Paying for College: 5 Options to Consider

Are you, like so many parents, wondering how to pay for college? Whether your kids are in elementary school and you’re looking at the projected costs of a higher education in ten or fifteen years, or the kids are in high school and university is just around the corner, your concerns about college financing are a reality.

Many public institutions are raising tuition this year, and just about everyone who has been saving for college has seen huge losses in the last twelve months. The bottom line? Families need to be looking at costs and benefits.

David Hawkins, Director of Public Policy and Research at the National Association for College Admission Counseling, says affordability is the number one concern these days. “The first thing we’ve noticed from our research confirms what we suspected all along,” Hawkins says, “which is that parents and families are taking a closer look at costs. Parents seem to be talking to their children about affordability as the primary factor in terms of choosing a college.”

This is a shift in focus in recent years. Once upon a time, parents dreamed of sending their children out of state or to private institutions that were particularly well suited to their children’s strengths and interests. Today, though, few families can afford to spend $30,000 a year on out-of-state tuition, and even fewer have the ability to spend upwards of $50,000 a year for private school.

But, says Edie Irons, Communication Director for Project on Student Debt, an education is what you make of it. “College education is as important as ever and will only get more important in being able to make it in our economy, but it doesn’t necessarily matter if you don’t go to a big name school or a private school,” Irons says. “Families are beginning to think in these terms, and a lot of families are choosing colleges closer to home—public colleges instead of private colleges.”

Though going away to college might seem to be a thing of the past, Irons says there are still a lot of ways for families to get help and a lot of families who can work this out. “The money is out there to help students,” Iron says. “Parents can take out federal parent loans, there are tons of scholarships available—there are just as many, if not more, options for financing in this economy.”

Hawkins suggests that families fully exhaust the federal loans that are available. These often carry consumer-friendly terms (as compared to some private loans), including the Income Based Repayment plan, which began July 1, that allows students to repay their loans based on income. “If someone really wanted to enroll in an institution that had a higher sticker price, this provision now says students can repay their loan as a percentage of their income,” Hawkins says. “It spreads the burden out over time.”

Still, in this environment, many consumers are oriented toward less debt. What kinds of options do families have who want to keep their debt to a minimum?