Portrait by Paul Flessland
Students and families around the country are celebrating but also in planning mode as college-acceptance letters continue to roll in. And for good reason. A higher education is one of the most important credentials in obtaining employment in today’s labor market.
A Consumer Financial Protection Bureau (CFPB) report released earlier this year revealed that it’s actually older Americans who account for the fastest-growing segment of student-loan borrowers.
As the average cost of a college education has swelled over the last decade, though, there’s a natural anxiety that accompanies the steep price tag.
A student’s education choice will be one of the most important choices in his or her life—not only for a career but also in terms of how much debt will be required to finance that schooling. Parents and students need to give clear thought to future job choices and how that job translates into income to pay off student loans.
Here are some tips to help you make the grade when affording a college education.
- Federal- and State-government: Options The federal Department of Education awards about $150 billion a year to more than 15 million students in the form of federal grants, student loans and work-study programs. And your home state offers various types of financial aid. You might be eligible, even if you’re not eligible for federal aid.
- Colleges and Universities: Many colleges and universities provide financial aid and scholarships from their own endowment funds. There may be opportunities for a particular field of study so be sure to check in with the various institutions where your child has been accepted.
- Financial Aid: You’ve probably completed a FAFSA (Free Application for Federal Student Aid), but just in case you haven’t done so, get cracking. According to NextGenVest.com, a company that helps students manage the college-selection and financial-aid processes, more than $2.5 billion in federal aid is left unclaimed by students who don’t fill out the FAFSA.
- Scholarships: Individual colleges, as well as private funders, award scholarships in recognition of academic performance, athletic excellence, a commitment to community service and other unique talents.
- Savings: 529 (qualified tuition) plans, Coverdell Education Savings Accounts, UTMA (Uniform Transfer to Minors Act)/UGMA (Uniform Gift to Minors), savings bonds, investment accounts, the list goes on and on. If you were fortunate enough to be able to sock away money for your child or grandchild, it’s time to milk the cow.
- Loan-repayment and Loan-forgiveness Programs: A great opportunity exists with programs such as the Public Service Loan Forgiveness (PSLF) program, but do your research. President Trump’s budget proposal targets loan-forgiveness programs such as this one so if you go down the path of utilizing the PSLF program, also establish a contingency fund. The contingency fund is money set aside and invested for growth to allow you to have backup funds to aid in paying off your loans in the event that the forgiveness program is eliminated.
The bottom line is that there are many ways to fund higher education without taking on enormous financial burdens. To determine the best way to finance a college education, consult a Certified Financial Planner who can help you tailor a plan specific to your needs and budget.