Author: Amanda Hall, CFEd, Education Engagement Manager, Retirement Plan Consulting
The cost of a college education continues to rise at an annual growth rate of 6.8% in the United States1, making the next step in education increasingly challenging. Proper planning and saving can help alleviate some of the burden and stress of college expenses. We've outlined a few additional tips to consider as you prepare for the higher education journey.
Start saving early. Whenever possible, parents and family members should make regular contributions to a college savings account. The earlier you start saving, the more time that money can grow. Earmarking funds in a separate account for a specific use in the future can help reduce the likelihood you'll use that money for something else in the meantime.
Complete the FAFSA early. You can complete The Free Application for Federal Student Aid (FAFSA) as early as October 1 each year for the following school year. Fill this out as close to this date as possible. Some financial aid is awarded on a first-come, first-served basis, so early completion is in your best interest. Keep in mind, if your financial situation changed from what was reflected on your federal income tax return, you may be eligible to have your FAFSA form adjusted to qualify for additional aid.
Seek scholarships & grants. College scholarships and grants are readily available for students willing to do the research and pay attention to the regulations. Finding college scholarships and grants with eligibility criteria you meet is key to receiving awards, so don't waste your time on an opportunity if it's not a clear fit. Wondering where to start? Meet with you high school guidance counselors, explore opportunities through you or your parents' current employers, and contact the Office of Financial Aid for colleges & universities of interest to you.
Make loan payments while in school. If you must borrow money to fund your education, avoid deferring your payments if possible. Paying at least the interest accruing on your loans while you are in school can save thousands over time. Keep in mind that student loan interest compounds, which means the balance growth isn't solely based on the amount that you initially borrowed to pay for school; it's also interest on the interest. The interest can add up faster than you may think. Consider your monthly spend and adjust where possible to add in regular payments on student loans while pursuing an education.
For more information and guidance on higher education decisions, contact your HORAN financial advisor to discuss the options.
1. Hanson, Melanie. "Average Cost of College & Tuition" EducationData.org, August 15, 2022, https://educationdata.org/average-cost-of-college.
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