It’s the time of year when high school seniors and their parents receive the much-anticipated college acceptance letters and financial aid offers. College remains a great investment in the future, so it’s important for families to make wise decisions when selecting a school and then creating a strategy to pay for it. But that process can be complicated.
Here are five smart tips to help students and parents make their college decision and determine a plan to pay the upcoming college bill.
1. Consider financial fit
Choose a college that makes financial sense. Students and families should think about what they can afford to pay, and remember that this is, most likely, a four-year commitment. Carefully analyze financial aid offers, as the college with the highest sticker price may become more affordable based on the types of aid offered. MEFA’s College Cost Calculator can help families make sense of the financial aid provided and determine the net price of each college.
2. Estimate earning potential
To help make the college decision, find out how much graduates from each college earn in wages after graduation, based on major. Knowing an estimate of potential earnings can help determine whether a college’s cost is worth the investment. The U.S. Department of Education’s College Scorecard provides data on median earnings broken down by field of study for U.S. colleges and universities.
3. Borrow federal student loans first
If you plan to borrow loans to pay for college, maximize federal student loan options before borrowing a private loan by submitting the FAFSA. Federal student loans have low interest rates and more flexible repayment options than private loans. In addition, federal student loans do not require a credit check or a co-borrower, and repayment is deferred until after the student leaves college.
4. Use a monthly payment plan
If there is one ”best kept secret” to paying for college, this is it: the monthly payment plan. Most colleges and universities offer one for a small, one-time sign-up fee. Instead of paying a lump sum before the semester beings, families can submit payments over ten to twelve months, interest free. This is a great way to manage cash flow and minimize borrowing. It’s like making a monthly loan payment, without the accruing interest or credit check.
5. Borrow wisely
When it comes to student loans, borrow as little as possible. Because borrowers pay back the amount of the loan plus interest, loans increase the overall cost of college and can take years to pay off. Make a plan to pay your college bill with as little debt as possible. You may be approved for a large loan, but it doesn’t mean you have to take the full amount.
MEFA, the Commonwealth’s trusted authority on how to plan, save, and pay for college, has developed How to Pay for College: A Guide for High School Seniors and Families, a program designed to help college-bound students and their families navigate the college decision and payment process. The program offers live and on-demand webinars, and a variety of tools and resources to help families understand each financial aid offer and ultimately make a college decision that will work for their family.
Find out more about this program here.
MEFA is a not-for-profit state authority, not reliant on state or federal appropriations, established under Massachusetts General Laws, Chapter 15C. MEFA’s mission, since its founding in 1982, has been to help Massachusetts students and families access and afford higher education and reach financial goals through education programs, tax-advantaged savings plans, low-cost loans, and expert guidance. All of MEFA’s work aligns with the ever-present goal to support the independence, growth, and success of Massachusetts students and families. Visit mefa.org to learn more.
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