August 2008 was the first time I walked on the Penn State campus. I was a brand new “class of 2012” student ready to take on the world. But because I was the first in my family to go to college, there was so much I didn’t know. When I first logged into my student portal, I noticed two emails from Penn State:
The first email welcomed me to campus; the second email told me I still owed $20,000 for the year. I naively assumed everything was going to be taken care of – that was far from the truth.
In reality, the bill was my full responsibility and I found myself unprepared and overwhelmed. Enough that I got kicked out of Penn State in May 2009 because I couldn’t pay all of my tuition…but the story doesn’t end there.
I eventually crawled to Penn State, graduated, worked for a few big Wall Street firms, and now have my own financial education company, BetterWallet. Now, nearly 15 years later (and after many war scars), I can teach parents what I wish I had known back then.
If you’re a parent with a student attending college in the fall (and you have very little savings for it), consider this 3-step strategy:
- find the money
- budget the money
- generate money
To achieve this specific financial goal, we first need to know how much it will all cost.
Some parents taking this journey for the first time have no idea how the process works, and it can be stressful. Hopefully, by the end of crafting this game plan together, you will find this process less stressful.
Once your child has been accepted to a college or university, the first thing to do is determine the total cost for the year. There are both “direct costs” and “indirect costs”:
Direct costs may include items such as: tuition, compulsory fees, housing and meal plans.
Indirect costs typically include books and supplies, transportation, and personal/miscellaneous expenses.
To estimate college expenses, check the college’s website or contact the college directly. Knowing the cost in advance can help plan your child’s education. Most colleges charge per semester, so check with the bursar’s office to determine what is included in that amount. Is it tuition and fees only or does it include on or off campus living? By breaking down the overall goal into smaller goals, it becomes more achievable. Start with the amount of tuition and fees as your first small goal.
find the money
Although you should aim to pay for your education without borrowing, student loans are a reality for most students attending college.
There are two main types of student loans: federal and private. If you need a student loan, always go for federal student loans in the student’s name, as they offer flexible repayment options. However, to qualify for federal student aid, you will need to complete the FAFSA (Free application for Federal Student Aid). You can find more details and resources at StudentAid.gov. If you plan to apply for a Direct PLUS loan (or Parent PLUS loan), you will also need to go to StudentAid.gov to apply for a federal ID card before you begin the application.
Private student loans are another option offered by online lenders and financial institutions. Do your research to see which options are best for you, but if you’re looking for a private student loan that meets your unique needs, consider College Avenue Student Loans. Their private student loans are tailored to your budget and goals, so your child can focus on their education without the same financial stress I did. Their application process is also a breeze.
There are feds subsidiesincluding the Pell Grant, TEACH Grant, or Federal Supplemental Educational Opportunity Grant (FSEOG) you may be eligible for after completing the FAFSA.
Your child can also request a on-campus job. If offered a payment plan to cover tuition and fees throughout the semester, a job can help them pay for those fees.
Another consideration is to work for university housing. In many cases, your child can earn a salary as a housing or residence assistant. As a bonus, colleges can even cover their housing costs. This is a strategy I used during my junior and senior years in college, and it saved me nearly $16,000 in total!
According to Forbes, the National Scholarship Providers Association reported that approximately $100 million in Scholarships unused each year due to lack of applicants. So why aren’t students applying?
The most common reasons students don’t apply are: 1) they don’t know where to find them and 2) they don’t know what to write about in their essays.
So how do students position themselves to have the best chance of receiving scholarships? Here’s a summary of things your child can do right away, from one of my favorite books, “Financial Literacy 101 for College Students: How to Find the Money, Budget the Money & Grow the Money”:
First, we need to find the scholarships. There are approved platforms like Scholy, PurseOwlAnd Bold.org that link your child’s profile to a database of scholarships that match your information. The more details you enter, the more accurate the results will be.
Another strategy is to search and type: “[Your child’s major] + Scholarships + [Current Month] Deadline” in your web browser. This will fill all scholarships with a deadline in the current month, regardless of the month.
Next, have your child write a “what you will do with the money” essay or a “degree or career plan,” an essay they may have readily available for scholarships that need it. Once they have written these essays, they can store them in a cloud-based drive (eg Google Drive) so they are easily accessible.
These two steps address the biggest challenges. Now your child knows where to find the scholarships (or have them find you) and the essays to draw when applying.
Once your child has completed these two challenges, they can implement the “Two a Day” strategy: request two scholarships each day for the next two months and beyond. After applying this strategy for the next two months, your student will have applied for approximately 120 scholarships!
Any last advice? Ask for 10 times more scholarships than you need. For example, with $50,000 in college expenses, students will need to apply for at least $500,000 in scholarships. If your child is not chosen for 90% of the scholarships they applied for, a success rate of 10% is still enough to cover what they need.
budget the money
When you have a written budget or plan for your money, you will know better how it will be allocated and spent later. This is especially important for those who will be living off campus. and will be responsible for the associated monthly bills. When living on campus, housing costs and meal plans are often a one-time payment before the semester begins, so students don’t have to worry as much.
This budget worksheet is a great starting point for all students, regardless of their life situation.
Because we live in the digital age, there are plenty of opportunities to take your ideas, passions, and interests and earn a side income from them. If your child is interested in certain hobbies or has specific skills that they are exceptional at, they may be able to monetize it (i.e. people earn money in that area of activity). ‘interest).
Let’s say your child is good at understanding chemistry. Maybe they can start a YouTube channel that focuses on “Easy Ways to Understand Chemistry”. Did you know that if a YouTube channel gets enough subscribers and video views, then that creator can get paid accordingly? If you don’t think people can make money off of something like this, check out ER nurse-turned-millionaire Stephanee Beggs. She built her entire business selling nursing school notes on Etsy and made a full-time income from it.
The key to this is picking one thing and sticking to it. The goal of this strategy? To give you an action plan that you can start today and see results materialize over time. You will never know if you don’t try!
Navigating the complexities of college funding can be daunting, especially for first-generation students and their families. However, by learning from the hard financial lessons of others, it is possible to approach the process with more confidence and avoid unnecessary challenges.
Understanding the total cost of college and breaking it down into manageable goals is the first step. Exploring various avenues of funding, such as federal and private student loans, scholarships, college jobs, and scholarships, can help ease the financial burden. Additionally, creating a budget and exploring income-generating opportunities can give students more control over their finances.
By following these steps and taking proactive steps, parents and students can have a less stressful college experience, ensuring a smoother path to higher education.