How Will You Pay For College?

Whether your child just started receiving college acceptances or is already enrolled in college, you may be asking, as parents do all the time, "How am I going to pay for college?"

After having worked in higher education and college financing for over 30 years, I have learned that the answer is remarkably the same from family to family: no matter who you are, no matter how little or how much money you have, we all pay for college the exact same way.

"How can this be possible?" you ask. It's simple, actually:

We all look at every available resource and every possible way to pay the bill and we piece it together. We figure it out. That's it. And everyone pays for college in exactly this way. Follow the steps below to create your own plan to pay.

1. Get "Someone Else" to Pay:
   Given the options, this is my favorite. And don't think about "someone else" in narrow terms:
   
   • Research outside private scholarships. You can search online, but be sure to look around your local community and professional and social networks for additional resources as well. Scholarship opportunities are all around you, you just have to look!
   • The federal government, state government, and colleges and universities all offer free money of their own in the form of grants and scholarships or "gift aid." Check each college's financial aid website to find out how to apply for financial aid,  and make sure to meet all deadlines!
   • Friends and family. Holidays and milestones (graduation) are a time when many family and friends give monetary gifts to students. Often times, families will use this money to help offset the incidental costs of college.

1. Look at your family savings:
   Look at your own resources. What do you have available to help pay the bills?
   
   
   • Add up all your personal savings accounts, CDs, college savings accounts like the U.Fund 529 Plan, and prepaid tuition accounts like the U.Plan. Most families will utilize savings to help pay the costs. The more you can pull together from personal resources, the more options you will have.

1. What can you afford out of your monthly income?
   
   
   • Most colleges have what they call a "monthly payment plan." Both parents and students can figure out what they can afford monthly toward college costs and sign up to pay that amount. Are there ways to supplement your income? Can your students do part-time work while in college?

1. Be a Wise Borrower:
   A good education is one of the most valuable things for our children to have, so it may very well be worth borrowing a loan to help with the cost. But do it sensibly.
   
   • Let's face it, in this country, we finance a number of big purchases in our lives. The key is knowing how to finance wisely. That means educating yourself about the different financing programs available and understanding the long-term picture of what it means to borrow a loan.
   • Before you borrow, make sure you understand all the terms and know the loan's total cost. What is the monthly payment? When will payments start? What happens if you don't have a job? The amount a family borrows will definitely affect the future of the parents and the student, so make sure you talk about borrowing and make a decision that works well for the whole family.

In my many years of assisting families, it's rare that I have come in contact with a family who pays for college with only one resource. It's difficult, and for most families impossible, to save the whole amount of the cost of a college education. It's also generally unwise and unlikely that a family can borrow the full cost of college. Piecing it together is the way that most families meet the cost of college today. For guidance on a plan to pay for college, check out MEFA's resources.