How to Financially Prepare Your Child for College

Every parent dreams of seeing their children venture off to college and find their place in the world. However, you’re probably aware that going to college for the first time can be disorienting. It’s a new experience and is the first step towards adulthood. The aspect of college that can be difficult to manage is the finances. Even with numerous smart money practices for college students available if conversations are not had those can be easily forgotten. College is one of the biggest investments you can make, so you want to be prepared before making it. Here’s how you can financially prepare your child for college.

Go Over How Student Aid Works

Student financial aid is a concept that you need to help your child understand. During the start of every year they have in college, they must fill out their FAFSA, or free application for student aid, form. This is how your child’s chosen college determines their eligibility for federal aid. Once the application is processed and accessed, your child will be given an aid offer. How much they receive depends on their cost of attendance (COA) and expected family contribution (EFC).

The EFC is subtracted from the COA, which is how much they’ll receive. This will be listed on their student aid report. After everything is all said and done, you can expect to receive the financial aid in two weeks or so. Something to keep in mind is the limitations. Undergraduate students, and graduate students for that matter, are given a set limit to how much aid they can get. Undergraduates can take out up to almost $60,000 while graduate students can take as much as almost $150,000. No one can take out an infinite amount of money for their education.

Take Out a Private Parent Loan

Depending on their chosen degree, their tuition can cost a lot of money. If there’s one thing that can interfere with their education, it’s worrying about missing the deadline for their student loan payment. Missing a deadline can not only make it difficult for them to acquire more financial aid, it can also impact their credit score. Your child deserves to enjoy their time in college and not have to deal with unnecessary stress.

Fortunately, you can help them pay for everything by looking into Earnest parent student loans. A private parent loan is basically the same as a traditional student loan. The only difference is that your name goes on the loan and not your child’s. It’s similar to being a co-signer. Private lenders may be able to give their borrowers lower interest rates than traditional banks, which makes paying back the loans easier.

Choose a College That You Can Afford

There are some colleges that are more expensive than others. The cost does vary depending on the area you’re in. In fact, some students even leave their home state to go study because the cost is cheaper. But sometimes, your child’s degree may be offered by multiple colleges at different prices. Which means they might not have to attend one of the most expensive universities just because they offer what your child wants to study. But you’ll have to look around and find the best program you can afford for them.