A good approach to paying for college is to use a combination of these seven college funding strategies:

1. Saving

The smartest way to fund college is through saving. Consider setting up a UGMA/UTMA/529/Coverdell Education Savings Account (an advisor can help choose the most appropriate plan for each unique situation).

2. Budgeting

Take a hard look at your annual spending and income. Two or three years prior to your child attending college, look to pay down debt or pay off other expenses so that funds from current income and bonuses can be used to pay a portion of your child’s college tuition.

3. Borrowing

Borrowing is a perfectly acceptable option for funding college. But it is also very important to have a realistic plan for paying off loans after college. Students need to understand the cost of borrowing compared to their future earnings potential and make smart borrowing decisions. If the student decides to borrow, a Stafford Loan might be a good choice:

• Stafford Loans offer lower rates than consumer loans. For loans first disbursed on or after July 1, 2024, and before July 1, 2025, interest rates are 6.53% for undergraduates or 8.08% for graduate students and students pursuing a professional degree, according to StudentAid.gov.
• They can be repaid in 10-25 years starting 6 months post completion or half time enrollment.
• The loan may be subsidized where the government pays the interest while the student is in school, or unsubsidized where interest accrues and is paid back later.
• Limits: There are limits to how much a student can borrow. In 2024, for dependent students the loan limits are: $5,500 per year for freshman, $6,500 for sophomores, $7,500 for juniors and seniors. Limits for independent students are: $9,500 for freshman, $10,500 for sophomores, $12,500 for juniors and seniors. For graduate students or students pursuing a professional degree, the limit is $20,500 (unsubsidized only).

4. Financial Aid

The first step in establishing how much aid a student and/or parent can receive is by filling out the FAFSA form (Free Application for Federal Student Aid) to apply for financial aid.

• Tip: the FAFSA is due after January 31st of the child’s senior year (obtaining advice from an advisor when completing the FAFSA can be beneficial). The FAFSA allows for grants and federal student loans. 
• Parents can also help by applying for the Parent Loan for Undergraduate Students aka PLUS Loan (Federal Direct PLUS Loans). The current PLUS loans rate is 9.08% or loans issued on or after July 1, 2024, and before July 1, 2025.
• A PLUS loan is fixed for life, with payments beginning 60 days after receipts and with up to 10 years to repay with interest. 
• PLUS loans are generally the most common and often the only available direct option for higher resource/ income families. 
• One last loan type is Private Student Loans. These types of loans are generally, unsecured loans and may also be referred to as signature loans. These loans typically have very high interest rates and may be difficult to obtain without impeccable credit.

5. National Grants

Look into Pell Grants, Academic Competitiveness Grants, or National SMART Grants to help fund your child’s education.

6. Local Scholarships

In some areas, there are civic and/or religious scholarships available. The search should start prior to their junior year in high school, and some scholarships may be specific to a school or even area of study. If your child has decided which school they would like to attend, you can check with them to see what scholarships may be available (a high school guidance counselor may be able to help too).

7. Benefactors

Groups such as AmeriCorps, Peace Corp, National Health Services and ROTC can sometimes help with educational costs in exchange for service commitments. Although these methods of saving for and funding college are great considerations, some of the best techniques for helping with college expenses don’t involve money at all. Obtaining good grades, advanced placements in school, extracurricular activities (which could involve sports, civic, or religious organizations), gaining college credits while still in high school, and scoring as best as possible on SAT/ACT exams can all serve to reduce the costs and improve choices for a child’s (or children’s) education.