If your child is a high school student or a soon-to-be college freshman, you may find yourself asking why they can’t pay for college on their own, perhaps the way you once did.
The answer? As one member of the Road2College (R2C) Paying for College 101 Facebook group puts it: “College costs SO MUCH more than it did when we were in school 30 years ago. It’s not something that can be addressed by summer jobs or even part-time, year-long jobs.”
So how then do families today afford to pay for Higher Ed? A recent College Ave Student Loans survey of 1,045 parents of college students attending a four-year university points to the top five ways families pay for college costs.
They are 1) grants and scholarships (70%), income and savings (62%), student loans (55%), 529 accounts (40%), and through the child working (37%).
We asked our Facebook community to share what they wished they knew early on about college loans, scholarships, savings, private versus public, and having family conversations about money. (Quotes have been edited for clarity and length.)
Grants and Loans
Sabrina, a mother of four, unpacked her hard-earned wisdom in a Facebook post. In a nutshell, she says you can’t get what you don’t apply for. That’s why, on October 1 of your child’s senior year, you’re going to want to file a Free Application for Federal Student Aid (FAFSA) to be considered for grants and student loans. All students who submit a FAFSA are eligible for Direct Federal Loans, regardless of financial need or income level.
After filing the FAFSA, you’ll receive your Expected Family Contribution (EFC). Keep in mind that the EFC is just an estimate, and the amount you end up paying can vary quite a bit from the actual EFC you receive.
From Cindy: “Expect the EFC to be higher than you think it should be. Also, that number only comes into play if you go to a school that meets your full need (they are very competitive). My sister-in-law’s EFC was $7,000, but the school her student attends doesn’t meet full need, so they must pay more than $20,000 a year.”
Direct Federal Loans (also known as Stafford Loans):
Direct federal loans have fixed, low-interest rates and a six-month grace period starting the day you graduate or leave college.
Keep in mind, says Sabrina, “The aggregate limit for Direct Federal Loans (the most a dependent student can take in their own name without a cosigner) is $31,000 total.”
The aggregate limit isn’t based on four years because she says, a lot of students remain in college longer than that: “Just one in three students who are enrolled at public colleges will graduate in four years, and barely half at private colleges do.”
Parent PLUS Loans:
You may also consider taking out a Parent PLUS Loan. These do tend to have high fees and interest rates. On the plus side, however, Parent PLUS Loans allow you to spread out the cost of college over years, and parents can borrow up to the full cost of attendance.
Private loans for parents and students are available from banks, credit unions, and state agencies, with both fixed rates and variable rates. Generally, you can’t borrow more than your school’s total cost of attendance.
Before applying for private loans, make sure you’ve applied for federal loans. There are differences between them in repayment terms, rates, and other features.
Some of the most important tips our parents shared on private loans:
- Before applying, you’ll need to know the cost of the school, along with any financial aid awarded to the student.
- The better the creditworthiness of the cosigner, the better the loan rate.
- Families should shop and compare interest rates from several lenders. Request a pre-qualification from them, or apply to several lenders within a four-week period so credit bureaus view the credit requests as one.
You can also get an estimate on what your monthly repayment bill will look like by checking out a student loan calculator, like the one offered from College Ave Student Loans.
For the parents of seniors and juniors, this tip from Sabrina: “Apply for private scholarships. But DON’T expect a miracle here–it can be a lot of work for the low likelihood of being awarded an extra few hundred dollars. Or, if you’re lucky, a few thousand–which of course is better than nothing but applying for many private scholarships is usually NOT a means to bridging big gaps in affording college.”
From Susan: “Focus on finding safeties and matches, ideally schools that have a history of giving good merit aid. Understand that unless you have a low EFC and are applying to ‘meet full need’ schools, you will be paying full price at your reach schools. For this reason, the only reach my son applied to was an in-state public.”
Some schools offer merit scholarships based on Grade Point Averages (GPAs) and test scores, but the specific GPA necessary for eligibility can run the gamut from a 2.0 to a 3.7. To find the merit scholarship that best fits your student, join the chorus of experienced parents singing, “Research, research, research.” And research early!
To snag merit scholarships, parents say your student might do better to be the big brain in a small pond (a smaller college), rather than one of many at a school where their credentials don’t allow them to stand out.
Presidential and Other Scholarships:
Parent Janet Marie says her daughter applied for a presidential scholarship and got a lower scholarship instead. Good enough…but when she got her financial aid package, she saw they gave her an extra $2,000 just for trying.
Our parents’ takeaway? You don’t know what you’ll get until you try.
One easy one to try for is the $1,000 Scholarship Monthly Sweepstakes from College Ave.
Saving for College
Savvy parents cite the following as good sources of tuition funding: 529 plans; regular savings; selling stocks if you have them; inheritance; and income.
Your EFC is based on your current income, and not as much on savings, so you shouldn’t be afraid to save. You’re expected to put your current earnings towards your child’s college education.
Side gigs–your own, your student’s–aren’t everything you’ll need to fill tuition gaps, but they can help. Get inventive! Cindy offers interesting advice: “Research what companies offer scholarships to employees and have your child apply to work there. My nephew has received scholarship money working part-time at McDonald’s while going to college to study architecture.”
If your child has already been accepted to a school, urge them to be a Residential Assistant (RA) for free room and board. They can also apply to internships and co-ops if offered and earn money for tuition before student loans come due.
Private vs. Public Colleges
Public Ivies, first identified in 1985 by Richard Moll, an admissions director, are public universities that match the caliber of Ivy League Schools without the prohibitive cost. Public Ivies include the College of William and Mary, the University of Vermont, and 30 institutions in five regions of the U.S.
You may want to compare the cost of your school choice against your desired criteria. Your theater major may or may not need a Harvard education.
Parents in the know suggest that you think about your student’s field of interest and be realistic about what the job market is likely to pay them. A young teacher who has $180,000 worth of loans for attending a prestigious public school may end up being more stressed than a teacher with $20,000 worth of loans to a public, less prestigious, school.
Ask if the prestige is worth it. It might be–but it might not.
Never say never. Some private schools do offer financial aid packages, so don’t automatically cross them off your list.
Get Real with Your Student About College and Costs
Parent Leigh says it best when she tells the parents of juniors: “Reinforce that college is the dream, not the school.”
According to the same College Ave survey, 34% of parents helping to pay for their child’s college reported their student attended a school outside their budget. Repeatedly, parents say not to waste time, energy, and emotion on schools your kid can’t afford. Saying “no” to an unaffordable school upfront is less heartbreaking and less effort than putting the stops on a dream school acceptance.
Mika, another parent from the Paying for College 101 Facebook group, shared this advice: “Parents and students should all be on board about your budget as you start thinking about college. Do not get to the point where your student is in love with a college you can’t afford.”
Remember, schools classified as “meet full need” use the EFC to offer aid. Is your school of choice a “meet full need” school and is your EFC below the school’s cost of attendance? These are the criteria schools will use to determine if you have financial need, and how much of it they can meet.
The squeaky wheel does get the grease–and the money–in obtaining college aid. Karin says her child’s small SUNY school doubled their initial aid after they appealed. So, ask! Just don’t count on an automatic “yes.”
You Can Do It
Wade, a member of the Road2College Facebook community, offers this perspective on paying for college:
“I can boil down what I learned this year into two points:
1. Most colleges are expensive. There are no magic bullets to pay for it. High achievers will receive some scholarships, but often not as much as the parents think they deserve. If you need to borrow a large amount of money you may find some aid, but likely not enough for your child to go to the most expensive and most selective schools.
2. Taking into account the above, many parents and kids are focused on the wrong schools and are not having honest conversations. Do not apply to (or expect to attend) the most expensive and most selective schools if you cannot pay. Again–there is no magic bullet.”
Although the process may seem daunting, with knowledge and persistence you can help make the dream of sending your child to college a reality.
This article was sponsored by College Ave Student Loans.
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