A Parent’s Guide to College Financing Options: Starting Points for High School Families

As a parent of a high school student, figuring out how to pay for college can be overwhelming. With rising tuition costs, it’s essential to understand the various ways to fund your child’s education. This guide provides an overview of the main college financing options available, so you can begin making informed decisions that suit your family’s financial situation.

Time-Based Savings Plans

Starting early can make a huge difference in your ability to cover college costs. Two major time-based options are:

529 Savings Plans: These are tax-advantaged accounts specifically designed for education expenses. While 529 plans can be used at any college or university, they are especially attractive because the money you contribute grows tax-free, and withdrawals for qualified educational expenses are also tax-free.
Florida Prepaid College Plan: For Florida families, this program allows you to lock in today’s tuition rates for future education, helping you avoid the impact of rising college costs. Florida Prepaid offers several options, including plans that cover tuition and fees at state universities and colleges.

Both of these options are most effective when you start contributing early, but they can also be useful tools even if your child is already in high school.

Merit-Based Scholarships

Merit-based scholarships are awarded based on academic achievement, extracurricular involvement, or other accomplishments, rather than financial need. The good news is that there are a variety of programs specifically for Florida students.

Bright Futures Scholarship Program: This is a Florida-specific merit-based scholarship program that covers a significant portion of tuition costs for students who meet academic requirements, such as GPA, SAT/ACT scores, and community service hours. Bright Futures is one of the most well-known and accessible scholarships for Florida students.
National Merit Scholarships: If your child scores in the top percentile on the PSAT, they may qualify for National Merit Scholarships, which are available nationwide. While not guaranteed, this prestigious recognition can lead to significant financial aid from colleges looking to attract top students.

Many merit-based scholarships can be layered, allowing students to maximize their financial aid based on their achievements.

Need-Based Aid

If your family has a lower income, or if you have significant financial obligations, need-based aid can be a crucial part of your college financing plan. The most common sources of need-based aid are:

Federal Financial Aid (FAFSA): Filling out the Free Application for Federal Student Aid (FAFSA) should be one of your first steps. The federal government uses this form to determine your eligibility for need-based aid, including the Pell Grant and Federal Supplemental Educational Opportunity Grants (FSEOG). These grants don’t have to be repaid.
State-Based Aid: Florida also offers need-based financial aid, such as the Florida Student Assistance Grant (FSAG). It’s important to complete the FAFSA early to be considered for these programs.
Private Scholarships for Underrepresented Groups: Numerous organizations offer scholarships specifically for minorities, women in STEM fields, or students pursuing certain careers. These scholarships are typically awarded based on financial need, personal background, or intended career path.

Federal vs. Private Student Loans

When it comes to borrowing, not all loans are created equal. While scholarships and grants should be your first priority, loans can help cover any gaps in financing.

Federal Student Loans: These loans, such as Direct Subsidized and Unsubsidized Loans, generally offer better interest rates, more flexible repayment options, and stronger borrower protections than private loans. Federal loans don’t require a credit check, and repayment doesn’t start until after your child leaves school.
Private Student Loans: These are issued by banks or credit unions and often require a cosigner. Private loans should be a last resort due to their higher interest rates, stricter terms, and limited options for repayment flexibility.

It’s important to carefully consider the long-term impact of borrowing, and whenever possible, prioritize federal loans over private loans.

Work-Study Programs

Work-study opportunities provide students with part-time jobs to help pay for education-related expenses while enrolled in college. Many universities offer these programs, but some corporations have taken it a step further by offering tuition assistance programs that could significantly reduce or eliminate tuition costs.

Corporate Tuition Assistance: Companies like Walmart and Chipotle offer work-study programs for their employees, allowing them to earn money and pay for their education while they work. These programs are ideal for students who are interested in working part-time while pursuing their degree and are looking for additional ways to fund their education.

Tax Benefits

Parents paying for college may be eligible for tax benefits that can offset some education expenses:

American Opportunity Tax Credit (AOTC): This credit allows you to claim up to $2,500 annually for qualified education expenses, like tuition, for each eligible student.
Lifetime Learning Credit (LLC): Unlike the AOTC, the LLC doesn’t require that your child be pursuing a degree. You can claim up to $2,000 per tax return for tuition and other qualified expenses.

These tax credits reduce the overall cost of your child’s education and are worth considering when budgeting for college.

Leveraging Scholarship Search Engines

While many scholarships are tied to specific needs or achievements, there are countless scholarships available to students from various backgrounds and interests, and searching for them can feel overwhelming. Fortunately, scholarship search engines are designed to help students find opportunities that match their unique profiles. These websites allow students to input their personal details, academic achievements, and career goals to generate a list of relevant scholarships.

Some of the top scholarship search engines include:

Scholarships.com: One of the largest scholarship databases, it offers a simple, user-friendly search tool for students to find both national and local scholarships.
Fastweb: This popular site not only provides access to a massive scholarship database but also offers resources for financial aid and career planning.
Cappex: Known for its extensive scholarship matching system, Cappex helps students find funding based on their personal strengths and extracurricular involvement.
Chegg Scholarships: In addition to textbook rentals, Chegg offers a scholarship search tool that includes over 25,000 available awards.
Peterson’s: With over $10 billion in available scholarships, Peterson’s is a comprehensive tool for students searching for funding based on academic merit, financial need, and unique interests.

Encourage your child to create profiles on multiple sites, as each may provide access to different scholarship opportunities. Taking advantage of these resources can be time-consuming, but with diligence, your student can significantly offset the cost of college with scholarships they may not have otherwise discovered.

Final Thoughts

As you begin planning for your child’s college education, it’s important to explore all of the available financing options. Whether you start with a 529 savings plan, aim for Bright Futures, apply for need-based aid through FAFSA, or explore work-study programs, each approach can help you offset the rising cost of tuition. Keep in mind that the best strategy may involve a mix of these options based on your child’s unique circumstances and your family’s financial goals.