College costs are one of the biggest expenses a student (and their families) will ever have to pay. A four year degree will cost between $40,000 and $120,000 for the tuition alone, before figuring in housing, transport, food, and all the other costs a young academic has to pay. In fact, research shows that on average it takes 21 years to pay off student loans!
Depending on when your kids are going to go to college, you’ve got several options to help them pay for their education — Let’s explore what they are.
Start saving for a college fund right now
If your children are still young, it’s worth starting to save for college very early. Setting up a low to medium-risk fund (known as a 529 college saving plan) and investing your money wisely can create significant returns. Investment providers like Vanguard and Fidelity provide these types of low-cost funds that let you save over ten to twenty years.
- Advantages — On average, invested money makes about 7% of compounding returns a year. 529 plans have some special exemptions from tax.
- Disadvantages — You have to start early to ride out temporary downturns in the markets. Your rate of return isn’t guaranteed.
Attend an “in state” public college
A resident going to a public college in their own state can expect to pay much lower fees. In 2016 they average out to around $10,000 a year for tuition, compared to $30,000 for private colleges.
- Advantages — Much lower tuition costs mean you don’t need to save as much.
- Disadvantages — Public, in state colleges may not provide the courses or tuition your child wants.
Submit a “Free Application for Federal Student Aid” (FAFSA)
FAFSA is part of the US Department of Education and is the largest provider of aid to students in the country. They provide more than $150 billion in grants, loans, and study funds every year. They receive around 22 million FAFSA applications a year.
To apply for FAFSA, you simply need to visit their website and go through their application process. It’s completely free, and you could get some much needed assistance in paying for college. There’s a large amount of information on who qualifies for aid and the type of aid you could receive in the FAQ section on their website.
- Advantages — Pay less on student tuition by receiving tuition aid from the government.
- Disadvantages — None.
Apply for scholarships and grants
Depending on your child’s academic achievements and the fields they’re choosing to study in, there may well be scholarships and grants available to them. These scholarships will often cover all, or a significant portion of, college tuition expenses. Scholarships and grants do vary from state to state and college to college, so check the schools you’re interested in to see what’s available.
- Advantages — Significant contributions towards paying for tuition. Recognition of having the academic ability to get a special scholarship.
- Disadvantages — Need to be able to prove significant academic ability and go into a field covered by the scholarship. Scholarships are only available to certain universities and colleges.
Get a part-time job to help pay for college
We don’t mean you, we mean your child. Many students have part time jobs, both during the school year and over vacations. These part time jobs can help to offset tuition costs, although with rapidly rising tuition costs, it’s not going to provide much help.
- Advantages — Teaches a work ethic to your child, helps to offset a small part of college costs.
- Disadvantages — On a minimum wage, it takes a lot of work to pay for college, as this article shows.
If it seems like this is a complex and difficult field with lots of options, that’s because it is. Let us guide you through what you can do to make college more affordable, for you and your child. Help them prepare for their academic studies by signing up for “Surviving College Debt” workshop.