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Evaluating Financial Situation & Award Letter
When parents realize how much college is a year, it can be quite a shock. For a fancy private university, costs for tuition, fees and room and board are up to $50,000 a year. Even a public university averages around $30,000 annually. So how do parents pay for college?
Families should evaluate how much they can afford out of their own income to pay toward a child's college. If both parents are financially stable and they will send one child to college at a time, they should be able to pay up to 10 percent of their income. However, 10 percent can be a hefty price. The rule of thumb is to not go over that 10 percent. For example, if both parents make a combined income total of $200,000, they should be able to pay $20,000 of the student's tab. However, this is not always the case.
No matter the financial situation, parents should fill out the FAFSA (Free Application for Federal Student Aid) to try and receive help from the federal government. If parents are in a situation where they are upper middle class or look wealthier on paper, they need to start examining the individual school's ability to give merit scholarships or any other type of non need-based scholarship.
Once the student receives their award letters from the schools they were accepted into, parents must examine them closely:
- How much money did they give the student in grants and scholarships -- in other words, money that doesn't need to be paid back?
- Did the student receive a federal Pell Grant or merit scholarship directly from the college?
- What type of loans did the student receive? Subsidized government loans, which are the best, or unsubsidized government loans, which are second choice?
- Did s/he receive federal Perkins loans, which are the best loans given by the government to low income families?
- Was s/he offered a federal work/study program?
It's time to take out the calculator and do the math. Did the schools and government cover all the expenses or do you have a bit of unmet need leftover? For example, let's say you have $5000 of unmet need you and your spouse must pay. Decide if you can cover this extra expense easily or if you can't, it's time to address how to meet unmet need.
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How to Address Unmet Need
Whether it's $5000 or $15,000 of unmet need, it needs to be addressed. If parents feel they just can't make up this difference, it's time to look to outside scholarships. Scholarships for freshmen and millions of other types of scholarships are out there for students to utilize. It's simply a matter of finding them on reputable websites for college financial aid and going from there.
There is scholarship and grant money to not only cover tuition and fees, but also to pay for student book costs and room and board. Parents should never overlook the cost of books because students can amass a hefty bill. Beware of science, premed and nursing majors who often accrue thousands of dollars worth of textbook bills. It's best to buy cheap textbooks from outside sources, if possible.
For room and board, it's best to discuss as a family if it's cheaper for the student to commute. Obviously, s/he must live near the college. But commuting can cut down on costs.
Another way to slash costs entirely and address unmet need is to attend community college for the first two years and then transfer to a four-year university. Many students from differing income levels are doing so to save a ton of money. An in-state community college costs around $7000 a year total. Compare that to a private university, which can be up to $50,000 a year. It's a huge difference in savings. If the financial aid need is that much unmet, community college may be a good compromise.
Another idea is choose elearning or an online university. This cuts down on costs dramatically and students receive four-year degrees without stepping outside of their house. It is an especially good idea for those who are nontraditional students or who have to work while going to school. There are now many accredited, reputable online universities to choose from.
Now that we've discussed some ideas on how to pay for college, evaluate your financial situation and decide the right course of action when sending yourself or a member of your family to college.
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