We all want the best for our children, and for many parents, this means contributing to a child's college education. However, figuring out how to pay for college can be a major challenge for students and parents, especially considering the current costs. According to the College Board, the average price for tuition and fees at a private, four-year college or university has risen to $35,380 per year, a 1.4% increase over the previous year. Public colleges can be pricy too. According to Value Penguin, the average total cost of public colleges is now about $25,290 for in-state tuition and $40,940 for out-of-state tuition.
While you may feel overwhelmed just thinking about paying for your child's college education, it is possible to provide help while staying realistic about what you can afford. Here are a few strategies to help take the stress out of paying for college:
Know your loan options
Like some families, you'll need to borrow money to pay for some of the college tuition. Federal loans are the first place to start because these loans offer low fixed interest rates, flexible repayment plans and special benefits that your child can use after graduating. The government also offers fixed-rate, PLUS (Parent Loan for Undergraduate Students) which are loans to parents of students enrolled at least part time in college. Once you have maxed out federal loans, you might consider taking out private loans to cover the remaining difference in tuition and other college-related fees or supplies, such as textbooks.
Search for scholarships
Scholarships and grants are a great way to pay for college because they are essentially “free money" – financial aid that doesn't require repayment. Grants are given out based on a student's financial need, while scholarships are typically merit-based. Encourage your student to research and apply for multiple scholarship opportunities. Remind them that even if they don't land a full-ride scholarship, smaller awards can still add up and help make the tuition bills more manageable. Even if your child is already enrolled in college, they may still be eligible for additional scholarships. It's always a smart idea to continue looking for scholarship opportunities throughout college.
Look into college tuition payment plans
Federal loans and scholarships may not cover your student's full financial need. If your child has a remaining tuition balance, a payment plan may be an alternative to taking out private loans. Some colleges offer monthly payment or “installment" plans, which allow you to spread out tuition payments in smaller payments over an entire semester or year rather than pay one large lump sum upfront. While such plans are usually offered interest-free, they may come with additional fees.
Involve your college student in the payment process
Even if you have enough saved to fund your child's entire college tuition, support them getting a job to cover additional expenses, such as textbooks, supplies and housing. For example, many universities will waive the costs of on-campus housing for students who work as resident advisors. Getting your child involved will ease the stress of paying for college and help them learn valuable life lessons in the process.
Don't neglect your own money goals
Finally, avoid putting your child's higher education above your own important financial goals, such as saving for retirement. While there will always be scholarships and loans for college, there are no scholarships or loans for your retirement! Dipping into your 401(k) or personal savings to pay for a child's education could put your financial future at risk.
Want to learn more about managing the costs of college? Check out our short, interactive learning modules here.