Paying for College: Top 6 Strategies

College graduates holding their caps in the air.

Getting into college is a very exciting time for high schoolers and their families. Paying for college, however, isn’t quite as thrilling. As the cost of college tuition continues to rise, most families must employ a multi-pronged approach to tackle this major life expense.1 To help you make informed financial decisions, Tennessee State Bank is sharing six of the best strategies for funding a college education.

1. Start an Education Savings Account

A Coverdell Education Savings Account (ESA) is a tax-advantaged savings account for higher education. The funds in an ESA can be withdrawn tax-free to pay for tuition, books, and other educational expenses. Parents or guardians can make nondeductible contributions to an ESA until the beneficiary reaches 18 years old.2

2. Fill Out the FAFSAThe FAFSA form in a notebook.

The Free Application of Federal Student Aid (FAFSA) is used by colleges, states, and the federal government to determine your eligibility for financial aid. Based on the information about your family’s finances reported in your FAFSA, a college may award you a grant, which unlike a loan, does not have to be repaid. Students who fill out the FAFSA may also be eligible for Federal Pell Grants, which are capped at $5,920 per year and are typically awarded to families who make less than $30,000 annually.3

3. Apply for Scholarships

In addition to grants, scholarships can also help subsidize college tuition. Private scholarships are given out by a number of organizations, including community groups, businesses, and nonprofits. High school guidance counselors may have insight into scholarships that are available, and the website Scholly helps students connect with scholarships that they are eligible for.4 Most scholarships require applicants to write an essay, but in some cases, students can recycle essays that they used when applying to college.5

Young adults in matching T-shirts picking up leaves.4. Get a Work-Study Job

As determined by the FAFSA, some students are eligible for work-study positions. Participating students hold a part-time job on campus, which is funded by the Federal Work-Study Program. In order to earn all of the aid they are qualified for, students must work a certain number of hours at an eligible job.6

5. Negotiate with Your College

If you are not pleased with the amount of financial aid offered by a college, it never hurts to ask for more money. It is not uncommon for colleges, especially private institutions, to increase a financial aid package if a prospective student makes a compelling case for it.7 Experts recommend writing a formal appeal letter and following up with a phone call. Be sure to mention any expenses that the college may not be aware of, such as medical bills, and let the Financial Aid Office know if your family’s financial situation has changed since you submitted the FAFSA.8

6. Take Out Loans

Although they should be considered a last resort, loans are often a necessary part of paying for college.9 Federal student loans are preferable to private ones because they include access to income-based repayment plans and forgiveness programs.10

About Tennessee State BankThe corporate headquarters for Tennessee State Bank.

Tennessee State Bank has been serving our local community for over 45 years. With branches in Sevier County, Knox County, Cocke County, and Jefferson County, we offer convenient banking services in East Tennessee. Whether you’re looking to open a checking account, obtain an auto loan, or apply for a home mortgage, we make the process as simple and straightforward as possible. Tennessee State Bank’s motto is “Banking at its Best!”SM, and we strive to live up to that creed every day. Let us know how we can help you by sending us a message via our Contact Form.

Tennessee State Bank is Member FDIC and an Equal Housing Lender.

____________________________________________________________________________
References
1. Nykiel, Teddy. “8 Expert-Approved Ways to Pay for College.” NerdWallet, 29 Sep. 2017, www.nerdwallet.com/blog/loans/student-loans/how-to-pay-for-college/
2. “Education IRA.” InvestingAnswers, http://www.investinganswers.com/financial-dictionary/personal-finance/education-ira-2557
3. Lobosco, Katie. “No scholarship? Here’s how to pay for college.” CNN Money, 5 May 2017, http://money.cnn.com/2017/04/25/pf/college/pay-for-college/index.html
4. Lobosco, Katie. “No scholarship? Here’s how to pay for college.” CNN Money, 5 May 2017, http://money.cnn.com/2017/04/25/pf/college/pay-for-college/index.html
5. Powell, Farran. “5 Overlooked Ways to Pay for College.” U.S. News & World Report, 18 Dec. 2017, www.usnews.com/education/best-colleges/paying-for-college/articles/2017-12-18/5-overlooked-ways-to-pay-for-college
6. Nykiel, Teddy. “8 Expert-Approved Ways to Pay for College.” NerdWallet, 29 Sep. 2017, www.nerdwallet.com/blog/loans/student-loans/how-to-pay-for-college/
7. Powell, Farran. “5 Overlooked Ways to Pay for College.” U.S. News & World Report, 18 Dec. 2017, www.usnews.com/education/best-colleges/paying-for-college/articles/2017-12-18/5-overlooked-ways-to-pay-for-college
8. Lobosco, Katie. “No scholarship? Here’s how to pay for college.” CNN Money, 5 May 2017, http://money.cnn.com/2017/04/25/pf/college/pay-for-college/index.html
9. Lobosco, Katie. “No scholarship? Here’s how to pay for college.” CNN Money, 5 May 2017, http://money.cnn.com/2017/04/25/pf/college/pay-for-college/index.html
10. Nykiel, Teddy. “8 Expert-Approved Ways to Pay for College.” NerdWallet, 29 Sep. 2017, www.nerdwallet.com/blog/loans/student-loans/how-to-pay-for-college/