How to Financially Prepare for College

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It’s no secret that pursuing a higher education is a huge expense, however, financially preparing for it ahead of time could help in the long run. Before making the leap to send over those college applications, make sure you (and your parents) are aware of the financial side of college and prep for it accordingly.

Plan Ahead Early

If you’re graduating high school and planning on attending college, be sure to check-in with your parents first. Sometimes, parents may have college preparations for you, like money put aside or a set price of how much they are planning on giving you while you attend. Parents can also have a savings plan built ahead of time where they contribute a certain amount of money throughout the years before their child goes to college. Parents should also have a serious conversation about money with their child and help them with creating a plan on how to fund college expenses that can add up quickly.

If parents are unsure how to begin creating a college savings plan for their child, they should look into getting a financial advisor. Michigan First Wealth Management Group have experts that are tailored to help with customizing an investment plan for you and your child’s academic career path.

Educate Yourself

Once you get a general idea of what you can afford for college, try to look into student loans, that can help you pay for school and give you some financial relief. Educate yourself by taking time to understand the different loan options there are and which ones you could utilize.

One of the applications all students should apply for is the Free Application for Federal Student Aid (FAFSA). FAFSA has to be completed each year the student attends college, and completing the form determines how much federal aid a student qualifies for. FAFSA collects the student’s (and often the parents’) financial information to calculate the EFC (Estimated Family Contribution), and the college’s financial aid department uses the EFC to determine how much aid the student qualifies for. There are also other student loans to possibly take advantage of.

  • Stafford Loans: Stafford Loans have federal funding benefits, like low fixed interest rates, no loan repayment while in school, and flexible repayment plans that can be income-based.

  • PLUS Loans: PLUS Loans (Parent Loan for Undergraduate Students) have a credit check, origination fee, higher interest rates, and repayment benefits. You would need a decent credit score or an endorser for this Loan.

  • Private Loans: Private Loans have interest rates that are based on your credit rather than need and sometimes come with higher interest rates. They aren’t subsidized, and you’ll accrue interest on them while attending school. 

  • Direct Consolidation Loans: Direct Consolidation Loans consolidate existing federal student loans and aren’t used to initially fund your education. They can combine several loans into one set loan with a fixed interest rate and a single monthly payment instead of multiple payments.

The Real Cost of College

Although college costs differ, try looking into general costs of tuition or look at the prices for the schools you’re mainly interested in. Pay attention to the net price so you can get an idea of what you may be paying and try to budget around it. When looking at the average tuition cost, be sure to keep in mind the extra costs needed for books and school supplies. This is also a good time to determine your living arrangement, like living on campus, staying at home, or getting an apartment. If you plan on staying on campus in a dorm, that’s an added expense, along with getting living essentials (food, towels, bedding, kitchenware, etc.).

Apply for Scholarships and Grants

Another thing students should definitely look into are scholarships and grants, which are forms of aid that’ll go towards your college education and won’t have to be repaid. There are scholarships that may require essays or videos based on an assortment of topics. Some students may be able to get scholarships and grants for participating in extracurricular activities, such as sports and hobbies. 

There are websites that offer an assortment of scholarships, like Niche and Fastweb. These scholarships are public, so keep in mind that they may be competitive. With that in mind, you can also look into local scholarships through churches and community organizations and ask teachers or counselors to see if there are any they might recommend as well.

Work During the Summer and/or While in School

If you have time around your classes and schoolwork, consider getting a part-time job to help save up money for any other expenses you may come across. Be sure to track your spending and determine your needs versus wants (or the 50/30/20 rule). If you just graduated high school, possibly get a summer job while you have some downtime so that you’ll have funds when it’s time to go to college.

Start a College Savings Account

Starting a college savings account is a great way to help you save up for any costs you may stumble upon while in school. Having a savings account can help you be prepared for any tuition payments you may have to pay on, buying and renting textbooks, and getting any supplies classes may require you to get. This money can also go towards an emergency fund or for paying off any student debt if you have any after graduation, or for any loans you need to make payments on.

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