By now, your college-bound student has gotten an official financial aid package and has accepted the admission offer from their chosen school. Now it’s time to create your financial strategy for paying for college. Will you be using financial aid, savings or applying for student loans? For many families, the answer is all of the above. So what tactics can you use if there’s a gap between the school’s actual price tag and what your family can afford to pay for college?
Many families today find it very challenging to afford college — even when kids attend in-state schools. According to The College Board, the average four-year, public, in-state university charges undergraduates $20,090 per year while the average four-year private college now costs $45,370 per year. If your family needs some last-minute ways to cover college costs, here are some options for both students and parents to consider.
What Students Can Do
- Do a last-minute scholarship search. It’s not too late. Some programs have summer or early fall application deadlines. You can check with your school, family, friends and the community for local scholarships. It’s also easy to search for scholarships online using a free scholarship search site. No matter where you find them, apply for as many scholarships for which you’re eligible.
- Ask your college about last-minute aid options. Students who decided not to attend your school will also have declined any scholarship or grant offers. As a result, the admissions office or certain academic departments might have some scholarship or grant funds available.
- Take out student loans. Consider using federal and/or private student loans to help pay for college. Be sure to carefully review interest rates, fees and repayment terms, and don’t borrow more than you need.
- Plan to work during college. Even if you didn’t qualify for work-study funds, you can consider working while you’re in school. Check your college’s website this summer if you want to work on campus. Many college offices begin taking job applications well before school starts. You should also start checking for open positions at off-campus businesses earlier rather than later, since those jobs can be competitive for college students.
- Cut your housing costs. Living at home or off-campus is generally less expensive than living in college residence halls. If you choose to live on campus, consider opting for a shared room or suite and a less expensive meal plan that you can supplement by cooking (or microwaving) a few meals.
- Work extra hard in June, July and August. Use this summer to work as many hours as you can and save your earnings to cover college expenses.
- If all else fails, consider a Plan B. You could choose a less expensive college, go to a community college and transfer to a four-year school, or defer admission for a year so you can work and save money. You can still end up with a great education, but at a lower cost and without excessive student loan debt.
What Parents Can Do
- Check employer-sponsored options. Some companies offer college scholarships or tuition reimbursement for employees’ dependents. Check with your employer to see what options they have.
- Use your raises and/or bonuses. College lasts just four years, unless you have multiple kids in college. Consider funneling any extra money you earn into an account to pay for college.
- Ask grandparents or other family members for help. It’s becoming more common for extended family members to help kids pay for college if they’re financially able. Talk to generous relatives about how they might help — with either gifts or low-interest family loans. Be sure to check with your financial or tax advisor on how to structure any monetary gifts. If your family qualifies for financial aid, there are ways relatives can gift money to your children without jeopardizing their aid awards.
- Get a side job. If you’ve got the time and energy, work a bit more during your kid’s college years. Take on extra hours or overtime at your current job. You can also get entrepreneurial and consider driving part-time for a rideshare service, selling handmade items online or starting your own side business.
- Sell something. If you were planning to get rid of that extra motorcycle or beach cabin anyway, this might be the time to do so. Any profit from selling big-ticket items could help free up money for college costs – just be sure to see if there are tax implications and if a windfall could affect your financial aid award.
- Take out parent loans or cosign with your student. There are both federal and private loan options for parents, which are available to help families when they have a financial aid gap. Carefully compare fees, rates and repayment options. Also, if your student applies for private student loans, they may have a better chance of getting approved or qualify for a lower interest rate if you cosign with them.
Don’t get discouraged if you initially see a big difference between your college’s costs and what you think you can afford. As you see here, there are many creative ways to make college expenses more manageable for your family.