Knowing your teen is college-bound is a proud moment for parents. It can also be a daunting one financially. That’s because, when it comes to funding for college students, most parents haven’t saved enough to cover the costs.
In fact, Sallie Mae’s 2018 “How America Saves for College” report notes that the average family saved around $18,000 for college. That’s an increase from previous years, but not even close to the 2017-18 nonprofit college cost of around $46,950 for tuition, fees and room and board.
Here’s a look at your financial aid options, from loans to scholarships and beyond.
Grants
This type of financial aid does not need to be repaid, so it’s a great place to start figuring out funding for college students.
As you research the grants available for your student, you’ll find that many are based on financial need. These grants can come from the state or federal government, the college you’re considering or even private organizations.
Keep in mind that if your student receives a grant, there may be rules about how long he or she must stay enrolled or rules on paying it back if they withdraw from school.
Need-based grants may also be reduced if students become eligible for other types of financial aid.
Scholarships
Scholarships are another financial aid option that doesn’t need to be repaid. While some scholarships are difficult to obtain, the good news is that the options are nearly endless since thousands of organizations offer them.
Requirements vary based on the type of scholarship for which your student applies. Some are based on need, while others are given for merit.
A student could qualify because of academics, athletics, community service, artistic talent or other merits.
Colleges and various corporations and organizations offer scholarships.
Loans
Both federal and private loans are available to assist students with paying for the cost of college. With a loan, your student will borrow money that must be paid back with interest – but the interest rates and terms available vary widely.
The federal government offers federal student loans that typically offer low interest rates and flexible terms.
When students need more funding, private loans are offered by banks and other lending institutions that set their own terms and tend to be more costly.
Loans can also be taken out in a parent’s name.
Work-study options
When it comes to funding for college students, many students opt to work full- or part-time while attending college to help pay for tuition.
The Federal Work-Study program is a form of financial aid that offers part-time jobs for college students who demonstrate financial need.
With this program, students often are placed in positions related to their area of study – often at the college the student is attending or at a local public agency or nonprofit organization. These jobs are sometimes easier to find than hourly positions.
The program is federally funded and currently available at 3,400 participating institutions.
FAFSA tips
The first step to evaluating your child’s financial aid options is filling out the FAFSA, which stands for Free Application for Federal Student Aid.
By submitting this form, you’ll find out if your student is eligible for federal grants, work-study or loans, all based on your individual circumstances.
Timing is key with the FAFSA; you’ll want to fill it out as soon as possible once it becomes available on Oct. 1 (for the next school year). According to Federal Student Aid, a part of the U.S. Department of Education, aid is based on the following factors:
- The cost of attendance at your child’s chosen school.
- Your “expected family contribution,” which is calculated using your taxed and untaxed income, assets and benefits (such as unemployment or Social Security).
- Your family size and number of family members in college or vocational school.
Parents can apply online, print and fill out a PDF of the application, or request a paper FAFSA by calling 800-4-FED-AID (800-433-3243). For more information, visit the official federal FAFSA website.
