6 Ways to Better Afford College
Sallie Mae’s recently released How America Pays for College study indicates that only four out of 10 American families have a plan to pay for college. Whether you’re desperate for last-minute ways to meet that tuition bill or worried about affording college down the road, don’t panic. I’ve partnered with Sallie Mae to provide my top strategies to prepare and pay for higher education.
Keep an Open Mind
The first lesson in planning and preparing for college is try to keep an open mind about where to attend and how to achieve that degree. Private liberal arts schools are wonderful, but not if attending means taking on piles of debt to attend. You have to be realistic about what you can comfortably afford. Many students are opting for state schools and community colleges where they can save a great deal of money. Others are skipping a year between high school and college and using that time to work and raise money for college. You need to do what’s best for you and your financial life.
Cast a Wide Net for Free Aid
Millions of dollars worth of scholarships and grants are available each year to college-bound students. The key to winning them – aside from meeting the qualifications – is applying early and often. In fact, there are many scholarships available to students in grades K-11, not just high school seniors. There are several free scholarship search tools including CollegeAnswer.com, which points to approximately 3 million scholarships worth $16 billion.
Also, while some state or school specific deadlines may have passed, you can still apply for federal grants. Start by completing the Free Application for Federal Student Aid or FAFSA.
Borrow Wisely
Speaking of the FAFSA, this form will also help you apply for federal student loans, which tend to carry the lowest interest rates with more flexible repayment options. If you must borrow money, start with federal loans first. Then, if scholarships, grants, federal loans and savings fail to cover the cost of education, carefully explore the private student loan market. My rule of thumb is that you don’t want to borrow more than half of your anticipated starting salary. So, if you expect to earn $50,000 a year in your first year out of school, don’t borrow more than $25,000 total – federal and private.Consider interest rates and total cost over the life of the loan.
Keep in mind, depending on your loans you can make interest payments while still in school. Even small monthly payments can help you graduate with less debt.
Consider Working Park-Time
In college I worked three to four jobs my sophomore year and, while it was absurdly hectic, making money on my own proved essential while living on (and off) campus to pay for books, food, club dues and holiday gifts. The savings also came in handy during the following year when I studied abroad in Paris. The most important lesson, though, was that I became more financially independent and didn’t have to beg my parents for money. It was rewarding to be able to afford things for myself. It made me appreciate having a job.
Aim for Four Years
One of the biggest financial myths of college is that it’s a four-year experience. The truth is schools, both public and private, are graduating just 37% of their full-time students within four years, according to an analysis of 1,400 schools by the American Enterprise Institute. It’s one thing if you’re majoring in architecture, accounting or engineering. Those concentrations tend to have greater course requirements to qualify for related work. But for millions of other college students, extending college by an extra year or two is arguably not a worthwhile investment. Each additional year could mean another $25,000 to $50,000 a year in tuition, room and board. Try to avoid changing majors midway through college or transferring to schools that don’t accept your previous course credits.
Family Financial Setback? Ask for More Aid
Schools offer what’s called a “professional judgment review” if a family suddenly experiences a financial setback such as a job loss, salary reduction and high unreimbursed medical bills. They’ll re-examine the amount of money they initially offered and try to adjust it to meet your new financial needs. Financial aid experts at FinAid.org, a college planning website, tell me that if parents’ earnings have dropped by $10,000 and they have one child in college, the student could potentially get an additional $2,000 to $5,000 a year in financial aid through a professional judgment review.
