Everyone Pays for College the Same Way

By Julie Shields-Rutyna

After working in the field of higher education financing for 25 years, I’ve learned a number of things, and one of them may surprise you. It is this: no matter who you are, no matter how little or how much money you have, we all pay for college the exact same way. "How can this be possible?” you ask. It's simple, actually:

We all look at every available resource and every possible way to pay the bill and we piece it together. We figure it out.That’s it. And everyone pays for college in exactly this way.

Of course, every family will piece it together differently based on their resources and circumstances. But the end result is the same—a solution is found. Let’s break this down a bit to see how families can piece together their solution.

1.     Get someone else to pay! If given the option, this is my favorite, isn't it yours? Here are a few ways to make that happen: Do your research and find some outside private scholarships for which you might be eligible. You can search online, but be sure to look around your local community and professional and social networks for additional resources as well. Family employers, local businesses, high schools, local religious and community organizations, and even towns themselves may all offer their own scholarship opportunities.

The federal government, state government, and colleges and universities all offer free money of their own in the form of grants and scholarships or “gift aid.” Last year, over 185 billion dollars of financial aid was awarded to undergraduate students, and gift aid was a significant piece of this pie.

Lastly, "someone else" could be friends or relatives that might like to help you and be in a position to do so. If you have grandparents, other relatives, or friends who want to help, that’s a great thing. For those who can and do help, reward them by keeping them involved through updates on your success as you go along. Value any support you receive from family and friends because it is truly the most wonderful gift and one that not everyone has access to.

2.     Look at your own resources. What do you have available to help pay the bills? Add up all your personal savings accounts, CDs, college savings accounts like the U.Fund 529 plan, and prepaid tuition accounts like the U.Plan. From a vacation home you may be ready to sell to the loose-change jar sitting in your kitchen, every resource will help. You get the picture. Add it all up and see what you can use to pay the bill. I will tell you a secret: the more you can pull together from personal resources, the more options you will have. After 25 years of working in this field, this is what I push the most: save, save, save. It just makes everything easier!

3.     Figure out how much you can afford to pay out of your current monthly budget. Just as you pay rent or your mortgage or a car payment every month, you can break up your college bills into monthly installments. All colleges have what they call a "monthly payment plan." Both parents and students can figure out what they can afford monthly toward college costs. Are there ways to supplement your income? Can your students do part-time work while in college? What skill do you have that you could use to earn some extra money to help with your college expenses?

4.     Finance some of the cost. Let’s face it, in this country, we finance a number of big purchases in our lives. Sometimes we even finance small purchases in our lives like a weekend vacation or even a nice dinner out. A good education is one of the most valuable things for our children to have, so it may very well be worth financing. The key is knowing how to finance wisely. That means educating yourself about the different financing programs available and understanding the long-term picture of what it means to borrow a loan. Before you borrow, make sure you understand all the terms and know how much you will be paying back. What is the monthly payment? When will payments start? What happens if you don’t have a job? How much a family borrows will definitely affect the future for parents and student so make sure you discuss this and make a decision that works well for the whole family.

In my many years of assisting families, it is rare that I have come in contact with a family who pays for college in one way. It’s difficult and sometimes impossible to save the whole amount for the cost of a college education. It’s also most likely not very wise to borrow the full cost of college. Piecing it together seems like a better way to go and each year there are thousands of families who figure out exactly how to do that.

For guidance on creating a plan to pay for your family, check out MEFA’s Resources.

Julie Shields-Rutyna is the Director of Early College Planning atMEFA.