Spend management – Competition for financial age can be huge, especially now that the economy is going through a rough spot due to COVID-19 (coronavirus) pandemic. But there are still resources to be had. However, timing and preparation are becoming more and more important. What to do? What should be wealth planning? Review these steps for starters.
Spend management – How to Pay for College During tough Financial Times
- Start Early. Spend management expert believes if it’s too late to start early, then start now. Whether you are several years away from needing financial aid, or only several months away, don’t wait any longer. The earlier you start researching possibilities, the better. Check online for scholarships and advice, talk to guidance counselors, speak with financial aid offices, network with others who have recently gone through the process. Makes lists of all your options.
- Improve Your Eligibility. If there’s still time, get those grades up. In addition, whenever possible students should try to do volunteer and/or paid work that not only expands their knowledge base and gives them experience in a potential career field, but also benefits others. Many scholarships are available to students with specific interests, skills and experiences.
- As per the wealth planning principles, carefully evaluate all financial decisions and their potential impact on financial aid. Selling off property to help fund college expenses might sound like a great option, but if it results in a capital gain, it raises taxable income. And that could result in a smaller financial aid package if the sale comes within a year of applying for financial aid. The same holds true with taking a distribution from a retirement plan. It counts as income and that can reduce aid eligibility.
- Always apply for financial aid–even if you think you’re not eligible. Financial Aid isn’t just about grants and loans. Many colleges require students to have a FAFSA (Free Application for Federal Student Aid) on file before they award scholarships. Many students who’ve assumed they were ineligible have found themselves the happy recipient of some extra money simply because they not only applied, but applied early before funds ran out.
- Check out the various tax benefits that can be claimed. Dollars saved in tax benefits one year can be used to help fund your education the next year. This should be priority in wealth planning.
- Don’t forget to check out money offered by your parents’ place of employment or their other affiliations. Even if you are an older, non-traditional student, you may find that there’s money available to you for college expenses.
- Consider attending a community college for the first two years. Community colleges typically cost less to attend than most four year colleges. The first two years of college are mainly about taking general courses anyway, so why not take them for less. Just make sure the college you’d like to graduate from will accept transfer credits from your community college.
- If you have to take on a loan to cover college expenses, check out the Federal loans first. These loans offer the best deal when it comes to repayment terms and interest rates. Avoid taking out any other loans if at all possible. (Tip: If you find you’ve borrowed more money than is needed to cover expenses for the term, you can return the extra money. That’s money that won’t have to be paid back later.)
- Never, ever, put the cost of college tuition on a credit card. It’s a bad deal financially, and because costs and fees add up so quickly, it has the potential to turn into the kind of money pit that’s almost impossible to climb out of.
- Get creative. Consider ways to reduce college costs. Earning credit for life experience or for courses taken in high school can sometimes save tuition dollars, as can taking courses on-line. Consider the pros and cons of sharing textbooks or living off-campus.
Spend Management – Reducing the Cost of College
The rising cost of a college education can be discouraging to many students; however, there are five specific ideas to help relieve the cost of college tuition and offer financial aid.
Choose an In-State College
Many college guides and resources will attempt to promote stellar colleges which may deceive high school students. Many colleges will provide students a quality education, yet the difference may only be a price tag with respect to spend management.
College tuition and costs are usually supplemented by the taxes paid by the residents of that state. Therefore, students attending an in-state college will be paying considerably less for tuition than an out-of-state student. This cost savings can be upwards of three to four times the cost of an out-of-state college.
Tuition Reciprocity and Wealth Planning
Reciprocity refers to an agreement among selected states regarding tuition costs. Students from one state can attend another state’s college and pay out-of-state college’s regular in-state tuition rate. An example of this is the Midwest Student Exchange Program. Over 140 colleges in Indiana, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota and Wisconsin have agreed to in-state tuition costs for students coming from the previously mentioned states.
Live at Home
College Board reports that the average cost for room and board at a private college to be around $9,000 a year and at a public university to be around $7,500. By living at home, college students can save a substantial amount of money to be redistributed to the actual tuition cost. Over the course of four years, a student could save between $28,000 and $36,000 by living at home.
Contact the College’s Financial Aid Department
- Sometimes the Student Aid Report (SAR) is disappointing. Families expect most of the cost of college to be covered; however, the rising yearly cost of college and decreased government aid to financial student aid usually leaves an unfilled financial need.
- Every college has a financial aid office that employs financial aid professionals. These counselors are available to meet with students and families to discuss financial aid packages. Because of their expertise, financial aid counselors can discuss options to reduce tuition costs for families. Each student’s situation needs to be approached on an individual level. Some students may be eligible for a no to low interest loan, and others may receive additional scholarships.
Financial aid counselors have knowledge of money that will not be utilized by students who chose not to attend the college. Usually seen at private colleges, this money is privatized and can be granted to other students in need.
Scholarship Databases
The internet now contains databases that store millions of scholarship opportunities. Fastweb is the largest and most used scholarship search database. Students can use these databases to search for scholarships that may indeed assist in paying for a fraction to most of the tuition costs.
Students need to be persistent when searching for scholarships. Even if you do not have all the criteria for a scholarship, consider applying for it anyway. Businesses and foundations anticipate awarding the money yearly, partly due to tax deductions and community relation exposure. Many will consider awarding scholarships to other students if they cannot find someone that meets all of the requirements.
Overall, in terms of spend management, reducing the cost of college is open to most students; however, it is not without some sacrifices. Consider staying in your resident state for college and living at home for part of the experience. Access professionals in the realm of financial aid to give ideas to reduce the cost of attending college. And finally, research potential scholarships to pay for tuition. Exercising any one of these ideas may substantially reduce the cost of paying for tuition and increase financial aid.
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