Financial Planning for College

February 8th, 2017 by Bunch & Brock

College isn’t for everyone, but if you are college-bound, or have children who are, your bank statements may be making you wonder if higher education is worth the financial risk. College tuition rates are increasing at a higher rate than general inflation. The average 2014-2015 tuition increase among private colleges was 3.7 percent, and 2.9 percent among public schools. That means that right now, 4 years of a private school will cost around $135,000, and in 18 years it will cost nearly $325,000. Four years of a public school is now approximately $40,000, and will hover closer to $95,000 in 18 years. With no guarantee of a high-paying job, the thought of depending solely on loans is a hard pill to swallow. Financial aid packages are helpful, but the school determines eligibility. Going to college should be a time of hope, not a time of dread. There are steps you can take, however, if you’re willing to plan. Paying for college doesn’t have to send you spiraling into bankruptcy.

According to education research firm EAB, many colleges around the country are releasing financial aid offers four to eight weeks earlier than they did last year. In fact, as many as 26% of them are doing so, while 31% are releasing offers two to three weeks ahead of last year. However, these packages are just estimates. Students won’t really know how much they’re paying for college until the semester starts. Each semester could see a tuition increase, too. The up side to these estimates and the new time frame is that students have more time to compare packages and therefore better weigh the pros and cons of each school from a financial standpoint.

College is a tremendous expense, so it’s important to take the time to evaluate your options. There are some considerations you can make to help afford the costs associated with higher education. It might not be wise, for example, to choose private schools when a public school in-state offers tuition at half or less than half the price. Public schools in Kentucky offer a discount if the student can prove residency. Other tips include:

  • Community service – A lot of schools offer grants and scholarships to students who volunteer at school or in the community.
  • Apply to a LOT of schools – The more schools that accept you, the more choices you’ll have when it comes to what you can afford. It also might give you leverage. The favorite school might be willing to match another school’s package if you take the time and effort to pursue negotiation.
  • FAFSA FAFSA FAFSA – Parents and students need to fill this form out for the opportunity to be considered for financial aid and applicable grants, as well as student loans. A family history of bankruptcy does not automatically disqualify you from receiving federal loan money, so don’t let that discourage you.
  • Good old-fashioned savings – Of course it’s hard for a kid OR an adult to save tens of thousands of dollars, but even just putting aside a little each month for a year or two can end up buying books and supplies for a few semesters.

If grants and financial aid and scholarships can’t get you where you need to be financially, loans are usually the next step. While bankruptcy does not make you ineligible for federal loan and grant money, it can make it more difficult for you to get approved for any private loan programs. There are extenuating circumstances, however, such as if the high debts were accrued by extraordinary medical expenses, natural disasters, or some other circumstances where the borrower is not at fault. Private lenders do tend to treat complete liquidations more carefully, so borrowers who filed Chapter 11 will be more likely to get a private loan than those who filed Chapter 7.

It’s very common to have questions about how your financial history can positively or negatively affect you or your child’s ability to attend college, At Bunch & Brock, we know it can be hard to get out of debt and even harder to save, but with more than 35 years of experience in the state of Kentucky, we have helped many people develop the best plan for their situation. To get started, or if you have any questions about this topic, call us at 859-254-5522 or fill out this online form.