How Do We Pay For College?

This question will be rearing its ugly head more and more often if your children are getting close to college-going age. The good news is that there are several options available to prospective students and their parents to help you pay for college. Tuition plus room and board at a private college in the US is on average around $35 000, and this amount is increasing by between 4 and 7% annually.

If you haven?t saved enough over the years to cover college expenses, you may have to work through those years to pay the fees as your child attends college. This is in addition to your normal living expenses and which could be quite a burden. There are however, a number of financial aid options available.

Basing on the total cost of their education and the family's ability to pay, need-based Aid are offered to qualified students. Need-based aid may come in the form of a low-interest student or parental loans, federal or institutional grants, or a work-study program subsidized by the Federal Government.

Federal Student loans ? the Perkins and Stafford loans - give students loans with lower interest rates that are accrued only after repayments start. Private student loans are available to students as well.

With repayments starting 60 days after the loan had been disbursed, the PLUS loan (Parent Loan to Undergraduate Students) gives parents low-interest loans too.

Not needing to be repaid, grants have one big advantage over loans. Grants are awarded by federal and state governments, as well as by individual colleges. Grants can help fund the gap between what parents can pay, and the tuition fees and are based on financial need.

Paid by the school, but later refunded by the government, work-study programs give students hourly or salaried work. Library assistant positions, dining hall workers and other in-campus jobs can be offered or even an off-campus job with nonprofit organizations or other government agencies is also possible. Usually requiring 10 to 15 hours a week, work is scheduled around the student's classes.

Merit-based scholarships are awarded based on academic, artistic, musical or athletic abilities, but are not available at all colleges. Providing the student with full tuition and room and board, these scholarships are highly sought after.

Students can also earn money working while in college. The option of taking summer internships and co-op programs provide students with certain opportunities, such as supplementing their income while gaining useful work experience and insight into their possible career paths.

These are all alternatives that can help parents pay for their child's college education. It may mean repaying loans for a while, but with statistics showing that college graduates earn up to 60% more than people with no college education, your child will reap the benefits later in life.

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