Financial Aid & Scholarships — Paying for College Without Panic
Your child should not bury themselves in debt to go to college! Find out how to get the best financial deal.
Paying for College
College is a significant investment of time and money. If you are worried about how you or your student will ever be able to afford it, take a deep breath!
In this article of the series “Everything You Need to Know About Applying to College (for Parents),” you’ll learn about applying for financial aid, getting grants and scholarships, and comparing aid packages from schools.
If you are new to the series, check out the previous articles (or send them to a friend)!
- “Where Do We Even Start?” The Parent’s Role in College Applications
- Building the College List Without Stress or Pressure
- What Colleges Really Look For (And How Your Teen Can Stand Out)
- The College Application Process, Step-by-Step
Ready to jump into money matters? Let’s do it!
You Don’t Pay Sticker Price
Colleges are a business, and your student is the customer. With almost 6,000 colleges in the US alone, these schools are competing for your business.
They want your teen to attend (and the tuition dollars that come with it).
Think of it like this: If you were shopping for a car, you would take steps before making a purchase.
You’d research which type of car works best for you. You would likely have several similar cars to consider.
During the shopping process, you’d take a look at your finances and figure out exactly what you can afford to pay.
You would get quotes from various dealerships and see if one dealership would price-match another.
Sure, cars come with a sticker price. But you know you would never pay that. You know that if you play it smart, you can get a better deal.
The same is true for paying for college. It’s a process! And if you walk it out, your child can get an excellent education at a great price.
How to Get Money for College
Your student has the potential to gather money from various sources to help pay for school.
Their Savings
Yes, your child can help fund their own education.
Perhaps you or a relative set up a college savings account (like a 529 account) in their name. They can even contribute to that fund themselves.
If your child has a job, they can save a portion of their income toward school costs.
A student may also apply for student loans from the government, the college, or a private loan company. Think of these as a last resort!
Parents and Relatives
If you plan to pay for all or part of your child’s educational costs, open an educational account (like a 529 plan).
You can deposit money into this account and then withdraw it for later educational purposes, tax-free.
Family and friends can contribute to it as well. If you have relatives who would like to contribute, have an honest conversation with them about how much they plan to give.
It may be awkward, but you need to know this information before committing to a school.
You may also qualify for loans for your child’s schooling (such as the Direct PLUS loan from the federal government). But consider this option as a last resort.
The Government
State and Federal governments have programs to fund college.
These programs include grants (money that does not need to be repaid) and loans (money that does need to be repaid).
There are different ways to qualify for this aid, and not all are related to income.
Every student, regardless of family financial circumstances, should fill out the FAFSA (Free Application for Federal Student Aid).
You and your child will need to fill this out every single year. The application opens on October 1 the year before your student will attend school.
The early bird gets the worm! Fill this out as close to the deadline as possible. Your child does not need to know their college choice when filling out this form.
In addition, your child may qualify for state-based aid. Check whether your state has a program.
Are you current or former military? Your child may be able to access college funds through your GI Bill.
The College
Colleges award a significant amount of money to current students in the form of grants, scholarships, and loans. There are three types of aid colleges provide.
Need-Based Aid
Colleges will examine you and your child’s ability to pay for school. They gather this information from the FAFSA (the federal application), and in some cases, from an additional financial aid questionnaire called the CSS Profile.
Colleges will offer your student money for school to offset the cost of attendance.
In some cases, they offer tens of thousands of dollars! A school with a large endowment could end up costing you less than the local community college!
Remember, ignore the sticker price! Use websites such as College Scorecard to find out what most students actually pay at the school.
Merit Aid
Colleges want to attract the best and brightest to their schools.
They do so by offering merit aid. This is scholarship money awarded to applicants who meet specific academic criteria.
Do you think your student will not qualify for merit aid? Think again! Remember, there are almost 6,000 schools out there.
Apply to schools where your child is among the top 25% of applicants for GPA and test scores.
Some highly selective colleges offer no merit aid (like the Ivy League schools and others like them). They can attract the best and brightest without it. These schools do, however, offer significant need-based aid.
Talent Scholarships
Colleges will offer scholarships to student athletes, artists, musicians, etc., to enhance the quality of their school’s programs.
Institutional Loans
Some colleges offer their own loans. These loans may be better deals than their private counterparts (though generally they are not as good as federal loans).
This is money your student will have to repay.
Outside Scholarships
Outside scholarships are available from individuals, businesses, and volunteer groups. You just have to seek them out and apply (more on this later).
Estimating College Costs
It is vital to have a complete picture of college costs.
Some institutions are very transparent about their costs. They include items like transportation, medical insurance, and personal expenses to give you a clear picture.
Others are a little more obscure, so you need to think through these often-overlooked college costs.
Housing
Housing is a significant portion of college costs.
Check the prices of on-campus housing. Then ask this important question: “Is housing guaranteed all four years?”
If the answer is no, your child may have to find off-campus accommodations for some years of college. Research the prices of nearby apartments and factor them into your budget.
Books and Technology
College textbooks are expensive! Although you can hunt around for deals, you should estimate that books will cost $1000 a year.
If your student is not provided with a computer by their college, consider that investment as well.
Medical Expenses
If your child is attending school far away, any medical expenditures may be out of pocket.
Most schools have a health center, but these are typically pay-per-service. Or the college may require an annual fee for use of their health center.
Transportation Costs
What is the cost associated with traveling back and forth to school?
Will your student have a car? If so, they will need a parking pass. Some colleges charge a lot for those. There is also money associated with gas and tolls.
Personal Expenses
You may think, “What does my child need to buy at college?” Consider laundry fees, dining out, and club fees.
If your student wants to participate in Greek life (like a sorority or fraternity), the organizations can charge thousands of dollars a year.
Study Abroad
Does your child dream of studying abroad? Some schools make this incredibly affordable. Others charge a premium. Find out which category your school is in.
Scholarships: Where to Find Them
Money is out there! You just have to find it.
Step 1: Apply to Colleges Early
Most colleges open their applications on August 1.
They typically have merit scholarship deadlines (often in October, November, or December).
If you miss this window, your child is out of luck for the free money that they have already worked hard to earn!
Submit those applications as soon as possible! You can always send your updated test scores and midyear grades to schools.
Step 2: Fill Out the FAFSA
Even if you do not think your child will qualify for federal need-based aid, fill out the FAFSA. Schools have their own formulas and use this data to offer need-based aid or other scholarships.
This application opens on October 1. Fill it out as close to this date as possible.
Step 3: Visit the Guidance Counselor
Your child’s guidance counselor has a list of local scholarships, and very few students apply for these!
Tell your child to make an appointment to review all the available scholarships offered by local businesses and organizations.
National scholarships have lots of applicants; local scholarships have few. Local scholarships are your best bet.
Step 4: Expand Your Scholarship Search
Remember, local scholarships are your best statistical bet, but you can find outside scholarships at online portals like Fastweb, Kaleidoscope, and Scholarship America.
Comparing Offer Letters
When the aid packages come in, sit down and compare the offers side by side.
Look and see their estimated cost of attendance. Does each letter cover some of the hidden budget items we discussed earlier?
If not, add those in.
Look carefully at what type of aid is being offered. Grants and scholarships are free money that does not have to be repaid. Loans do.
Are the grants and scholarships renewable? Or do they only last the first year? Consider also that most colleges raise their rates by an average of 3% per year.
Factor in that buffer!
How to Pay for College Without Panic
College can be affordable, and the money to pay for it can come from surprising places!
Don’t assume college is financially out of reach.
Apply early to schools that offer generous need-based and merit aid (and those that offer in-state discounts).
Work the steps in the proper order, and you’ll see that preparation literally pays off!
