2743: 3 Easy Steps in Paying for College Financing Priorities by Miranda Marquit of Good Financial Cents

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[00:01:17] Optimal Living Daily. This is Optimal Finance Daily, episode 2743. Three Easy Steps in Paying

[00:01:25] for College Financing Priorities by Miranda Marquit of goodfinancialcents.com. And I'm your

[00:01:32] host and personal finance enthusiast, Diana Merriam. Now let's get right to today's post

[00:01:38] as we optimize your life. Three Easy Steps in Paying for College Financing Priorities

[00:01:48] by Miranda Marquit of goodfinancialcents.com. Discover three straightforward steps to finance

[00:01:56] your college education, from seeking grants and scholarships to exploring federal and private

[00:02:02] student loans. This guide outlines practical strategies for managing the rising costs of

[00:02:07] higher education. College is becoming increasingly expensive. As a result, it's likely that you'll

[00:02:14] need to seek funds for paying for college from multiple sources. First of all, though, it's a

[00:02:19] good idea to be setting money aside in some sort of advantaged account if you still have time.

[00:02:26] Whether this is a 529 plan or a Coverdell, it's a good idea to be in the habit of setting aside

[00:02:32] money for college. However, if you're concerned that what's in a college account will not be

[00:02:38] enough to cover the cost of college, it's a good idea to consider additional sources of college

[00:02:43] financing. How to Pay for College in Three Easy Steps. Before we look at some of the specific

[00:02:50] options for financing college, we're going to look at some of the general types of aid.

[00:02:55] There are two categories of aid. First, merit-based. As you could probably decipher from the name,

[00:03:02] this is money that's given out based on performance. These are typically given out based on academics,

[00:03:09] but it could be for other skills or abilities. And second, need-based. This type of aid is given

[00:03:16] to students based on their financial needs. Typically, there are few requirements other than

[00:03:21] finances. Some types of college financing are more desirable than others, as you might imagine.

[00:03:28] Here, you'll find ideas for college financing in the order you should seek them. Number one,

[00:03:35] free money, grants, and scholarships. Your first efforts should be geared toward getting free money

[00:03:41] to help you pay for college. The government offers grants based on your income. If you qualify,

[00:03:47] you can get government help paying for your schooling. On top of this, there are scholarships

[00:03:52] available for different accomplishments. Some of them are available because of certain qualities

[00:03:57] you might have, such as being tall or being of a certain ethnicity. FAStWeb is one site that can

[00:04:03] help you locate scholarships to apply for. Check with the school and in your local community for

[00:04:08] scholarships. Because this is free money, you should be prepared to spend a lot of time researching

[00:04:15] and applying for these. It might seem cumbersome now, but it'll be worth it when you start repaying

[00:04:20] loans. When you're researching grants and scholarships, don't forget to look local.

[00:04:26] There are a lot of local groups and businesses who offer scholarships and grants. These are

[00:04:31] probably going to be smaller amounts, but there are also going to be fewer people applying.

[00:04:37] You have a much greater chance of winning these scholarships. Free money is free money.

[00:04:43] Number two, federal student loans. Scholarships are hard to come by these days, so you might need

[00:04:50] additional loans. Your first stop for student loans should be the federal government loan program.

[00:04:56] You can get loans at a lower interest rate. You should first get as much as your federal financing

[00:05:02] in subsidized loans. With these loans, the government pays your interest until you're done with school.

[00:05:08] If you don't qualify for subsidized loans, you can get unsubsidized loans. With these loans,

[00:05:13] you can pay the interest as you go or wait until you're done with school and the accrued interest

[00:05:19] is capitalized. And number three, private student loans. You can also get student loans

[00:05:26] from private sources. Banks offer student loans, but their interest rates and terms are not as

[00:05:32] favorable as those offered by the government. You can go to websites like terry.org to find

[00:05:37] sources for private student loans. Another possibility is to go through a site like

[00:05:42] TuitionU, which offers peer-to-peer lending as well as access to banks and credit unions

[00:05:48] across the country. Before you go to a bank, it might be worth it to check the terms you can get

[00:05:54] with peer-to-peer lending. In some cases, you can get better deals. Additionally, you can ask

[00:06:00] friends and relatives to help you with your education by loaning you a portion of the sum

[00:06:05] through a peer-to-peer site. Financing tools. When you're facing those massive college bills,

[00:06:11] it's important you get all the help you can. You could easily spend days and days researching

[00:06:17] grants, loans, or scholarships. Thankfully, there are a couple of ways you can make the whole process

[00:06:22] easier. We already mentioned FastWeb, but that's not the only source out there. We couldn't go

[00:06:28] any further without including the Free Application for Federal Student Aid, or the FAFSA. Just about

[00:06:34] everyone is qualified for some type of financial aid. Depending on the situation, some people

[00:06:40] qualify for much more than other people. The best way to determine your eligibility is to create a

[00:06:45] FAFSA account and complete an application. FAFSA is managed by the U.S. Department of Education,

[00:06:52] and they hand out over $150 billion every year in student aid. If you haven't completed a FAFSA yet,

[00:06:59] you could be missing out on some serious funding. It's free to fill out the form,

[00:07:04] and the office will review your application and deliver any loans and financial aid you qualify for.

[00:07:10] It can save you hours and hours of time. One common confusion is that FAFSA is the same thing

[00:07:17] as a CSS profile, but the two are very different. CSS, or College Scholarship Service, is a form

[00:07:24] some colleges use to distribute their own funding. These forms won't get you access to any funding

[00:07:30] other than what that specific college does in-house. Bottom line. Finding financing for college isn't

[00:07:38] always easy, and it can be expensive. However, there are a number of options that can help you

[00:07:43] find some of the help you need to pay for college. Start out by working towards funding yourself

[00:07:49] through savings and scholarships, and then explore other options if needed. You just listen

[00:07:58] to the post titled, Three Easy Steps in Paying for College Financing Priorities, by Miranda Marquit

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[00:10:09] The student loan crisis has certainly gotten a lot of attention in recent years and with good reason.

[00:10:14] While the societal norm of going to college certainly puts a lot of pressure on young people

[00:10:19] and their parents to take on a mountain of debt, unchecked lending practices are also a huge part

[00:10:25] of the problem. Think of it this way, no bank would give an 18-year-old hundreds of thousands

[00:10:30] of dollars to buy a house as it's unlikely they'll be able to pay it back, but they'll happily do so

[00:10:36] for student loans. I read an article from Business Insider which highlighted a report from the

[00:10:42] bipartisan policy center, a DC-based think tank. The report highlighted some key reasons why the

[00:10:48] student loan crisis has gotten so bad. State funding to colleges has declined, causing those

[00:10:54] schools to raise tuition to fill the gaps. Pair this with easy access to federal loans has led to

[00:11:00] schools raising tuition without losing prospective students. Even Parent Plus and Grad Plus loans

[00:11:07] are granted very easily regardless of a parent's or student's ability to repay these loans.

[00:11:13] As the report noted, unchecked borrowing is a major contributing factor to the growth of the

[00:11:19] student debt crisis. I'm hopeful that over time, societal norms about getting a college education

[00:11:24] will shift and lending practices will evolve. But that'll do it for another edition of Optimal

[00:11:31] Finance Daily. Thank you so much for joining today and every day. Have a great rest of your day

[00:11:36] and I'll catch you tomorrow where your optimal life awaits.