegeAve.com to find out about possible monthly payments, interest rates on private loans, and terms for paying back the loan.
You could also look into private parent loans if your credit is good and you can handle the debt. Private parent loans, like those from College Ave, offer both fixed and variable interest rates, and there are no origination fees. Federal parent PLUS loans, on the other hand, only offer fixed interest rates.
“Ask about the terms of the loan when you’re looking for a lender,” said Joe DePaulo, co-founder and CEO of College Ave Student Loans. “Make sure you understand everything, from the interest rate to the terms of repayment, so you can choose the best option for your family.”