This article was written in collaboration with our partner, Blaine Blontz at Financial Aid Coach. They are our experts who assist with complicated issues in higher education funding when your students are only a few years away from shipping off to college.

There are calculators out there that say it costs $500,000 to raise a child up through college. About half of that total is higher education costs. Unfortunately, college is only getting more expensive so that figure could grow much larger depending on the age of your children. The good news is that if you have very young children you have time to start saving to cover that expense. If your children are closer to college age then you have a lot to consider for what you can afford and how to fund those important 4 to 5 years. Either way there are some common questions that are asked with regard to financing college for your children.

How much will it cost for my kid to attend college?

While this seems like a simple question, there are a number of factors that contribute to the overall cost for your child to attend college.

The first figure to determine is the Cost of Attendance, or COA. This is comprised of tuition, fees, room and board, cost of books, supplies, transportation, loan fees, personal computer, child care or dependent care, disability related costs, study-abroad programs, and other possible miscellaneous costs. Some of these might need applicable to your situation but can be included if they are.

After you have the COA, you can then find the expected family contribution, or EFC. The EFC is an index number determined by the student aid staff at your school of choice. This index is based on both the parents and students’ income, assets, household size, number of students attending college, taxes, business worth and more. Keep in mind that student assets, such as money in an UTMA, are weighted at 20% in the calculation and the parents assets are only 5.64%. Moving assets to parents prior to filling out the FAFSA will help lower your EFC. This is the amount the school expects the parents to contribute towards the education cost. The higher this number, the less financial aid available to the student.

The final number to find out is the financial need which is funded by grants, loans, and student jobs. Take your COA and subtract the EFC to find this number.

What are some ways to pay for it?

There are many ways to save and pay for college. The best way for you will depend on your unique financial situation but here are some common vehicles used to pay for college.

529 college savings plan – earnings are tax-free if used for qualified education expenses and contributions could be deductible to your state taxes depending on your state. This can be owned by the parent so it will have less of an impact on the EFC as discussed above.

UTMA – Some parents are skeptical about the future of higher education but they want to save to give their children options once they get to 18 years old. A Uniform Transfers to Minors Act account is a great way to gift assets to your kids and let them decide what to do with it once they reach the age of majority in their state. They can use this to pay for college, start a business, or fund another goal. The risk is that your child will gain control over these funds at a very young age where they may not be mature enough to make responsible financial decisions. Once the assets go into this account, it is then owned by the child so it will have a larger impact on the EFC calculation.

Federal Financial Aid – The government offers grants as well as subsidized and unsubsidized loans to US citizens or permanent residents. These loans have extra benefits that private loans do not so even though there may be attractive lower rates for consolidation after graduation you should maintain these loans.

Scholarships – With a little bit of elbow grease your kids could win some money to apply to their college expenses. These are generally tax free and you can win multiple scholarships to chip away at your overall costs. Colleges offer scholarships, but there are also outside scholarships that can be used at any college.

Work – This is a great way to teach your students outside the classroom how to budget and save towards a goal. Having them take a part-time job and contribute to the college costs will also give them a lasting pride for a rewarding financial accomplishment.

Alternative Financing Options – This includes private loans, a federal Parent PLUS loan, as well as other financing alternatives such as home equity lines of credits, loans again retirement accounts, and more.

How do I get a scholarship?

Scholarships are a great way to get easy money to pay for college by writing a simple essay or sample piece. There is a plethora of scholarships available for many reasons that could match your student’s unique situation. Some essays could be used for multiple applications, saving precious time to apply to more scholarships. Just remember if you and the student feel overwhelmed then so are the other candidates. After getting through a few applications you can get into a grove and figure out the best formula to win more scholarships.

To get your students motivated, remind them that if they are awarded a scholarship they will be making way more per hour than they do at their minimum wage summer job. Less student loans after graduation is a big win for their financial future.

If you have kids who are going to college in the next few years reach out to Blaine for consultation. This important process should only happen once in your students life and you need to make sure it is done right. Blaine is a great resource to make sure you fund their schooling in the best possible way. Contact Blaine here or reach out to Ryan Kaysen for an introduction.

Fiduciary Mission

At Integritas Financial, we are committed to providing fee-only, fiduciary financial planning services that are tailored to the unique needs of young professionals, particularly millennials. Our experienced planners work with you to develop customized financial plans that address key areas such as estate planning, trusts and wills, retirement, workplace benefits, education funding, student debt, and buying a house.

We believe in transparent, client-focused service that puts your financial goals at the center of everything we do. As a fiduciary firm, we are dedicated to acting in your best interests, and we never sell products that charge commissions to clients.

Our goal is to help you achieve a stable and prosperous financial future by providing comprehensive financial planning services that are tailored to your individual needs. Whether you're just starting out in your career or you're already well-established, we can help you navigate the complexities of financial planning and create a roadmap for success.

Ryan@if-money.com