Who knew that getting into college would be the easy part for many students?  Paying for college can prove to be much more challenging.  If you have followed our past blogs, you would know how important it is to target the right schools to keep your cost down, but I am going to give you some tips in this piece to reduce your financial exposure if you have already decided on a college.  

While there are other viable options, such as living at home and commuting to school or knocking out required classes at a local tech school, that could significantly reduce your cost, my approach in this blog assumes that those more radical (in many students’ eyes) options are not under consideration. As is the case with any major financial decision, you need to carefully consider all your options to determine the best path forward.  Here are some tips that can help you navigate that path more successfully.

Fill out the FAFSA! 

Every year, I am asked this question by numerous families: “Should I fill out the FAFSA?” My answer is always the same.  Yes! Even if you don’t think you will qualify right now for need-based financial aid, it is still wise to fill out the FAFSA so that you can be better positioned for future aid should your financial circumstances change. A 2018 NerdWallet study found high school graduates who don’t complete the FAFSA leave behind billions of dollars in unclaimed federal Pell Grant money. 

The harsh truth is that many private colleges have gotten so expensive that you may qualify for assistance that you didn’t think you would. The only way you can ensure that you will receive no aid is by choosing to not complete the FAFSA.   

Students who complete the FAFSA are considered for state and institutional scholarships as well as the federal Pell Grant, a form of financial aid aimed at the lowest-income families that do not have to be repaid. Some college scholarships require students to complete the FAFSA, so you will not even be considered for that free money if you don’t submit the FAFSA. 

In the end, you lose nothing by completing the financial aid forms other than a little bit of time, and what you give up by refusing to submit the FAFSA could cost you much more in the long run. Use this map on the Education Department website to find the agencies in your state that administer college grants. Then look up and apply to state grant programs you may qualify for. 

Treat Scholarship Applications Like a Job 

For many students, this will not sound very appealing, but the private scholarship application process can be much more time-consuming in many cases than applying for acceptance to a college. The key to this process is to work smarter not harder.  Sure, you could apply for every scholarship you technically qualify for, but that will only lead to a great deal of work that will not pay off in most cases. 

If you start off by limiting the scope of your search to local scholarships, you will dramatically improve your odds of success.  Look for scholarships at local nonprofits and other organizations in your community, and seek out local scholarships, which are typically smaller in size but less competitive than national scholarships. If you fish in smaller waters with limited competition from other fishers, you increase your odds of catching a fish.  

Look at whether your mother or father’s employer has a benefit around tuition or a scholarship for the students or employees. ” Also, check at any organizations your parents belong to, like the Rotary Club, Kiwanis Club, or some type of community-based organization. 

Use Federal Student Loans First if You Must 

Just because schools offer you loans does not mean you have to take them.  However, in some cases, it can be in your best interest to do so.  The key is targeting the best money to accept and rejecting the less appealing loans. If you need to borrow to pay for college, take out federal student loans before private ones. Federal loans have benefits that private loans don’t, including access to income-driven repayment plans and loan forgiveness programs. 

Federal loans, especially the ones subsidized by the government, can be a smart way to pay for college if you want to avoid touching money that is working hard for your family.  With interest rates for federal loans as low as they are, it could be wiser to leave your money invested and use these loans to cover a portion of your college expenses. 

For the subsidized loans, no interest will accrue until six months after graduation, so as long as you pay the loan off before then, that is free money. I plan to use this as a way to get buy-in from my son.  If he maintains the academic standards I expect from him while he is in school, I will pay off that loan for him; but, if he does not, he will be responsible for paying the loan.  Having some skin in the game can be a very strong motivation.  

Avoid Private Loans if Possible 

It is much better to take advantage of Federal Student Loans and Parent Plus Loans if you must borrow money; however, if you must resort to private loans, be sure to shop around for the best rates and the most flexible repayment options. Remember: After you graduate, you’ll have to pay back any money you borrowed. Many student loans — all but federal subsidized loans — accrue interest while you’re in school, which means you’ll have to pay back more than you originally borrowed. You can use a student loan calculator to see how much you’ll owe later based on what you borrow now. 

Emergency Grants May Be Available  

Many colleges are offering emergency grants to students in response to the spread of COVID-19. Some of these are federally funded by the Coronavirus Aid, Relief and Economic Security Act, or CARES Act. More money may come in the future to support students struggling in the wake of the pandemic. 

Don’t Be Afraid to Appeal for More Money 

Don’t commit to a college without making one final appeal. The FAFSA uses “prior-prior year” information to determine a family’s financial need. For example, the 2022-2023 FAFSA that students can file beginning in October will be based on 2020 federal tax returns. However, families who have had a recent change in their financial situation that would not be reflected in their 2020 financial information can request a financial aid appeal, sometimes called a professional judgment, from a college. 

You won’t know if you don’t ask, so if a college is out of your price range based on the Financial Aid Award letter you receive, don’t turn the page on that school without asking for more money.  The worst thing they can say is no, but, in many cases, colleges can find more money to sweeten the deal.