A look at the dollars and ‘sense’ of funding higher education

Attending college is a major decision. Ideally, funds are available because a financial plan was established early in a student’s life. In reality, each student and each financial situation is different.

No matter where you are on the college preparation scale, it is important to take some time to review, check off, add to your list and glean additional information and resources.

It’s time to set up a spreadsheet or create a binder with yearly plans, information, college and scholarship applications, goals and expenses and incomes.

Be practical

The decision to attend college begins with asking yourself some questions.

• Where is the best advice regarding college choice, finances and mapping course requirements? Technically, this can be anyone — parents, friends, advisers from the college or someone who has the degree you want.
• What degree are you pursuing? It will play a significant role in what college you should consider. For example, certain universities are known for their agricultural degrees, some for biblical studies and others for medical work. Remember, if you switch degree programs and transfer to another school, you may lose credits and incur additional costs.
• When will you attend college? Do you plan on working a year before your freshman year? What about engaging in missions work before you start? Are you needed at home because of someone else? When do you want to attend, starting in the spring or fall semester? Do you want to continue through summers to complete your degree earlier?
• Where will you attend college? One student told me she had scholarships to out-of-state universities and wanted to do this. However, it would have meant taking out student loans. She chose to stay with an in-state university and graduated debt-free. Weigh the costs and reasons for attending an in-state or out-of-state school.
• How long will it take to obtain the degree? Are you looking for a two- or four-year plan? How much would you save if you attended a junior college first? Do you plan on pursuing additional education with a master’s or doctorate? These can play a big role in funding college and living expenses.

What are your assets?

Now that you’ve made your choice regarding a degree program, the college to attend and an estimate of what it will cost, including living expenses, look at your assets.

• Savings bonds may be a thing of the past, but many relatives have given them for special occasions. Check your family’s lockbox.
  Perhaps some have reached maturity, gained interest and are ready to be cashed in.
• Parents are wise to establish money market or savings accounts in a child’s early years. Hopefully, it has been added to as the student also worked throughout high school.
• One grandmother put away $20 a month for each of her grandchildren. It wasn’t a large amount when the student started college, but it certainly helped.
• Another source of revenue is an investment account. Marcus Hall, a Christian financial adviser in Dothan, said, “I encourage [parents] to look at investing funds if you’re starting early in your child’s life. It allows a larger growth possibility over time. But it also carries more risk than money market and bank savings accounts.”
• Consider 529 Plans. “529s include some tax advantages if you make sure all the funds are used for school purposes,” Hall said. “In most cases, any funds not used for school are penalized 10%, and you’ll owe tax on any growth over the years. “One major exception to the penalty is the use of scholarships. If your child earns scholarships, you can withdraw that amount from the 529 account without penalty. You still owe tax on the growth.”

Taxes and FAFSA

Who likes to file taxes? Honestly, no one. Yet it’s vital for parents and students to file federal income tax returns as soon as possible.

Once that’s done, it’s time to fill out the Free Application for Federal Student Aid (FAFSA), which can be completed after Oct. 1.

Once submitted, the school you’re attending will assess financial need by comparing your Expected Family Contribution, which is a calculation of your family’s financial strength.

The institution calculates the need against a formula established by law. It also hinges on dependent or independent status.

Learn more, including the most up-to-date changes in federal financial aid due to COVID-19 at studentaid.gov.

Two federal tax incentives, the American Opportunity Tax Credit and the Lifetime Learning Tax Credit, potentially are available to students and their families.

If you have student loans, be sure to check out the Student Loan Interest Deduction. Additionally, consult a CPA or tax adviser to help plan and take advantage of all available credits and deductions.

Paying for college

The application process for many scholarships begins in high school.

Ask your school counselor or the financial aid office at the institution you plan to attend for a list of scholarships, then apply, apply, apply.

In addition:

• Check with your church. Many have bequeathed money for scholarships to be used for a ministerial student or one going into a church-related vocation.
• Check with community organizations about scholarship opportunities.
• If you attend a junior college, be sure to ask about transfer scholarships.
• Consider educational benefits through the ROTC, military service or military academies.
• Attend job fairs to learn about co-op programs and internships. Companies are willing to invest in a student who will be an asset to their company. In turn, the student commits to working with the company for a certain number of years. Co-op programs also can open the door for a job opportunity. And the experience gained is excellent on your resumé.

Part-time jobs help

• Consider loans very carefully. Someone has said that for every dollar you borrow, it will cost you two. Scripture also advises against debt (Prov. 22:7), and financial experts often advise taking out loans as a last resort.
• Get a job. The college schedule and class load, which change each semester, will determine each student’s available hours for off-campus employment. One student said she was able to take classes two days a week and work three days; another took courses in the morning and worked in the afternoon.

A good rule of thumb is 20 hours per week or fewer. Be careful of overloading. Moving to college marks a massive transition for the student and their family.

It’s the beginning of a new adventure as a young adult, but choices made, positive or negative, will have a huge impact on the student’s future.

Prepare early, do your homework, review your plan and look forward to watching how God weaves and works.

For a list of colleges and universities by state, along with tuition costs, providing a comparison and a quick look at tuition, visit collegesimply.com/colleges.