What should you know about funding your child's education?

With more high school seniors college-bound in recent years than ever before, a college degree is no longer a luxury but a necessity.  Rising costs of higher education can seem overwhelming and even impossible at times, but fear not.  There may be more options in loans, grants, and scholarships than you thought that can help combat those steep tuitions.

Government Funded Loans

One of the most common ways to stand up to mile-high tuitions is through government assisted loans.  Filling out the Free Application for Federal Student Aid (FAFSA) is a recommended first step when discussing tuition, because this application unlocks the door to many types of aid for students and their families.  With student and parent income, tax, and expense information, the FAFSA helps determine the amount of money students can receive for college by low-interest Stafford Loans.  These loans come in two types: direct subsidized and direct unsubsidized.  Students who demonstrate financial need are eligible for direct subsidized Stafford Loans, money which will not be charged interest during the duration of the student’s four-year college stay.  The college’s financial aid or bursar’s office will determine the amount of aid available to students based on their information supplied on the FAFSA.  The other option, a direct unsubsidized Stafford Loan, is available to all students, regardless of financial need.  Like an unsubsidized loan, the college is responsible for determining the amount of aid a student may receive, but the loaned money begins accruing interest as soon as it is paid out.  Students and their families may wish to begin paying off this interest before graduation, but they are not required to do so.  Sallie Mae, Inc. offers convenient loan repayment plans and resources for budgeting loan money.

Grants and Scholarships

Grants and scholarships are a great way to supplement loans when paying for college.  Unlike loans, the money does not have to be repaid, and it may even be possible to avoid loans altogether with enough help from grants and scholarships.  When filling out the FAFSA, you are also opening the door to government funded college grants, which are available in amounts up to $5,000 for families that demonstrate financial need.  In addition to FAFSA, grants are given by many other foundations and organizations based on merit, athletic ability, course of study, military relation or service, family income, and academic promise.  These loans can be found either directly through organizations or the college’s financial aid officers.  Scholarships are only slightly different from grants; they are both monetary gifts to deserving students for the purpose of paying tuition.  How one receives scholarships is the only difference.  Scholarships do not discriminate a student based on financial need, and are often awarded based on athletic, artistic, or academic skill.  Schools invite students to apply for scholarships within their fields of study, and the applicants who demonstrate the most promise are awarded.  Scholarships vary greatly in award amount, some award as little as fifty dollars; others may cover an entire semester’s tuition and fees.  Students are encouraged to apply for as many scholarships as possible, because receipt of one does not disqualify a student from receiving an additional scholarship from the same department.  Scholarships and additional grants can be found through the college’s financial aid office and SallieMae.com.

Additional Ways to Cut Down College Expenses

Between loans, grants, and scholarships, college tuitions can become very manageable.  In addition, student and their families should determine how much money they can contribute to tuition and fees.  It is recommended to start saving in a “college fund” when your child is still young, so that savings accounts can grow over the years.  Many banks offer resources for building and managing these accounts.

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