College Consultant Tip: 3 Unique Ways to Pay for College
As a college consultant, I spend a lot of my time speaking to groups of parents and students about the college admissions process. Although I try to focus on the entire college endeavor, I've noticed that parents and students are always eager to turn the conversation toward the financials of college...even if it's not the topic I'm scheduled to talk about.
Unfortunately, paying for college relies primarily on the government's Free Application for Federal Student Aid (FAFSA) and not on any secrets I can divulge. Through the FAFSA, schools estimate how much of the comprehensive cost of the student's education should be paid by the student and parent. The Feds and the school are supposed to cover the difference between that estimate and the established costs through loans, grants, and workstudy programs.
The FASFA can be a lifesaver for low-income students, but I've often found that it dramatically overestimates the amount of money that parents and students can put forth in the pursuit of a college degree. All students should fill out the FAFSA in the second semester of their Senior year, but they shouldn't be surprised if the financial aid packages they get from the colleges are a little lean.
In fact, middle-income students are the hardest hit by the lack of Federal aid. Low-income students will find that the majority of their college experience can be subsidized, but middle-income students may find that their parents make too much to get any grants, but too little to foot the whole bill.
So what can be done? Ya gotta get creative! Here are three ideas for paying for college when the "traditional" options dry up.
1) Get a private loan.
Until recently, I considered private college loans to be a devil's bargain. All too often, I have seen students struggle to pay down loans from mainstream banks with interest rates in the 10-15% range! Luckily there are some new tools on the market to help students find good loans from respectable institutions. Simple Tuition is a site that's leading the way in transparency, publishing interest rates, estimated monthly payments, and even summaries of what the loan will cost you in total.
2) Check out schools that are footing the entire bill.
This year, Congress is taking a close look at the endowments of many private colleges that are claiming to be "non-profits." They contend that rising tution costs are the result of the universities' willingness to pass the bill to students rather than pay out of the school's enormous endowment. This has prompted some schools, like Harvard, to declare within the last few years that they will be reducing costs for upper-middle income families...even going so far as to eliminate tuition completely for those students! So don't be scared by initial price tags. Instead, call the financial aid department and find out what the school is doing for families in your income range before you apply.
3) Beg.
It's a risky strategy, I know. But it looks like it's working out pretty well for Max Stephenson, a student who sent an email to friends and family asking for them to chip in a few dollars for his $25,000 college tuition bill. He's accepting amounts as little as $2, collected almost $6,000, and ended up with coverage in a few larger media outlets that I'm sure netted him more cash. It's unlikely that you'd be able to replicate his success, but asking around if people can help you is never a bad idea!
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Paying for college can be tough, but don't get bogged down! Got any ideas that didn't make the list? Let me know in the comments!