There’s no doubt that college keeps getting more expensive every year. With a little planning, you can avoid breaking the bank when it comes to funding your child’s college tuition.
Federal Grants And Loans
71.4% of full-time college students get federal aid, which averaged $10,500 during the 2011 – 2012 school year, according to a report from the U.S. Education Department’s National Center for Education Statistics.
The Free Application for Federal Student Aid, also known as FAFSA, should be filled out for each college year a student will attend school. Applying to both grants and loans is a great strategy, since you may not get a grant but still have the option to use a loan. Freedom Debt Relief notes that even if you are approved for a loan, you don’t have to take it.
Grants from sources other than the FAFSA are often overlooked. However, they can be an excellent source of funds for covering tuition. Yes – filling out grants takes time but if you can pay a large percentage of your child’s college tuition, it is certainly worth the time involved.
collegeraptor.com found that students receive funding for tuition from the following sources:
- 40% Federal
- 39% Colleges/Universities
- 13% Private Sources
- 8% State
Many state and private source entities offer grants, which students do not need to pay back. Focusing on those areas first could yield some surprising, positive results.
Community College Research Center (CCRC) at Columbia University’s Teachers College found in a study that “Federal work-study generally boosts students’ odds of graduating and getting a job.”
A main benefit of work study is its flexibility. While students must complete their work study tasks, there is often time left to do their own school work while on the job.
Work study schedules will also work around a student’s class schedule. Freedom Debt Relief mentions that students aren’t going to make enough to pay off their debt (work study must pay at least minimum wage), they should be able to pay for many of their living expenses, which can help keep them from going further into debt.
Using an IRA can be a great source of tuition funding to cover tuition costs. To avoid the 10% withdraw penalty, it’s important to be aware of the rules when using your IRA for educational purposes.
Freedom Debt Relief says educational expenses must be for yourself, a spouse, child or grandchild. The student must also be enrolled at least 1/2 time at an eligible college as defined by the Department of Education.
When using distributions from an IRA, they will count as income, which means it could have an impact on the amount you’ll receive from any FAFSA grants or loans. One technique to get around this is to only use an IRA during the final year when financial aid for the following year is no longer an issue, as mentioned in an investment service report by BancWest, a San Francisco-based financial institution.
Freedom Debt Relief could help you get your debt under control. If you’d like a free evaluation from a debt consultant, contact them at freedomdebtrelief.com.