Deal Diva: Paying for College

College, YIKES!!! To some the mere though of college makes your heart race and your check-book tremble! No more! You are going to read this article and walk away knowing more about how to pay for college, you and your check-book will be more relaxed. We as American’s are lucky to live in a country where our government understands the importance and the high costs of today’s college education; our government provides loans and tax deductions as incentives to make sure everyone has the opportunity to go to college.

Financial Aid- (FA Link to more info. HERE) Financial Aid is money from the government to pay for college, nearly everyone is eligible for some sort of government aid. What makes government loans more appealing than bank loans are the lower interest rates and better pay back terms. The amount of money an individual or family receives is dependent on many factors, such as: family size, family income, how many family members are currently in college, what college you will attend, etc. all of these factors will be evaluated to determine a students financial needs. Be sure that you are honest on all of the forms you fill out, they are randomly selected for verification (I had to go through one once, very painless!). There are many types of loans and even grants (money you do not have to pay back) to find out what they all are, check out the US Department of Educations FAFSA home page.

Mail your application in on January 1 even if your University’s deadline isn’t until later in the year, you are more likely to get grants this way (TRUST ME!!!!). You will have to estimate your taxes, but this is OK, because they send your form back to you to verify, so be sure you have your taxes done the second time around.
Call the University that you intend to attend and speak with one of their Financial Aid advisors, this can really help you to estimate costs and know what your schools Aid limitations are.
Know that when the government is determining your eligibility (if you are unmarried) they will take into account your families income, whether or not your family chooses to help you with college is irrelevant. If your family is not helping you, then talk to a financial aid advisor to see what you can do to qualify as “independent”, the government will then only evaluate your income.

Scholarships- are many and plentiful. Sometimes the hardest part isn’t qualifying, but finding scholarships! HERE is a link to thousands of scholarships, fellowships and postdoctoral awards. Another place to find scholarships is YOUR college; almost all colleges/universities have scholarships offices, sometimes it is tied to the Financial Aid department, but they can let you know about certain scholarships that are only eligible to students at your school (limits the competition). If you are already at school, or have already decided what your major will be, check with your department or school (ie if you are majoring in Business, then check with the Business School Department), there are a lot of scholarships that are only for certain majors.

Monthly Payments- A lot of colleges offer monthly payments through a company AMS. AMS will pay your tuition up front when it is due, they then break the amount into 4 payments which you payback in 4 monthly installments. I used this program for the last 2 semesters that I was at college. It worked out really well, my husband had a good job that paid well, but our budget was tight and we weren’t able to save big chunks of money, but we were able to make the monthly payments. To find out if your college offers this service, call your financial aid office.

Tax Credits- Thanks to President Clinton being a college student can be a tax break! If you are in the first 2 years of your college education you are eligible for the Hope Scholarship Credit. Here is how it works:

“(1) 100 percent of the first $1,000 of the taxpayer’s out-of-pocket expenses for each student’s qualified tuition and related expenses, plus (2) 50 percent of the next $1,000 of the taxpayer’s out-of-pocket expenses for each student’s qualified tuition and related expenses. Thus, the maximum credit a taxpayer may claim for a taxable year is $1,500 multiplied by the number of students in the family who meet the enrollment criteria described above. (irs) “

To find out more about the Hope Credit you can talk with your accountant or check out the IRS’ webpage HERE

If you are beyond your first 2 years of college you are eligible for the Lifetime Learning Credit. Here is how the Lifetime Credit works:

"Through 2002, the amount that may be claimed as a credit is equal to 20 percent of the taxpayer’s first $5,000 of out-of-pocket qualified tuition and related expenses for all the students in the family. After 2002, the credit amount is equal to 20 percent of the taxpayer's first $10,000 of out-of-pocket qualified tuition and related expenses. Thus, the maximum credit a taxpayer may claim for a taxable year is $1,000 through 2002 and $2,000 thereafter. These amounts are not indexed for inflation. (IRS)"

The key to paying for college is knowing what’s out there and planning ahead. Discuss with your child (or parents) ahead of time about college expenses and how your family will handle them. A lot of parents get the idea that they have to pay for all of their child’s college expenses, WRONG, have you child get a part time job! There are tons of part-time jobs in a college town; most businesses rely on students as employees. Many parents however fear if their child works he/she will not be able to devote enough time to school work, this is not always true. My sister for example works 30+ hours a week and maintains a 3.8 grade average! It can be done; working will teach your child many important lessons responsibility, time management, financial responsibility….the list goes on.

College is a wonderful opportunity for you, or your child to learn and top grow, don’t let college be a burden and a hassle. Although you may not be able to afford Harvard, it’s not always important where you got your education—but how you use the education you have!