Ten Mistakes Families Make in Paying for College

Paying for college is a considerable challenge for many families, and it seems to be getting more difficult each year. As you go through the planning process, here are some mistakes you will want to avoid.

Counting on a free ride – Some families mistakenly assume that scholarships and free government aid will cover the cost of college. In fact, much of the burden will fall on the students and the parents. Therefore, families need to begin college planning as early as possible. This includes saving money, having a clean credit rating, paying down debts, and becoming familiar with the financial aid process.

Saving in the child’s name – While parental assets are heavily protected, student assets are treated less generously. Given the option, it is usually better to have assets invested in the parents’ name rather than in the student’s name.

Using the wrong money – Borrowing from life insurance policies, pulling funds from retirement accounts, and taking cash advances on credit cards are VERY expensive ways to pay for college. Plus, they can jeopardize a family’s financial security. Use financial aid programs and other options to fund college expenses, and leave your life insurance policies and retirement accounts intact.

Not sharing the burden – In the planning process, students and their parents should have a discussion about who is going to pay for what. Students who have a financial stake in their own education tend to take it a bit more seriously. By taking on some of the cost (such as books, personal expenses, or the social life) students are making a financial investment in their own future while helping their parents with the overall cost of college.

Misreading financial aid packages – Award letters from colleges can be confusing. To clearly understand your financial obligation, simply take the total cost of the school for one year and subtract any free money being offered. The remainder is the amount the student is responsible to cover. You can then consider other aid being offered (work study, loans, etc.) as a way to meet your share.

Being too shy to ask for more – Don’t be afraid to contact the college to see if the aid package can be reconsidered (but don’t use the word "negotiate"). This is especially important if you have something to add to the admission package – higher grades or SAT scores, new activities in which you are involved, additional honors you have received, etc. It’s not likely that the school will contact you to see if you want more free money – the initiative must come from you, so don’t be shy!

Not searching for private scholarships – Students should search for private scholarships EVERY YEAR, both on the web and through their college’s Financial Aid Office. Each year, new awards are created and student eligibility changes. Students doing a "one time only" search during the senior year of high school are likely to miss out on many funding opportunities. There are many web sites that you can use to search for scholarships, including one right here in Education Planner. These sites are FREE, so there is no need to pay anyone to search for scholarships for you.

Not exploring all of your options – In addition to applying for financial aid programs, there are many options available for using yesterday’s money (savings), today’s money (income), and tomorrow’s money (borrowing) to cover college costs. Check into saving plans, tuition payment plans, home equity loans, and other financing options. There is no right way or wrong way to pay for college – just come with a plan that works for you.

Missing deadlines – The worst thing you can do is miss deadlines for financial aid. To avoid this problem, determine the application deadlines for ALL schools you are considering, as well as the deadline for your state’s financial aid programs. Then file your financial aid forms and other documents by the EARLIEST of all those dates. Once you’ve met the earliest deadline, you’ve met all the others as well.

Not filing the FAFSA – The Free Application for Federal Student Aid (FAFSA) is the form used to collect the data needed to determine eligibility for federal, state, and often institutional forms of financial aid. Without filing the FAFSA, students will lose out on most forms of financial aid, including loans. The FAFSA is an annual form, so be sure to file a renewal FAFSA each year.

If you follow the timelines we have given you in this site and avoid making these ten mistakes, you will be well prepared to meet the challenges of paying for a college education.