What follows are ten conventional ideas about paying for school.
These ideas are propagated by Wall Street, financial advisors, and the media day-in-and-day-out until you are conditioned to believe they are your only options.
Following those ideas, I’ll mention the one that truly works, the one we use for the benefit of our client families. We know it works because we embrace the idea ourselves.
The ten conventional ideas that don’t necessarily serve the family:
1. Grants. Free money available from the federal government, the state, even the schools themselves. Often, you must meet eligibility requirements and apply. The application is considered and you will be notified, if awarded. The grant may not cover the full cost, as the awarding body may have evaluated your family’s financial circumstances.
2. Ask the school for money. Following your award letter, if it isn’t a fair offer, it may be possible to negotiate for a better award. We utilize this strategy with our clients who have applied to our recommended 6-8 comparable schools and who may not have received a fair award.
3. Part-time employment. An offer of work-study aid will be included in the award letter, if the family has the requisite financial need. If not included, part-time employment off-campus is an option, as is starting a side business. Of course, this may take valuable time away from studies.
4. Private Scholarships. Companies, non-profit organizations, and community groups may offer these scholarships. However, they may be highly competitive. In fact, such scholarships are roughly 3.1% of available financial aid each year. Placing a high percentage of your efforts in this arena could prove to be a waste of valuable time and energy.
5. Loans. Loans likely will be part of every college planning campaign. Conventional scenarios will result in a long, expensive repayment process. Our non-conventional scenario, perhaps half or less of that repayment period. It may be a good idea to contact our financial coaches for assistance.
6. Claim tax credits. While not really an idea on how to pay for school, this should be done every year you have a child in an undergraduate institution. Your accountant, or your tax software, should have covered this option automatically.
7. Live off-campus. Perhaps as an upper-classman. But, doing so as a freshman or sophomore can have a negative effect on developing the relationships that will benefit you long after you’ve graduated. For our clients, the cost-benefit analysis favors on-campus living the first few years.
8. Enroll in community college. Always an option due to lower fees and off-campus living arrangements (e.g., stay at home), it may be the best option for the family. However, this also can have a negative effect on developing those beneficial relationships.
9. Complete the FAFSA. This is a no-brainer for ALL families, regardless of assets and incomes, as most schools will not award money from their coffers until they know for certain a family will not qualify for federal or state aid. This includes merit-based scholarships, grants, and awards.
10. Start a 529 plan. Typically a long-term option, there are tax advantages to this account. However, there are many more negative impacts of which a family should be aware. While a 529 may be right for a certain family, it is not the right option for most families.
While everyone should have the opportunity to obtain a college education, most people have no idea how to cover the cost of one. While we may help families implement one or more of the above ideas, we favor the unconventional means of funding an education that guarantees a return on the savings, that guarantees against loss, that leaves the family in control of the funds, that provides immediate access to the funds, that has no restriction on how the funds may be used, and that has no negative impact of eligibility for financial aid.
Contact The Money Architects for a free analysis of your college planning campaign.
We await your call…