Four ways to financially prepare for college

September 05, 2023

By Anne Purcell

Four ways to financially prepare for college

It is never too early to start thinking about college planning. Costs are known to be high, and the thought of college tuition might feel overwhelming, even if college is still years away. We all hear the statistics about how college debt is rising and affecting students well after graduation. While spending some money for college is necessary, there are tactics you can take to help ease the financial burden.

College costs don't have to break the bank. While it might seem like you'll have to make financial sacrifices that will leave you with debt or major setbacks on other financial goals, this isn't necessarily true. Thinking about and planning for college costs early on can help you avoid rushing to make decisions and overpaying for a degree. With these tips, you can make financially savvy college decisions that work with your long-term goals.

#1: Consider who should lead the college selection process

In the end, whoever is taking on the bulk of the financial costs should have a more considerable say – since they have more to lose.

Instead of starting the college search based on advertisements sent to your home, college ranking lists or visiting a college fair, look at your budget and see where the funds for college will come from. Have the budget dictate which schools you look at before they fall in love with an institution that may be out of that range.

#2: College is a buyers’ market

While college costs are high and some colleges have high rejection rates, attending a good school without those burdens is possible. Further, most colleges offer discounts, and many students don't pay the total price tag for higher education.

While some schools, usually the most elite, are harder to get into and have substantially higher costs, many others are pushing to get students to attend and have admissions goals they struggle to meet. Looking at schools outside the most elite can help avoid overpaying, and you may find discounts within other schools to help decrease the overall financial burden. Still, don’t discount a school because of its sticker price. For example, Harvard meets 100% of students’ need-based aid, despite having a high annual tuition.

#3: Gather information about the schools

When looking at different colleges, here are four things you should focus on that will factor into what schools will make the most sense:

  1. Price: Understanding the cost of one year of college is necessary when making your school choices. To find the closest accurate estimate, use a net price calculator before applying to see a personalized estimate of what the first year will cost. This calculator will take grants and scholarships, if applicable, into consideration when estimating the overall cost. Looking at net price calculators for all colleges you’re considering will help you decide what to apply to based on what you can afford.
  2. Expected family contribution (EFC): This is the amount that the institution expects the household to pay for one year of college. Factors include income, non-retirement money, education accounts, family size, marital status and number of kids in college. This number will give you a better idea of whether you will qualify for need-based aid or if you should look for schools that provide merit scholarships. One main EFC formula includes the federal formula tied to the Free Application for Federal Student Aid (FAFSA), which all families should file yearly.
  3. Graduation rate: Looking into the percentage of students who graduate from a specific school and the number of years it takes is another factor to consider when looking at schools. While many people assume a four-year graduation timeline, this isn't always the case. Many students take longer than four years, and this will affect the overall cost you will pay. By looking at these statistics at the schools you're considering, you will better understand the historical graduation rates and the number of years it takes the average student.
  4. Expected starting salary: Looking at the projected school costs and comparing it against career goals and expected starting salary is another factor to consider. Knowing this information, you can decide whether the school's cost is justified based on the expected salary after graduating.

#4: Financial aid

There are four types of financial aid: grants, scholarships, loans and other borrowing options. Some types do not need to be repaid, while others do. Depending on your financial situation, you may qualify for some financial aid, such as grants like the Pell Grant. If you don't qualify for need-based financial aid, you can look into other merit-based options, such as school or community scholarships, to help decrease overall education costs.

Planning for college funding early can help decrease the stress and pressure when making those final college decisions. To learn more, check out this webinar on the topic or the following blog articles:

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