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College costs are rising, but with a little bit of planning and saving, paying for higher education is doable. Regardless of your financial situation, there are smart ways to plan and pay for college.
Let’s explore some frequently asked questions around planning and saving for college.
Why save for college?
Having a plan to save for college actually increases the changes that your child will go to one. Savings won’t necessarily make you ineligible for financial aid. Family income, not savings, matters the most when aid is calculated.
When do we start saving for college?
As soon as possible! Not just the amount you save, but the number of years you save is also important, so your funds have the chance to earn interest.
How much does a child need in college savings?
If you plan on sending a child to a four-year university, a good rule of thumb is to multiply the age of the child by $2,500. This will estimate how much you will need to save each year for just one year at a public university.
Try our College Savings Calculator to estimate your savings needs.
What college costs should you consider?
Besides tuition and housing, the average family spends an additional $1,700 to $3,300 per semester on other college costs. These costs include:
- Personal items: Whether housing is off- or on-campus, personal items should be considered. These include clothes, cell phone, toiletries, microwave, sheets, towels, lamps, etc.
- Bookstore: Students need other supplies besides textbooks—such as a computer, printer, printer paper, notebooks, backpack, and lab fees—to be successful.
- Activities: College life can also mean a social life. Costs to consider include gym access, restaurants, sporting events, theater/plays, Greek life, spring vacation, or a semester abroad.
- Parking lot: Transportation comes in many forms, and each has a cost. Plan for travel home for the holidays, parking, car insurance, gas, public transportation, or rideshare apps.
- Student center: Students are responsible for things other than studying, including basic care that can include health insurance, medication, groceries, laundry, and meal plans.
Is financial aid an option for our family?
Most likely, yes. The only way families can access federal student aid, and most state and college aid, is by submitting the Free Application for Federal Student Aid (or FAFSA) each year. Eligible students may receive financial aid packages that contain a combination of the following funding options.
- Merit- and Needs-Based Scholarships: Based on skill, ability, or financial need. Awarded by federal, state, and college programs — and don’t have to be paid back.
- Federal Grants: Mostly based on financial need and awarded by the federal government — and don’t have to be paid back.
- State and Institution Grants: Many states and colleges have grants that require the FAFSA to be submitted — and don’t have to be paid back.
- Federal Work Study: Provides part-time jobs to help students earn money for education expenses. Program is based on financial need.
- Federal Loans: Usually provide lower interest rates than private loans and must be repaid.
College costs are rising, but with strategic planning and saving, paying for education can be within your reach. Regardless of your financial situation, there are smart ways to plan and pay for college.