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4 Tips on Smart College Finance

By Kate

You have seen college tuition rates stagger out of control in recent years. If you have a child who is about to start filling out those college applications, do not let the numbers intimidate you. Instead, explore your smart college finance options when it comes to both selecting a school and choosing financial aid. A little research on your part can save you and your child thousands of dollars. The following smart college finance tips will help you and your college-bound child get the most out of your money in the long run.

Step 1:  Choose a school carefully. Very few 17-year-olds know exactly what they want to do for the rest of their lives, but many have a good idea. A college-bound senior who is thinking of becoming a nurse will likely be looking at schools in a different way than someone wanting to become an engineer. Dissimilar courses of study have various associated costs. There is a school out there for even the most specialized career interests, and each has a wide range of terms regarding tuition and fees.

• Two-year schools. These schools offer a variety of two-year degrees and certificates as well as lower tuition than most public four-year schools. As an in-state student you can expect your yearly tuition to be somewhere around $2,000, but this varies by state. Students seeking four-year degrees can cut costs by earning an associate's degree at a two-year school and then transferring to a four-year university. A high grade point average may mean scholarships for some transfer students.
• Public four-year schools. Though more expensive, four-year universities provide the full experience of campus life and usually more options for courses of study. In-state students pay an average of nearly $6,200 dollars annually, while the average for out-of-state students is $16,640.
• Private universities. Usually the costliest option, the average tuition for these schools is $24,000 for both in-state and out-of-state students.

Step 2:  Factor in additional costs. Tuition is not the only major cost of attending college. Books, lab fees, living expenses, entertainment, and other things can often double the cost of being a student. Be sure to factor this in as you estimate your total costs, and remember to leave some wiggle room.

Step 3:  Explore your financial aid options. These options are seemingly endless, as research will tell you. Be sure to choose your financial aid path wisely.

• Scholarships. Your child is likely eligible for a number of scholarships, so to make sure he or she applies for them by the deadline. Some awards are just a few hundred bucks while others will cover everything. They come from a wide range of places: state and federal government, universities, non-profits, private companies, and others. Searching online and talking with a university financial aid counselor about scholarships is well worth your time.
• Loans. This is the most complicated financial aid option. You should approach student loans with caution. Borrow as little as possible and start paying your loans back as early as possible, as interest can add thousands to your debt (especially if you make only the minimum monthly payments after a deferment period). There are four types of federal student loans: Subsidized Stafford Loans, Unsubsidized Stafford Loans, Parent PLUS loans, and Federal Perkins Loans. You may also be eligible for private loans. Choose the loan type that will likely leave the most cash in your pocket when all is said and done, and keep in mind that the smallest difference in interest rates could mean thousands.

Step 4:  Come up with a reasonable loan repayment plan. Obviously, starting repayment as soon as possible is the best way to avoid paying too much interest. It can save you thousands, but may be unrealistic for students facing an uncertain future. In this case, borrowing as little as possible is one of the ways to avoid spending years paying off a student loan. Develop a loan repayment strategy as well as a Plan B before you take out a loan to avoid facing years of repayment with no plan.

Succeeding financially with smart college finance

Scholarship-winning grades and financial savvy are a huge help when it comes to funding a college education, but they are only part of the equation for most people. Getting the most out of your money when it comes to your child's education boils down to your willingness to research and explore all smart college finance options.

7/17/2009

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