How to Make Smart Decisions When Financial Aid Just Isn't Enough

Tips to Avoid Panic While Figuring Out How to Pay for College

Father and son discussing how to cover college tuition while looking at a laptop screen

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In a perfect world, students would receive a sufficient amount of grants and scholarships to help pay for college. They would be able to add in a little financial aid from the federal government or their state to cover any additional expenses without having to apply for student loans. Unfortunately, though, the financial aid world is not perfect. Somewhere between completing all the applications and submitting the FAFSA, harsh reality sets in that the family might not be able to afford to send their child to this particular college.

Panic begins to grow as family members carefully add up college costs, subtract financial aid and look at their personal savings accounts. If they don’t have a sufficient amount of money already saved in a 529 college savings plan, they are often shocked by the amount of money they have to borrow through federal and private student loans. That’s when some tough decisions might have to be made. Before hitting the panic button, consider using these tips to make smart decisions when financial aid just isn’t enough.

Smart Decisions When Financial Aid Isn't Enough

Document any changes in income: With the use of “prior-year” income tax returns in the financial aid equations, some families find that their financial situation has changed dramatically in the last calendar year. The family might have experienced a job loss, divorce, death, or medical emergency that reduced the available income substantially. Take time to carefully document these changes and submit the paperwork to the appropriate financial aid offices.

Ask for a second review: It is possible that a favored college might have a less favorable financial aid package than other alternatives. This could be due to school policy, but it could also be a mistake. There are times when figures are misread or miscalculated, and an offer might not be as complete as it could be. Politely ask the financial aid office to explain the discrepancy and be prepared to support your request with any needed documentation.

Carefully consider alternatives: Calmly talk with your child about possible alternatives, even if they are obsessed with attending a particular college. Point out the short-term financial costs to the family and the long-term financial burden to the student of taking on this kind of debt load. Explore whether attending a community college or a public college for two years to take general education courses might make sense, so the student can request a transfer during their junior year to take courses in the selected major.

Look at all forms of income: The family and the student can work together to earn extra money that can be put towards college costs. The student might be able to find part-time employment on or near campus, or might be able to pursue some type of online income source. They should commit to working during breaks and over the summer to earn as much money as possible. Family members can also look for additional sources of income, or the parents can consider borrowing money from relatives who might be willing to offer lower interest rates to help the student pursue an education. Be sure to put all understandings in writing and stick to any promises that are made.

Not all student loans are bad: Student loans can help bridge the gap, but the problem is that many students borrow the maximum amount of money available and then spend it on non-education expenses. Do some calculations about how much you need to borrow and then project your earnings after graduation to be sure that you will be able to repay those loans. If the numbers don’t add up, go back a few steps and start considering alternatives again.

In the end, use more logic over emotions when making decisions this important. Is it more crucial for your child to attend a particular college that you can’t really afford, or to attend a quality college that will provide a solid education without breaking the family bank? Panic does little good in these situations, while a calm mind can assess many options.

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