Different students have different resources available to them.
When a student plans to attend college,
both the student and their family will benefit from anticipating and planning for the costs of a college
education. Many families think only about tuition and room and board. Other costs include books and supplies,
traveling to and from campus, and miscellaneous personal expenses.
There are essentially three ways to fund the family’s/student’s
share of their college education costs: save ahead, pay as you go, and pay after graduation.
Saving ahead is the most economical option, as you not only avoid paying interest
(as the other two options require), but you earn interest or dividends on your investment.
This method takes discipline and planning, but you could literally save thousands of dollars
in the long run. Payment plans and some loan programs allow you to pay as you go, typically
monthly or quarterly. There is usually an application fee or interest charged for using this
payment option. Finally, student loans are available to allow you to pay for part of your
education following graduation or withdrawal. While the interest rates are competitive
(capped at 8.25%) this is potentially the most expensive way to fund a college education.
Students and their families can prepare for funding a college education
in a variety of ways. We offer the following list of suggestions:
Talk as a family about potential lifestyle changes which may take
place while financing a college education. This may particularly help younger siblings feel
as though they are participating in the college search process with their sister or brother.
If possible, pay off credit card balances
or other outstanding consumer debt. This is important for two reasons.
First, having fewer bills coming in as you are paying for college
may mean you could pay more out of pocket and borrow less. It is
always wise to borrow as little as possible. Second, consumer debt
like credit cards and auto loans are not considered in the aid
awarding process. In the past, a few families have thought that
keeping these balances high would show a significant debt, and
would increase their financial aid. This is not the case. Federal
and state programs do not consider consumer debt, and at Earlham
we consider only significant medical or educational debt — and
then only with documentation.
Realize that the whole balance doesn’t need to be paid at once.
There is a Financing Options chart which follows the “Education Tax Laws” section, showing
options for paying the balance remaining after grant and work assistance. We encourage you
to contact our office if this chart raises questions for you.
Discuss what costs will be the student’s responsibility. Will the
student be using work-study paychecks for spending money or to help pay tuition? How will the
student’s summer and winter break earnings be used? Make sure the student understands the student
loan process and how to keep track of their total indebtedness.
Mark your calendar with all application
deadlines. If you are applying to several schools it can be confusing
to try to remember each school’s timeline, because they can and
will vary from school to school — and it grows even more
complex if you are applying for several outside scholarships. Missing a deadline
can be a frustrating and costly mistake.
Be sure your financial records are in order. Know the values of your home,
your assets, and any business or farm information. This is the type of information most aid forms
will request. Also, the sooner you can complete your tax returns, the better. The federal form uses
information straight from your tax return, and it will be easier to complete if your tax returns are done.
Recognize the importance of selecting a college based on its programs and resources,
and not just its price. If a student goes to a college based on price alone, and is unhappy or cannot find the
program they want, they may want to transfer. Transferring can be an emotionally and financially draining
process for a student and their family. If a student wants to come to Earlham and is admitted, we will offer
the maximum aid for which the student is eligible. Often this brings Earlham’s costs in line with the cost
of attending a public institution.
