If you have a student entering college in the Boston area in the fall of 2012, then you know that college tuition bills are coming due in August. While it is hard to think about during the “lazy days of summer,” you can’t ignore dealing with this. Otherwise, you’ll end up in a cash crunch emergency. So plan ahead and consider these easy steps.
Paying less for college is a matter of being an informed buyer. While there are a host of options available to help families plan ahead whether your child is still in diapers or entering the last year of high school, this post focuses mainly on those who are about ready to enter the halls and dorms of college campuses throughout Boston in a few short weeks.
Smart consumers need to keep their eyes open for opportunities. As I note on my college planning websites at www.ClearViewCollegePlanning.com and www.CollegeCashPro.com, there are two different prices that folks pay for college: One for those who informed and one for those who are not.
Accept All Grants, Awards & Scholarships
Take whatever has been offered by your school’s financial aid office. You may always appeal later especially if there are circumstances in your family’s situation that have changed from the Base Year used to calculate your Expected Family Contribution.
Consider a Payment Plan
Coming up with a lump sum for tuition is next to impossible for most families. So ask the school about a payment plan option offered through an outside company. Terms are flexible and in some cases you avoid accruing any interest charges. Plans are available for periods ranging from ten-months to 2-years, 3-years or 5-years. This helps make your cash flow planning more manageable allowing time to raise funds from other resources or avoid incurring tax liability for selling investments at an inopportune time.
You need to be aware that payment plans need to be in place BEFORE the due date for the tuition bill.
Students Need to Apply for Stafford Loans
Under the Federal Student Loan Program, the federal government sponsors more than $83 billion in financial aid.
The most important of these include subsidized Stafford Loans, parent PLUS loans and the Consolidation Loan programs.
Stafford Loans are available for each student for a fixed amount based on whether your student is a freshman, sophomore, junior or senior. Right now, freshman are eligible for $5,500 split evenly between each semester. These loans do not accrue interest until after you leave school.
Go to www.StudentLoans.gov to apply. Start with the subsidized options and then apply for the unsubsidized options if needed.
These loans require no credit checks. If you filed a FAFSA in the spring, you will be able to access subsidized loans.
Parents Need to Apply for PLUS Loans
The next option for parents to consider will be PLUS loans. PLUS loans fill in the gap. They are not based on need and can cover the full Cost of Attendance (COA) less the amount of any other aid received. These loans may be deferred until after a student leaves school. Interest may accrue but this provides some flexibility in cash flow planning.
Prepare for Next Year
Now that the initial shock may be receding, you need to take a deep breath.
Now spend the next few months researching scholarship and grant money and work with a college financial planner to help find other tax and planning strategies that may help you increase your financial aid award. Visit the scholarship search tool available at www.CollegeCashPro.com or consider the other free resources available through CollegeScholarships.org.
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