How to Prepare Financially
There are three approaches to paying for college:
- 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 and/or interest charged for using this payment option.
- Student loans are available to allow you to pay for part of your education following graduation or withdrawal. While the interest rates are competitive, 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 that 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 outstanding consumer debt (like credit cards and auto loans) before beginning college. This is important for two reasons. First, having fewer bills to pay enable the student to pay more out of pocket and borrow less. It is always wise to borrow as little as possible. Second, consumer debt like credit cards debt and auto loans are not considered in the aid awarding process. Keeping these balances high does not increase financial aid. Federal and state programs do not consider consumer debt in the aid planning, 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. The Financing Options Chart shows options for paying the balance remaining after grant and work assistance. Contact the Financial Aid Office if this chart raises questions.
- 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? Students need to understand the student loan process and keep track of their total indebtedness.
- Please note all application deadlines. If you are applying to several schools, it can be confusing to try to remember each school's timeline. It grows even more complex if you are applying for several outside scholarships. Missing a deadline can be a frustrating and costly mistake.
- Keep financial records in order. Aid forms will request the values of parents' home and assets, as well as any business or farm. Remember that the FAFSA uses information straight from federal tax returns, so it is a good idea to file early.
- Recognize the importance of selecting a college based on its programs and resources, and not just its price. 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.