Tips to Help Pay for College

Financial Aid - You must start by filling out the Free Application for Federal Student Aid (FAFSA). The earlier you can send this in the better. You can start to send in these forms on January 1 of each year. Also don’t miss the colleges’ deadline for financial aid! You may also be asked to fill out an additional application for some colleges. This form is the PROFILE form. Ask if you need to fill this out for colleges you are applying to. Also ask which form the college uses to base its financial aid package on; sometimes one will be better than another for you depending on the information you submit. Financial aid will come in three forms: grants, which are not repayable but are free and clear; loans, which are of various types (See federal loans.); and work study, which is work on campus offered to students for pay. Make sure you always check the package offered. You want more grants than anything else. If one college gives you a better deal, ask a second college for consideration. Yes, you can negotiate. You should also ask the financial aid officer at a school for a review if you think the financial aid package is too low, especially if you have a change in your circumstances between application time and the beginning of the school year. Examples of changes would be if you have lost a job or have had medical expenses.

Loans

• Federal Loans – These loans are guaranteed by the government for educational expenses. They are offered at a fixed rate, but they are not always covered by the same consumer protections as private loans. The Stafford loan has a 6.0% interest rate while PLUS loans have an 8.5% rate.
• Private Loans - When the market is down, private loans may be the best way to go because interest rates will be down. But always be sure to compare rates and origination fees as well as terms of repayment. Many times colleges will have lists of approved lenders, but they may be getting kick backs for this kind of advertising so these may not be the best deals. Check with your own bank, credit unions, and go online to such sites as SimpleTuition, eStudentLoan, and LoanFinder. Also consider social lending programs. Look at LendingClub.com for 7.88% interest rates on loans made from members to each other, bypassing banks.

Outside Scholarships – Use free scholarship search services to find any and all scholarships available. Scholarships are free, and there are many out there, sometimes small and not easily found. Enough of these can be a big help in paying for college. ScholarshipExperts are examples of sites that offer extensive and up-to-date data bases. Check in your high school’s guidance office for a list of local scholarships. In addition, often employers and local community service organizations offer scholarships. Hint: Scholarships that ask for essays are often the best; most applicants don’t want to write so the competition pool is not as large, and the essay is a great way to showcase talents of students.

Merit Aid – Also great because this is free money, merit aid is based on academic and athletic merit. Always check with a college you are applying to for what they offer in merit aid.

Savings – There are many ways to save for college, but you must start early!

• See accounts such as Coverdell Education Savings Accounts.
• See Pre-paid Tuition Accounts – offered by states at the present tuition cost. Save for 18 years and pay at the tuition rates of the year of your child’s birth. It is a savings. But, if your child wants to go out of state, although you can withdraw the monies saved without penalty, you will be behind the rate of tuition increase and paying out-of-state college fees.
• 529s – These accounts allow you to save tax-deferred, and if you use the monies for education—tax-free! The best 529s are in your own state, but compare. Some terms are not as good as others. If so, you can open a 529 directly, but you will pay broker fees. Not all 529s are the same. You want to make sure they are diversified and are well-invested. Check with Morningstar.com to compare.
• Use the Upromise website. Here you can shop at participating retailers for 1% to 25% off. The savings can be placed in an account for a son, daughter, nephew, even friend as part of each’s college savings. You can also register your grocery card and receive 1% to 3 % savings or eat at participating restaurants for savings. And be sure to register the College Dream Sweepstakes. You may be one of the 10 lucky winners to win $10,000—that should help pay for your college bills!