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Quick Guide: Be Financially Prepared for College
Being Financially Prepared for Higher-Learning
Not all parents feel the same about higher education, but one thing we CAN agree on, is that it is EXPENSIVE!!
A recent USA Today article released the findings of TD Ameritrade’s Young Money Survey. This survey found that 26% of Millennials in college plan to move back in with parents after graduation to pay off student loans. Of the 2,000 students surveyed, 32% said they owed anywhere from $10,000 to over $50,000! This has not only put these students in a debt sink hole, but large percentages of these students said that the student loan debt delayed other life experiences, such as getting married, buying a home, saving for retirement, and moving out of their parents’ home.
Borrowing money for college has become the “norm”. Debt after graduating with a degree is expected, but I don’t think it’s just part of the college experience.
We want better for our kids. I know I do. I want my kids to be financially prepared for the future, even if they are armed with nothing but knowledge. At the risk of sounding cheesy, “Knowledge is POWER!”
Check out these college financial prep tips. Go over these together with your child or *er* young adult. This could make a huge difference!
(I would like to preface this section by saying, college is NOT necessary for living a successful life. Help your kids discover their gifts and goals. Help them understand that trade schools and other avenues can be just as beneficial for what they want to do and for where their gifts lie. Too much money is a stake for young adults to be living out someone else’s life.)
1. Start saving EARLY! I knew that I wanted to go to college from the time I was in second grade. I wonder how things would have been different if I had started saving then!
2. Student loans are considered “low-risk”, but it’s still borrowed money. Talk to your kids about how loans can affect your credit and future plans. Then, help your kids to understand how interest is calculated and the difference between subsidized and unsubsidized loans. (Schools teach how to calculate interest, but it’s different when it’s applied to real life. AM I RIGHT?)
3. Sit down with your college bound kids to help them compare the costs of different schools. Draw comparisons and conclusions between schools close to home where housing is not needed, versus schools further from home where housing fees and meal plans must be included. Let them SEE the numbers!
4. Encourage your kids to research different scholarships that are available. If your child attends a public school, there may be a senior counselor whose sole job is to help juniors and seniors apply for scholarships. Take advantage of this help! There are usually new scholarship opportunities available every week! From personal experience, keep a document saved that lists all of his or her activities, awards, work experience, classes taken, extracurricular activities, and a basic personal essay. This will make filling out ALL of those applications a lot easier and faster!
5. Good grades are important, but make sure your kids know the importance of studying for the SAT and ACT. These scores can make a HUGE difference in what scholarships are available. Also, know which exam is required for your kid’s desired school or university. If either is accepted, know which exam will highlight your child’s strengths. Contrary to popular belief, these two exams are actually very different.
6. Make every effort to fill out the FAFSA (Free Application for Federal Student Aid) form together, with your child. Check for details and deadlines at https://studentaid.ed.gov/sa/fafsa. From there, you will know what federal grants are available to help cover the cost of education. Some people in the lower income bracket feel that college is not an affordable option. What they don’t understand is how many grants are out there. Do your research! Also, keep a folder containing all FAFSA paperwork and passwords – print and label everything for your records!
7. Once your student has selected a university or school, help them find the cost of the first year’s tuition + room and board, then subtract your total in scholarships (be careful, some scholarships won’t cover room and board). Ideally, your child will have already saved enough for the first year of tuition. I would recommend not taking on more classes than he or she can afford. Most scholarships require so many hours to be considered full-time to continue receiving scholarship funds. Make sure to have the minimum, but your child doesn’t have to take the same course load as everyone else. You need to be very transparent of your financial situation when talking to your academic advisor. Fewer course hours = less $. Then, help your student develop a budget to pay for living expenses and SAVE for the second year. Try to stay a year ahead!
8. Encourage your child to apply for jobs close to campus or on campus EARLY! Those jobs go fast. Go online and fill out A LOT of job applications the summer before the fall semester begins.
9. Once you have walked through all these steps with your student, let them take the reins. Hand over the organized files and passwords. Let them be responsible for their education. It will mean more in the long-run!
God bless you as you prepare for the exciting road of college and higher education!
What are some other college prep tips that you have found to be helpful on the journey?
Source: Empty Nests Fill Up Again; Adam Shell; USA Today; 2017