How to pay for college - 6 Strategies

If you’re a parent with a teenager in high school and you’re not sure how you’re going to pay for college, this blog is for you.


The first thing I want to make sure to point out is that - if you assess your personal financial situation and determine that you can’t afford to send your student to the school of their dreams, that does NOT mean you’ve failed as a parent.


The second thing you really really need to know is - if your kid begs to go to a specific school even though it will require they take out loads of student loans, it is absolutely OK to say “no, it’s not worth it,” or find a compromise that involves them going to their chosen school for some but not all of their college years. If you can show them how the student loans will likely affect their post-college budget and ability to buy a car or pay for other things they care about, it might help them accept a compromise or alternative.


Ok, so how do you do it - how do you pay for college?


Step 1 - Calculate how much you can afford to pay by adding together all available sources. This could include:


  • College savings from parents (think 529 plans and other investing and savings accounts set aside specifically to pay for college)

  • Gifts from Grandparents or other family and friends

  • Student’s savings for college

  • The amount your student can earn from working during college

  • Employer assistance for college tuition

  • This can also be money you’ll save by not having all the expenses you’ve grown accustomed to covering like food, sports, music lessons, etc.

  • Also, find out if you’ll qualify for the American Opportunity Tax Credit or the Lifetime Learning Credit and add that savings to your tally

  • Since most students end up with some amount of student loans, you can factor in a student loan amount as well - but keep it to the student’s projected first year salary after school which is typically manageable. Do a google search for salary stats in your area or the area your student wants to live in after school. If they don’t know, use a national average

  • And, anything else you have available that is specific to your situation, for my family, this includes income from a rental property we’ve owned for awhile


Once you have this total - you and your student can go shopping.


Now, I realize that if you’re reading this blog, there’s a good chance that you already HAVE gone shopping and have a specific school in mind. You’re in 1 of 2 possible categories. Either you added up all of your sources and it looks like it's going to be enough or it’s NOT going to be enough.


Category 1 - So if you’re in category 1 and you have enough to pay for college, you will still benefit from making a plan to use money from different sources at the right time to optimize each source. I’m going to talk about that in a later blog.


Category 2 - You don’t have enough. Ideally, you’ve already started the conversation with your student about this and have set realistic expectations. If not - there’s no time like the present. I’ll get more into how to have that conversation in a later blog, but for now, let’s talk about the money.


Here are 5 strategies you can try to bring down the cost of college to a more affordable level.


Appeal - If you’ve already gotten an offer but it’s not enough, you can appeal the offer to try and get a better one. This will sometimes be successful, so it’s always worth a try. It might help if you:

  • Have a better offer from a competing school

  • Have lower income now than you had for the year your FAFSA was based upon

  • Just Ask!


Compromise - Honestly, no one really cares where anyone went to college for their Freshman and Sophomore years. Usually, they'll just be getting the basics out of the way for most of that time anyway. Consider sending them to a local college or much more affordable school for the first two years and then transferring to their chosen school for their junior year.


Gap and Save - How much earning power does your student have right now? If they have a skill now that they can use to earn a decent amount of money or have access to a job that pays well for unskilled or low-skill labor, they can consider taking a gap year to save as much money as possible to add to the stash. Run the numbers to see if it’s going to make a big enough difference to be worthwhile first. For this to work, they’ll have to be really diligent about saving the MOST money they can. Have that savings automatically deposited into their savings account preferably.


Job with Benefits - See if your student can find a job working for a company that offers tuition assistance. Make sure the benefit covers the specific school they're looking to attend and check out all of the details first. They may even luck out and find a company that will help with tuition and also help them pay off their student loans later on.


Side Gig - How bad do you want your student to go to that school? Bad enough to work harder for a few years? You could consider a 2nd job or side gig to bring in more money as a parent. Consider all of the pros and cons first, and start before-hand to make sure you’ll be able to keep it up for a few years if this is a significant part of your plan. Also, be sure to have your pay automatically deposited into a specific account set aside for college savings, otherwise you may find that it trickles away inexplicably.


Keep Looking - Find another school that will give more merit or need based aid depending on which your student is more likely to qualify for. There are a lot of schools out there, especially the smaller private schools, that may offer them aid to get them on their roster. I’ll be the first to acknowledge that it’s not easy - almost impossible - to search for this type of school, but it can be done with some help from a college planning financial coach or with a lot of blood sweat and tears!


So, there you have some strategies for squeezing into a school while keeping loans under control.


Please comment below with other strategies you’ve used or are considering. Also, let me know what college planning financial topics you’d like to hear more about.