When parents send their children off to college, they may feel as if they are…
When it comes to paying for college, it is not uncommon for families to rely on several sources of money. Unless you have an unlimited amount of cash in the bank, there is no one solution that can cover the entire cost of tuition because of how expensive it has gotten. The key is to start planning as early as possible.
Getting a Student Loan
Private loans can help a student pay for tuition, especially if they do not have any significant scholarships lined up. However, it can be hard for students to get these loans on their own because they do not usually have a long enough credit history. You might wonder if you will have to cosign with your child, as it is often vital to getting approved. Your child might also qualify for federal student loans if they are in school half-time or more. There are subsidized and unsubsidized federal loans, so make sure to find out which ones your child may qualify for. It is generally recommended for a student to graduate with less in loans than their starting annual salary will be. This will allow your child to pay back the funds in a reasonable amount of time. However, even if this does not seem feasible right now, there are some other options your child can combine.
Scholarships and Grants
It is important for parents and students to fill out the FAFSA together so you can help your child qualify for as much financial aid offered by the school as possible. However, don’t stop your scholarship search with what is offered by the school. You could also use external scholarship search tools, which can match your child to funding offered for everything from academic achievement to what they’re interested in. Don’t forget to help them look for grants too, which are like scholarships and do not need to be paid back like loans do.
Saving for Your Child’s Tuition
If you have enough time, you can start saving cash for your child’s education and allow it to grow. While you can use a savings account, if you know your child will use the funds for their education, you can open a 529 plan, which offers more benefits than a traditional savings account. Know that 529 plans do have some restrictions on how the money can be used, so if your child decides not to go to school, you can't just withdraw the funds to take a vacation instead. In some ways this can help you get closer to financial independence since the 529 plan is specifically for college and you don’t have to combine your personal savings with your savings for your child’s education.
Working During School
If your child has a scholarship already, they may want to work during school to cover additional expenses. The money can be used for living expenses, textbooks, class fees, or anything else a scholarship might not cover. Working part-time is unlikely to generate enough funds to pay for all your tuition, but your child could take a gap year to work full-time and use the funds to pay for some tuition. Still, the rising costs of college have made it much harder for a student to pay their entire way.