- Personal Finance»
- Family Budget
Affording college is always an issue, but more so now, when there is so much uncertainty about the economy. You may find yourself in the uncomfortable position of not being able to afford your college tuition and fees. Don't give up! There are things you can do.
Expected Family Contribution (EFC)
In the United States, federal student aid is based on the Free Application for Federal Student Aid (FAFSA). Using your income and expenses and your parents' incomes and expenses, and other factors, such as age, health, employment, the United States government figures out what you and your parents should be expected to pay for college. This amount is called the Expected Family Contribution, or EFC. If your parents own their own home, make over $100,000 jointly, and are ten or more years away from retirement, and you, the student, make less than $5000 per year, your family's EFC will be in the range of 25% or more of your parents' income. As I'm sure many of you know, many families cannot afford this percentage of their income on a yearly basis. Enter your learning institution's financial aid department.
Tuition and Reality
If you attend a private college, your tuition may very well be in the $40,000 range. However, only those famiies wealthy enough not to need financial aid will pay that amount. When you are accepted to a college, they will present you with a financial aid package that will include:
- Federal subsidized and unsubsidized student loans
- Work study opportunity
- Scholarships and grants
These sources of money are there to try to close the gap between the EFC and the actual cost of going to school. If the college has a lot of endowment money - that is, money that it has raised by fundraising and other means - they may cover the gap completely. If the college has only so much money to go around, they may not.
For example, your tuition, fees, room and board amount to $40,000, and your EFC is $25,000. The federal government will give a first year student, say, $3,500 in loans and $2,500 in work study. (Work study is usually used by the student to defray living expenses, nevertheless it is taken off the total that the college will give you.) Let's say that the college is able to povide $7,500 in scholarships and grants. That still leaves $1,500 left to pay in addition to the $25,000 EFC. Therefore your family would have to pay $26,500 in order for you to attend your first year of college.
If you and your family just can't come up with that kind of money, there is where the problem comes in.
So it is the final gap that will either enable you to go to school or prevent you from going there.
Deferment and Leave of Absence
If you find that you simply cannot afford to go to school immediately after high school, after you get accepted to a school you can choose to defer. That is, you are accepted as a student, but you tell them you will not go this year, but next, so you can make enough money to go there. The guidance office at our local high school says that all schools allow this.
Once in school, you can take a leave of absence every other year or so to work, and you can work during school as well to make your tuition money.
Even now, so soon after the financial industry crash, there are places with money to lend for college. However, these places are not kind and gentle like federal loans. These are places that want to own you forever.
In general, private student and parent education loans are to be avoided.
Delay and Independence
If the deferment and leave of absence strategy will not be adequate, you can decide not to attend the college of your choice and instead either live with your parents and work until you can afford your education on your own, or go out and become independent.
To become independent according to the FAFSA, you could join the military, get married, or become an emancipated minor by order of the court. If you got married and you had a combined income of $46,000 and managed to save up $15,000 toward your education, your EFC would be around $6,000. Since your EFC is so much lower, you would be eligible for much more financial aid. Also, your parents would still be able to help you.
While you are making yourself financially independent, you can attend night courses at a community college or school of continuing education for college credit. These courses are usually much less expensive than courses at the school to which you would prefer to be going, and they will count in some way toward your degree. Taking such courses will also make you an even more attractive candidate for acceptance as well as scholarships and grants.
Scholarships and Grants
Even in this economy there continues to be a tremendous amount of private scholarship and grant money available. Click the FastWeb link in the Links section below to find grants and scholarships.
Work and Money
One way to get money for college is to earn it.
As as young person in the United States, when you earn money for your education you will find that if you make over a certain dollar amount after the age of seventeen, you will be taxed, and you will no longer be a minor under the law.
Investigate opening an Education Savings Account (ESA) for your education that gets you a tax break on the money that you will withdraw. It is also worth meeting with a tax adviser to learn what expenses you may be able to deduct from your income and which education tax credits you may be able to claim by going to school part time as you earn money.
Whenever you get work, emphasize that you are working to get money for college. People respect someone who is trying to better themselves and may be more generous with you as a result.
Despite the economy, there is work out there, especially for hardworking young people. Go get it! Be prepared to work hard. And good luck.