Preparing To Pay For College
While a child embarking on the college journey is an incredible achievement, financing tuition can be
challenging. There are a number of options to consider as you and your child are planning the next steps:
1. Immediate University Alternatives:
Take a gap year: While many parents often discourage taking time off in fear of losing
momentum, in many other countries, the so-called "gap year" is quite common. This time off is a
great opportunity for students to save money. Using the gap year to work at part-time jobs,
volunteer, and build their resumes. The difference between a 23-year-old college graduate and a
22-year-old college graduate is negligible. A student working and saving for a whole year could
save as much as $10,000 for college. That's enough to defer the cost of tuition. Plus, building a
resume could make it much easier to find work on the other side.
Start out at a community college: Community college may not be a first choice, but could be an
attractive option when it comes to money. Most community colleges will offer significantly
discounted tuition for students. These institutions offer the same general education courses for a
fraction of the price. Also, the more flexible schedule a community college typically offers can
make it easier to work a part-time job while going to school. Many start out at a community
college and then transfer to a larger college or university; what matters more is the school one
graduates from with their four-year degree.
2. Free Money:
Research grant options: There are a number of grants available to support individuals for a
variety of reasons, such as income level, heritage, ethnicity, and area of focus. Do some research
to see if there are any organizations that might offer grants. Grants are a great option because
unlike a loan they do not have to be paid back. Regardless, don’t give up on your college dream
because of a lack of financial resources.
Seek out scholarships: Scholarships are a wonderful way to save money on college expenses.
Based on qualifying criteria, like good grades and/or being enrolled in a full-time course load,
scholarships are like paying cash for these expenses – which means no loan necessary, and
therefore no interest payments.
While schools and community organizations offer a myriad of scholarships to support your child’s
education, don’t forget to look to your credit union. Financial institutions, like Unity Catholic
Federal Credit Union, offer scholarships to their members, based on qualifying criteria.
For any scholarships you apply for, read the eligibility requirements and the terms for maintaining
the scholarship. Some scholarship amounts are a one-time payment, whereas others will pay for
part or all of tuition payments.
However, if the terms for maintaining the scholarship are not met (such as maintaining a “B”
grade average), the funding could be disqualified and stopped. In this case, it's good to have
more information about student loans that could supplement what scholarships won’t cover, or for
a solution, in the event a scholarship program ceases.
- Tuition Reimbursement - If scholarships, loans, and grants aren’t enough to cover the cost of
graduate school, don’t despair. If your college-seeking child is currently employed, they may be
eligible for tuition assistance. Tuition assistance is an employee benefit through which an
employer pays for a predetermined amount of continuing education credits or college coursework
to be applied toward a degree.
3. Choose flexible schools: Encourage your child to apply to and visit a few schools where he or she
would feel comfortable attending. The quality of instruction is similar among many colleges and
universities; what's different is the environment. What makes your student most comfortable: a small,
liberal arts school or a big state school?
4. Financing: If you have nothing saved for college, then you'll likely have to borrow funds to support
college tuition. The college for which you’re applying can help you determine what financial aid you might
qualify for and to what extent you will have to look elsewhere for financing. Outside of a mortgage, a
student loan is the safest investment you can make. The earning potential of college graduates is
significantly higher than a high school graduate. There's no need to be stressed about borrowing to pay
for school. Just use it responsibly. You will need to repay all that money whether there is a degree at the
end of the adventure or not. Borrow only the amount you need vs. the full amount for which you’re
eligible.
- Federal Loans: It’s also important for your child to fill out a FAFSA (Free Application for Federal
Student Aid), which requires your income and savings information, as soon as possible. This will
give you a good idea of what type of assistance you qualify for. Depending on your family’s
income level, you may qualify for federal grants that don’t need to be paid back. The results of
FAFSA will also help your child make an informed decision about which school to attend. As far
as loans, the federal government sets a cap on how much they will lend to students, based on
EFC, or estimated family contribution. These loans have quite favorable rates and good
repayment terms that will help young people stay out of trouble. Below are two different types of
Federal aid to keep in mind when applying:
- Subsidized - A Subsidized Loan is a type of federal student loan. With a
Subsidized Direct Loan, the bank, or the government (for Federal Direct
Subsidized Loans, also known as Subsidized Stafford Loans), is paying the
interest while you’re child is in school (a minimum of half time), during their
post-graduation grace period, and if they need a loan deferment.
- Unsubsidized - Another type of federal loan is an Unsubsidized Loan. With an
Unsubsidized Loan, your child is responsible for the interest from the moment the
loan money is disbursed into their account. There’s no help on the interest; they
are responsible for the entire amount.
- Private Loans: After exhausting all eligibility for federal student loans, scholarships and grants,
your child may need to explore private loans to cover the remaining financial need. Student loan
solutions at Unity Catholic are designed to help fill those gaps. With great rates and fewer
fees, you could save thousands of dollars by choosing your credit union's solution over other
"alternative lenders".
Our family at Unity Catholic FCU is thrilled to support you and your child through this next chapter.
Congratulations and good luck!