Tuition and More: Start Early To Effectively Manage College Costs
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DENVER-With the cost of college tuition and fees outrunning inflation by some 5 percent a year over the past decade, parents and teens can feel overwhelmed affording books, technology and tuition. But you and your son or daughter can manage those costs through early and careful planning-and some smart shopping.
Judge a Book by its Cover
Buying new textbooks at the campus bookstore will run up a steep tab-easily exceeding $100 each. Your teen should try buying used texts, but to do so, he or she should make the bookstore the first stop when arriving on campus, not the last, before classes start.
"Elisabet seemed to get there after all the used books were gone," recalls Hope Torrents, whose daughter, Elisabet, just finished her freshman year at the University of Wisconsin.
Students should act early. Get the course syllabus, or any information that details textbook requirements, for the fall during the summer months. Look online for book deals at sites such as Amazon.com, eBay® and efollet®.com. Your child also could rent books from online sites such as Chegg®.com and BookRenter.comTM. It's also a good idea to check with the college to see whether it has a rental program or uses electronic textbooks.
All Things Tech
Before spending money on all of the latest tech gadgets, your son or daughter should check if his or her school requires a laptop or any other educational gear. Review your child's syllabus and determine whether your teen is taking a math or photography class that might warrant an expensive calculator or camera. Some classes require students to purchase a hand-held wireless device known as a clicker for in-class participation.
Next, see what the school has to offer. Your teen might be able to use equipment at computer labs, school libraries or his or her dorm. If your child already has a computer, he or she should visit the campus bookstore for student discounts on word-processing software or other programs he or she needs for typing papers, searching the Internet or homework.
When shopping for technology, start early. Beyond bookstore deals, look out for coupons and sales at local stores and investigate discount Internet merchants. If you choose to buy online, allow enough time for shipping so your child has what he or she needs on the first day of class. Also, exercise self-control. Your child doesn't need the "next best thing" on the shelf. Here's a basic shopping list:
* Laptop or notebook computer with wireless capabilities
* USB drives for saving papers or sharing notes with classmates
* External hard drive to prevent losing work if his or her computer crashes
* Anything required by a certain course (i.e. calculator, in-class clicker, computer software)
* Cell phone (avoid the extravagant applications)
Paying for Tuition
This far into the college planning process, you and your child most likely have already completed and submitted the Free Application for Federal Student Aid (FAFSA). The government uses this application to determine a student's financial need and the estimated parents' contribution. Because the amount of federal aid your child receives is fixed, now is the time to search for alternative options for offsetting the high cost of tuition.
And remember, regardless of whether your child secures federal financial aid, he or she should file an appeal if there's a change in your family's situation (e.g. job loss, medical emergency, or death of an income-earning parent) that might change your child's eligibility.
Search for Scholarships
Your child should seek scholarships and grants as soon as possible. They often are awarded based on need, academic merit, athletic or musical talent, or participation in an organization. When looking for scholarships, remember they often are awarded on a first-come, first-served basis. Check in your local community for opportunities as well, such as local businesses, churches or organizations such as Rotary International or Kiwanis International. Finally, make sure your student meets the application deadlines.
"We started applying for scholarships and other forms of aid right away," says Aurita Apodaca of Westminster, Colo., whose daughter, Sonny, will attend the University of Northern Colorado in the fall. Apodaca and her husband explained to Sonny how much money they would pay toward college. Sonny was responsible for the rest.
"That motivated [her] to apply for 10 different scholarships," says Apodaca.
If your teen is eligible for financial aid, he or she also is eligible for his or her school's federal work study program. These programs typically offer flexible on-campus jobs that help students cover the costs of college.
If your son or daughter doesn't qualify for work study, a part-time job can help. If your child knows he or she will need part-time employment while in school, it's important to begin looking right away. Competition for jobs in college towns increases dramatically come August.
Avoid the Debt Trap
Loans should be a last resort. Although a loan represents an investment in your child's future, it also creates debt. That motivates most parents and students to go for scholarship money first. It's a strategy that makes sense in the long run. Students who graduated from college with loans in 2008 shouldered an average debt of $23,200, nearly a 25 percent jump from four years earlier, according to The Project on Student Debt, an initiative of the nonprofit Institute for College Access and Success.
If your child does opt for a loan, make sure he or she does his or her research. Government loans, such as the Federal Stafford Loan, often offer lower interest rates and fees than private loans offered by banks and credit unions. Also, remind your child that educational loan money should be used only for school-related expenses.
Change in the Education Loan Game
Looking ahead, the recently enacted health care overhaul legislation includes a revamp of the federal student loan program. Starting July 1, 2010, all new federal student loans will come directly from the federal government. The move will eliminate fees paid to private banks that act as intermediaries, saving Uncle Sam some $68 billion. The government expects to use much of the savings to boost the Federal Pell Grant Program for low-income students starting in 2013, and make it easier for some workers to repay student loans.
Graduation 2010: Cover the Basics Before Your Child Leaves the Nest
Parents provide the most influence on their children's financial knowledge, attitudes and behaviors. Our graduation series provides information and topics weekly to help you start a conversation with your kids. For more information and to download NEFE's 40 Money Management Tips Every College Student Should Know, visit: www.nefe.org/helpforconsumers/graduation2010.
About the National Endowment for Financial Education® (NEFE®)
NEFE is an independent nonprofit organization committed to educating Americans about personal finance and empowering them to make positive and sound decisions to reach financial goals. For more information, visit www.nefe.org.