Unprepared for College Tuition? You’re Not Alone!

If you are the parent of a college-bound high schooler who’s starting to look at colleges, but find yourself in the difficult position of not having any savings to put toward the cost of education, take a deep breath.  Sending your child to college without having any savings isn’t going to be easy. It’s going to take more research, more writing and more debt. But, this disadvantage isn’t insurmountable. You and your child are both just going to have to work a little harder to make this happen.

Before you begin planning your course of action, get a realistic estimate of costs. The College Board maintains a utility called the Estimated Family Contribution (EFC) calculator. Using this tool, enter your income, savings, and the number of people in your household. At the end of this, you’ll get a dollar amount showing how much the federal government expects you to pay. You can use this number as a target for how much you’ll have to come up with each year.

As hard as it might be to have this conversation with your child, you ought to have it. At some point, your student will have to read and sign the FAFSA (Free Application for Federal Student Aid), which require your income and savings information. This will also help your child make an informed decision about which school to attend.

Once you have a good understanding of realistic costs, it’s time to start planning. Here are three options to consider as you and your child are planning the next steps:

1.) Choose flexible schools

Encourage your child to apply to and visit a few schools where he or she would likely be among the best students. There’s a dirty little secret in the college admissions world. The quality of instruction at most non-Ivy colleges is the same. What’s different is the environment. What makes your student most comfortable: a small, liberal arts school or a big state school? There are many in both categories at all points on the cost continuum.

Many schools in both categories struggle to attract quality applicants. They will be eager to accept a bright and promising young person who can make their school a better place. These schools may offer extensive grants, scholarships, work-study offers, and other tuition breaks.

If your child is reluctant to consider schools that don’t have an elite price tag, you might want to frame the concern as future debt. Use current examples of people who just graduated and can’t find work in their fields. Encourage them to think about the next five or six years of their life, rather than just the next four.

2.) Take a look at loans

If you have nothing saved for college, the unfortunate reality is that you’ll likely have to borrow at least something. The federal government sets a cap on how much they will lend to students, based on EFC, or estimated family contribution. These loans have quite favorable rates and good repayment terms that will help young people stay out of trouble.

The NASA Federal Credit Union CU Student Choice Loan can help you pay for education expenses. Get competitive interest rates and generous repayment terms. Plus, with our fast online application, get the money you need to pay for college quickly. To learn more about NASA Federal’s education loan options, visit the Credit Union Student Choice Loan Center.

Borrowing for college isn’t the end of the world, but you will need to repay all that money whether there is a degree at the end of the adventure or not. This can be a serious burden for a new graduate, even with income-based repayment programs. Don’t give in to “debt creep,” or the feeling that, since you’re borrowing, there’s no reason to borrow less than the most you can. $19,000 in debt is better than $20,000 in debt. Every dollar not borrowed is compounded by the absence of interest on the other end.

Outside of a mortgage, though, a student loan is the safest investment you can make. The earning potential of college graduates is significantly higher than a high school graduate. There’s no need to be ashamed about borrowing to pay for school. Just use it responsibly.

3.) Consider non-traditional options

There’s no rule that says every 18-year-old has to graduate high school and then immediately enroll in college. In fact, in most other countries, the so-called “gap year” is quite common. Students use this time to work at part-time jobs, volunteer, and build their resumes. The difference between a 23-year-old college graduate and a 22-year-old college graduate is negligible. A student working and saving for a whole year could save $10,000 for college. That’s enough to defer the cost of tuition. Plus, building a resume will make it much easier to find work on the other side.

Community college may also be an attractive option. Most community colleges will offer significantly discounted tuition for exceptional students. These institutions offer the same general education courses for a fraction of the price. It’s not a free alternative: you’ll still have to pay for housing and transportation. Yet, the more flexible schedule makes it easier to work a part-time job while going to school, and it costs half as much or less. No employer or grad school will react badly to  two years of community college. Once your child graduates with a four-year degree, that degree will be the same as a four-year student of that school. Community colleges aren’t free, but they’re certainly not as expensive as a residential college.

Having no college savings does set you behind in the education race, but there are many alternative options. Have a frank, honest conversation with your student, and then do what’s best for you and your family. And don’t forget to celebrate the positive – you raised one smart kid.

 

College Bound? Win up to $7,000!

Announcing the 2015 Mitchell-Beall-Rosen Scholarship Contest

Are you, or do you know, a high school senior gearing up for college next year? NASA FCU has great news! We’re accepting applications for the 2015 Mitchell-Beall-Rosen Scholarship Contest. Through the Contest, we will award scholarships in amounts up to $7,000 to one or more contest winners to assist with the costs of tuition, books and living expenses.

Applicants must be:

  • The primary owner of a NASA FCU account
  • A high school senior with an average grade of C or above
  • Under the age of 21

Scholarships are awarded based on the evaluation of a 1,000 word essay and a personal interview conducted by the Scholarship Committee. For more details and an application, go to nasafcu.com/scholarship or call 1-888-NASA-FCU (627-2328) today. Then, get ready. Get set. Write your essay today! All submissions must be postmarked by February 6, 2015.

Financial Planning For College: How To Get The Most Out Of The FAFSA

Q: My oldest child is about to begin her senior year of high school, and her younger brother is about to begin his sophomore year. We’ve already started getting letters from colleges, and I’m worried that her dreams will have a price tag we won’t be able to deal with. We’ve got some savings, but are worried it might not be enough, especially when both kids go to school. What can we do to maximize our chances of getting scholarship funds?

A: If you’re the parent of a college-bound high school student, you’ve probably already started receiving junk mail with pictures of big, impressive stone facades on the outside and big, appalling price tags on the inside. It’s college recruitment season, and college costs are at an all-time high. If your young scholar has his or her sights set on a private school, you can expect to shell out about $120,000 on tuition.

Whether or not you plan to help your children pay these costs, the federal government will use your financial status to assess your child’s financial need in terms of an Expected Family Contribution (EFC). Whether you expect to qualify or not, you’ll have to fill out a Free Application for Federal Student Aid – the FAFSA form. This form will be used in determining your child’s eligibility for a variety of scholarships, including subsidized student loans, Pell grants and other need-based financial aid.

The equation the government uses to calculate the EFC based on the FAFSA is publicly available. With this knowledge, you can move assets around to make your financial situation look as unimpressive to the government as possible. By doing so, you can help your child get qualified for more financial aid for college. You can help pay for school without spending any money by taking these steps:

  1. Reduce your cash assets. The FAFSA formula expects that you’ll use a portion of your liquid assets – that is, money in savings accounts, money market accounts, brokerage accounts, CDs and checking accounts – to pay for college. If you’ve got significant savings there, consider using it to pay down your mortgage or save it in a retirement fund. Neither of these accounts are considered “cash” as far as the FAFSA is concerned.
  2. Move investments into real property. The assets of your business are protected by the FAFSA equation. If you’ve been considering a capital upgrade, like new equipment or a bigger office, now might be the time to do so. If you don’t own a small business, consider shifting your savings into rental property or making improvements to your home. Both of these will reduce your cash assets.
  3. Make purchasing decisions with asset reduction in mind. If you are thinking about taking a big vacation before you send your little ones back to school, consider paying for it with a withdrawal from your savings rather than financing it through debt. The debt will accumulate interest, while the reduction in assets will make your EFC smaller.
  4. Review Retirement Account Contributions. If you haven’t already done so, maximize your tax-deductible contributions to retirement accounts. This will lower your income without counting as assets for the FAFSA. You can do the same thing if you’re planning a large, one-time charitable gift or other tax-deductible expense.
  5. Don’t lie on the FAFSA. It seems obvious, but bears stating. Lying on the FAFSA is a federal crime that could put you in serious trouble. Any money you gained with a fraudulent FAFSA would have to be paid back, usually with penalties.
  6. Reduce savings in your child’s name first. Because children have fewer expenses, they’re expected to pay a higher percentage of their assets. You can put the money back into savings on his or her behalf after graduation.
  7. Discuss college planning with gift-giving relatives. If grandparents are thinking of making a significant gift, ask them to hold off until after graduation. Once the FAFSA has been submitted, it’s good for a whole year.
  8. Be wary of firms that promise to reduce your EFC by huge margins. Often, these savings offers are pitched to desperate parents as a way to sell low-return annuities. These annuities can come with their own serious financial repercussions.
  9. Buy needed supplies before you fill out the FAFSA. Your student will need thousands of dollars worth of supplies, from computers to dorm furnishings. You can usually get a better price if you buy early. Also, you can deduct that money from college savings.
  10. Time your return to school. If you or your spouse is considering returning to school to pursue a higher degree, consider enrolling concurrently. Having two members of the family in college simultaneously allows you to divide your EFC by two.
  11. If your child is employed by the family business, it may be time to let them go. Student income is one of the biggest expected sources of contribution, and students who earn significant income will not qualify for financial aid.

These tricks can only affect your EFC so much. Don’t expect miracles. Unless you’re right at one of the significant FAFSA thresholds, you will likely only end up with some deferred interest loans. For help paying the rest of college expenses, get help from a trusted lender like NASA Federal Credit Union.

Our representatives can help you set up college savings plans for younger children, and may be able to offer competitive rates on student loans for children who are ready to leave for school. Call 1-888-NASA-FCU (627-2328), email support@nasafcu.com, or stop by NASA FCU today, to get help financing your educational future.

College Bound? NASA FCU Can Help

College ScholarshipThe NASA FCU Scholarship Committee is now accepting applications for the 2013 Mitchell-Beall-Rosen College Scholarship Contest.

Scholarships up to $7,000 may be awarded to one or more contest winners to assist with the costs of tuition, books and living expenses.

Applicants must be:

  • The primary owner of a NASA FCU account
  • A high school senior with an average grade of C or above
  • Under the age of 21

Scholarships are awarded based on the evaluation of a 1,000 word essay and a personal interview conducted by the Scholarship Committee.

College Planning Webinar

College Planning Webinar

Sending Your Student To College For Pennies On the Dollar

Wednesday, October 24, 7:00-7:30pm ET

Register to attend the 30-minute educational webinar and learn:

  • How To Get Big Discounts From High Priced Colleges
  • Why Expensive Private Schools Can Cost the Same Or Less Than State Universities
  • The 10 Biggest Mistakes Parents Make That Cost Them Tens of Thousands of Dollars in Lost Financial Aid

Armed with the insider secrets and strategies that you’ll learn from a leading national college admissions and financial aid expert you’ll be empowered to make better informed choices. You’ll likely save thousands of dollars on your out-of-pocket college costs.