The cost of higher education has been steadily rising for decades, and it has reached a point where it now exceeds median household incomes in the US. While this snowballing cost can be attributed to a number of factors that are beyond the scope of this article, post-secondary education is still a good investment, albeit an expensive one. We will go over some tips that help you raise funds for your student’s college education but before that let’s break down the cost of college and take a closer look at its components.
The Cost of College
Let’s start with the cost of attendance (COA) which is an estimate of all of your student’s expenses for attending one year of college. How this cost is calculated largely depends on the institution. Usually, COAs are broken down into direct billable costs such as tuition and fees and indirect costs which are expenses related to the student’s education that are not charged directly such as transportation and books.
According to the College Board’s Trends in College Pricing and Student Aid 2021 report, the estimated yearly costs which include tuition, fees, room, and board for a public four-year in-state institution was $22,690 in the 2021-22 academic year. And, for a public four-year out-of-state institution and a four-year private nonprofit intuition, the amounts were respectively $39,510 and $51,690. For a detailed breakdown of college pricing, refer to the official report here.
It is very important to know how you are going to approach paying for your student’s education in advance. Here are some of the different options that may help you do it.
Submit the FAFSA
The Free Application for Federal Student Aid is an initiative from the federal government that lets students apply for financial assistance to help pay for direct and indirect college expenses. This financial assistance can be in the form of loans, grants, and work-study funds. The form—which does not take more than 30 minutes to complete—requires you to provide financial information regarding your income, assets, and benefits. This information then is used to calculate your EFC or Expected Family Contribution via a formula set in the law. EFC is one of the factors that help determine your eligibility for financial aid along with the cost of attendance of your target institution, and your enrollment status.
If you are eligible, the amount that you receive is calculated by the college you will be attending. They start by estimating your COA based on the tuitions, fees, and the cost of room and board, books, transportation, supplies, loan fees, and other expenses. Then, your EFC is simply subtracted from your COA to determine how much financial aid you need to receive.
Because the applicants’ financial circumstances can change, students need to file it each year. Submitting the FAFSA form should be the first thing on your list, even if you think you are not going to qualify for it.
Choose Your School Carefully
When choosing a school to attend, it is very important that you choose an option that fits your financial situation. As we saw earlier, the prices for these institutions can vary by a large margin. You can determine a college’s affordability by using their Net Price Calculator (NPC) that can usually be found on their website. These calculators provide you with a clear picture of the costs associated with attending their respective colleges.
Keep in mind that lower prices don’t automatically mean worse options. Conversely, some of the more expensive colleges are more generous with financial aid which may make them more affordable for you than schools with lower sticker prices. Also, a community college is a viable choice too, as these colleges provide higher education at a reasonable price and serve as a pathway to four-year colleges and universities.
Understandably you may consider taking out a private loan as savings and financial assistance sometimes are not enough to cover the whole bill. In doing so, carefully research all of your available options, compare loan rates, and consider your family’s circumstances and preferences in the process to make sure that the one you opt for best fits your family situation. Also, for private loans, you may want to consider adding a co-signer. Having a co-signer in many cases can improve the chance of securing a loan and may help the borrower qualify for lower interest rates. Additionally, a general rule of thumb to keep in mind is that your total debt should not exceed the salary you expect to earn the first year after your college. You can get an estimate of post-graduation salaries at the U.S. Bureau of Labor Statistics.
Last but certainly not least, working at a part-time job as a student can be a tremendous help in paying for college-related expenses. On top of that, it will allow you to take out less in student loans. There have been many cases where students worked throughout their college years and were able to pay for their entire education.