6 Conventional Ways to Pay for School

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Whether you’re a high school senior beginning the “freak-out, how to pay” phase of your college planning campaign, a high school student on whom the upcoming, unbelievable expense is beginning to dawn, or the parent of a college-bound student of any age facing yet another addition to the ungodly amount of debt you currently manage, there are a number of conventional ways to cover the expense when you’re short on cash.

Option #1 – The current flavor of the day, month, or year (your choice!) – the 529 Plan. Although it’s called a “savings account,” it truly is an investment account. Sure, you might get a tax break. And, yes, the earnings grow tax-free. So, it might be right for you. However, the money you place in a 529 Plan is subject to market loss and you could end up with less than you’ve actually contributed. Moreover, the plan comes with government restrictions on when and how you can use the funds.

Option #2 – You could attend a cheaper school. While it may look cheaper on paper, it could actually cost you more. Rather than focus on “sticker price,” a price that families with a properly designed college planning campaign will not pay, focus on finding the right school at the right price. A school that may cost more on paper, but may actually be less expensive in the long run.

Option #3 – Apply for scholarships and grants. While these represent only about 3% of all available financial aid and thousands of students apply, it’s possible you could win one, perhaps a few. But, you are legally obligated to report those “winnings” to the schools who can then reduce the financial aid award. Certainly, apply for those you could win; just don’t rely on this strategy.

Option #4 – Borrow money from the government. No matter who you are, if these are available, take them. They have lower, fixed interest rates set by Congress and flexible repayment terms. With a properly designed college planning campaign, such loans shouldn’t be as fearsome as the media portrays.

Option #5 – Private student loans. While it means more debt, these loans are in the student’s name (with a co-signer), typically at lower interest rates than PLUS loans, and somewhat flexible repayment terms. With a properly designed college planning campaign, such loans shouldn’t be as fearsome as the media portrays.

Option #6 – Find a job. Whether on-campus (typically through work-study programs) or off, the money earned can offset the cost you may need to cover through loans.

Then, there’s the unconventional way, a way that shelters savings from financial aid calculations, that does not restrict how and when you can use those funds, that does not subject your savings to market correction (i.e., loss), and that is guaranteed to increase in value year-in and year-out.

Contact us for more information.

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