Financing College

Early planning can help families survive the sticker shock.

College costs have gone through the roof. Four years at a good school can cost as much as a nice house.

Simply wailing about tuition bills won’t help. Early planning and action may, however, limit the pain. Right after your baby is born, open an education savings account. Choose a Coverdell Education Savings Account from Coastal, or talk to a broker about a 529 Account. Though there are differences, the accounts are similar enough: You invest a modest amount each month, and by the time Junior or Missy turn 18, there’s enough in the till to put a dent in college costs.

When your kids become teenagers, urge them to get a job. Not only does it pay for gas money, but there could be an unanticipated payoff. Generally, the more assets a family has, the less financial aid a student gets. But schools expect parents to contribute the bulk of the money. Student savings doesn’t weigh as heavily when colleges evaluate finances. The next step is to actually apply for that aid. Even before acceptance letters arrive, students are instructed to complete the Free Application for Federal Student Aid. There’s nothing fun about filling out the ultra-detailed FAFSA, but it does have two vital functions. First, it determines student’s eligibility for federal grants. Second, colleges use it to decide whether students qualify for in-house grants, scholarships and loans. (Some private schools also want the even lengthier CSS Profile.)

Though colleges boast of their generosity, many parents are still shocked at how much they’re expected to contribute. If the bill exceeds your savings account balance, you have a few options. First, colleges allow you to file an appeal and argue why the initial award was insufficient. Second, you can apply for private student loans from local banks and credit unions and national lenders such as Sallie Mae. Finally, you can pursue private scholarships. There are countless quips about grants for left-handed Irish trombone players, but it’s worth checking with your high school’s guidance office and websites such as to see what’s available.

No one ever claims paying for college is easy. But, if you view it as making a down payment on your child’s future, you might find the pill – and the bills – easier to swallow.

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