One of the most significant challenges facing parents today is paying for college. Jacob Gold, in an article he wrote for HuffPost, said: “We constantly see headlines about the increasing cost of education and the strain it puts on family finances.” He went on to say “There is no question that funding a child’s college education is one of life’s most significant investments. So how can you keep junior’s undergrad years from undermining your own retirement savings?”
The Best Way to Pay for College
The best way to pay for college is to use money from brokerage accounts, 40l(K) or other retirement accounts, 529 state-sponsored education accounts, and other traditional savings accounts. All of these methods of saving require time and planning during the younger years of the future college students in your household. If you do not have the cash set aside, then you will have to investigate the numerous types of financial programs that are available.
Several Types of Aid
There are several types of aid available to help you pay for your education beyond high school, including grants and scholarships, federal work-study jobs and student loans. The first step is to complete the Free Application for Federal Student Aid (FAFSA) form at fafsa.gov. We will discuss the important details of FAFSA in another blog post.
Grants and scholarships
Grants and scholarships are free money. They should be your first choice to finance your education. Why? Because you don’t have to pay them back. An excellent way to apply for a grant is through your FAFSA form. You also can check your financial aid office at the college you want to attend, U.S. Department of Labor’s free scholarship search tool, federal and state agencies, your parent’s employer or even with your current employer, to name a few possible sources to find grant and scholarship opportunities.
Federal work-study jobs
Federal work-study jobs are another way to help pay for college. Work-study is a need-based grant that requires you to work part-time while you’re in school. To qualify for work-study, you’ll need to fill out the FASFA form and meet the needs-based criteria of the program. You are only paid for the hours that you work.
Student loans fall into two categories: federal loans and private loans.
Federal student loans come from the Department of Education. These include:
Direct Subsidized Loans, Direct Unsubsidized Loans, Direct PLUS Loans, Direct Consolidation Loans, and Perkins Loans. The specifics of the Department of Education loans will be discussed in a future post.
Private loans sometimes called “alternative loans,” are offered by private lenders, like banks and credit unions, and do not include the benefits and protections that come with federal loans.
Seek Professional Advice
Get help to make informed financial decisions about how to pay for college. Start by comparing financial aid offers or understanding student loan repayment options.
###Larry W. Marvin
LifeCrafter- Money $ense