College Financial Aid Planning
One of the worst fears that a
parent has is paying the cost of their child's college education. The
college inflation rate over the past several years has been two to three times
greater than the consumer price index increases. The average cost at a
public institution today is approximately $11,000 and the average cost at a
private institution is $25,000. Add to this equation the fact that the
average student takes five years to obtain a bachelor degree. To make
matters worse, some studies have shown that only 4% of parents have saved
$5,000 or more for their child's college education. The majority of
parents have not saved at all for their child's college education.
The above information makes
planning for your child's college education all the more critical. The
more planning you do today, the less likely you will be to raid your
retirement, take a second mortgage on your home or have to take that second job
to pay for your child's college education.
The best advice we can give is it
is never too early to start saving.
One variable in paying for your
child's college education is that of financial aid. Financial aid
basically comes in three formats. They are as follows:
1. Grants/Scholarships - Grants and scholarships may be based
on need or merit. Almost all colleges offer these as part of their
package. The following is a brief list of where you can go to inquire
about potential grants/scholarships:
• High School Guidance Department
• Parents Teachers
Association
• Chamber of
Commerce
• Trade
Associations
• Fraternal
Organizations
• Local
Foundations
2. Loans - The majority of us will have to have
some loans to help pay for our child's college debt. The following is a
list of potential funds available to borrow for your child's college education.
• Federal
Subsidized Stafford Loans
• Federal Perkins Loans
• Student Loan
Programs
• Federal PLUS
Loans
• Federal
Unsubsidized Stafford Loans
3. Work
Study - The
majority of colleges offer some sort of work study program. These
programs can be offered by the college or can be part of a federal or state
sponsored program.
The government also gives tax
incentives to help lessen the cost of college education. These are
through the Hope and Lifetime Learning Credit. There are certain
parameters in qualifying for these credits.
In applying to a college, it is
best to apply early and apply to more than one school.
You will be able to see the packages that the schools offer to cover the
cost. Usually no two are alike. Frequently, these differences in
college packages leave potential room to negotiate the cost of
your child's education.
If you have any questions
pertaining to college financial aid or would like our assistance in navigating
the paperwork in applying for financial aid, please do not hesitate to contact us.
