Ten Tips for Lowering Out-of-Pocket College Costs

Even if you’ve been saving since your child was born, chances are there’s still not enough to cover four or five years of college. What’s a parent to do? Follow some of these tips and strategize ways to help cover out-of-pocket costs.

1. Examine your financial assets
In the Free Application for Federal Student Aid (F.A.S.F.A.), families are required to include money invested in assets, such as custodial accounts, retirement accounts, bonds, stocks, and more. The government does not count some of these assets toward your family’s Expected Family Contribution (or the amount they feel your family will be able to afford each year), but they do include monies in some of the areas. For example, money in custodial accounts, stocks, and mutual funds is counted against you in the F.A.F.S.A. formula. Make an appointment with a financial advisor in your child’s junior year at high school, and discuss where to put your money (there is a two-year “look-back” period).

2. Fill out your F.A.F.S.A. early
The government accepts F.A.F.S.A. submissions annually from January 1 to June 30. Because the colleges begin designating money for financial aid as soon as they start receiving F.A.F.S.A. forms, you should apply as soon as possible. You can apply even if you haven’t completed your taxes for the following year if nothing drastic has happened in your financial situation. Use your data from last year and make corrections to your F.A.F.S.A. submission once you have finished your taxes. Colleges generally give more money to families who apply first.

3. Do well on the SATs
S.A.T. scores are important, but just how important are they? Some schools have automatic scholarships for students who get over a certain score on the S.A.T, so if your child is interested in one of those schools, you’re in luck. But the S.A.T. or A.C.T. scores are important even if there aren’t guaranteed scholarships. Doing well on the exams makes your child more attractive to the colleges, which will probably give you a better financial package.

4. Don’t apply for early decision
Early decision allows the student to apply early (usually in November) and receive an admission decision before the college’s usual notification date. Although it’s tempting to apply for early decision if the student knows where he wants to go, it severely limits your chances of getting any financial aid. You should wait until you have financial aid packages from several schools so you can compare them. And instead of early decision, try the “early action” option, in which the school may offer a decision without it being binding.

5. Participate in extracurricular activities
Having a strong resume of activities will prove to colleges that your student can prioritize, especially if her grades are good. Colleges love student leaders, so encourage her to get involved in leadership roles through school clubs or sports. If she isn’t able to handle schoolwork and other activities at the same time, stress the importance of academics first. Academics are the first thing that the school will look at; extracurricular activities, while an important factor, always come second.

6. Save money in the right places
Don’t open an account in the student’s name and put all of your saved money there; 35 percent of the money in the student’s account is automatically designated for college by the government (through the F.A.F.S.A.), while only 5.6 percent of money in the parent’s account is counted. If the student has income, keep her money in your account.

7. Apply for scholarships
Many Internet scholarship sites require a lot of work with minimal reward. Useful scholarships often come directly from the colleges. Visit college Web sites and look at the scholarship pages in the financial aid sections. For example, a graduate student at recently received a scholarship that covered two thirds the cost of college. She simply had to do some research and compose a well-written essay about one of the school’s important benefactors.

8. Apply to comparable schools
Apply to more than one school. Your student should wait until he has received acceptance letters and financial aid packages from all the schools to which he has applied, before making his decision. If he applies to schools that are comparable, he can compare financial offers and select the best deal. If one school offers more aid in grants and scholarships, consider calling the other school, outlining the situation, and asking that they match the price of the first school.

9. Pick the right school for your major
Statistics show that 30 percent of students transfer after their first or second years of college. When your student transfers, she has to start all over at a new school, and it may require her to add an extra year to her schooling. Because of this, it now takes students an average of 5.2 years to complete their undergraduate education. Encourage your child to choose a school that has several majors that she might be interested in, avoiding the need to transfer if she changes her major. (Most students change their majors at least once while in college.)

10. Choose a school that doesn’t cost a lot
If you want to lower your out-of-pocket costs for college, choose an affordable school. State schools offer lower-priced undergraduate educations, and many of them offer excellent quality. Many parents get trapped into paying for high-priced universities because they want their student to be happy and aren’t thinking about the burden of loans that will fall on the family or on the student in years to come.

Your student doesn’t have to be burdened with loans if you both make the right choices. Make wise decisions with your money, encourage your student to do well, and choose the right school for your child. And enjoy the money you save.

Valerie Johnson