You've got plenty of time to start thinking about college, right? Or do you? Considering the average in-state tuition at a four-year public college is around $30,000 (not including room & board!), it's actually not too early to take some steps now to save money down the road. Over at Fidelity Viewpoints, they explain there are a few little steps you can take even now to increase your chances of getting financial aid. Here are a few highlights:
Steps you can take now include:
1. Finesse financial aid
If you can lower your EFC, you may position yourself to be eligible for more financial aid. "Fidelity suggests performing a dry run with the CollegeBoard EFC calculator—even five years before you complete your first FAFSA application—in order to obtain a ballpark EFC figure and get a sense of what family financial data is required to participate in the financial aid evaluation process," Devaney says.
2.Get familiar with grants, scholarships, and loans
Possibly the most attractive are subsidized Stafford loans. These are federal government loans available to any student who meets the FAFSA eligibility requirement and who typically has an unmet financial need after Pell grants and other financial aid are factored in. Subsidized Stafford loans have a subsidized interest rate, and interest is paid by the federal government until six months after the student leaves school. Also, the student may wait until six months after leaving school to start repaying the loan.
3. Revisit how you've invested your child's college savings
Five years before college starts is a good time to make sure that your mix of college investments (allocation) makes sense, given that you'll need to pay the tuition bill in a few years. In fact, many people don't understand the need to reduce their equity investments—and thus their risk—as college approaches.
4. Research educational institutions to match the student to the best aid packages
Colleges and universities may be pretty strategic about awarding financial aid, so if it is determined that you do qualify for financial aid, you may be eligible for a better package if your child has a background or interests that match a particular school's criteria.
5. Consider working with a trusted adviser who possesses college planning expertise
...an expert adviser can help you evaluate your family's income, assets, and liabilities, and suggest actions that may allow you to enhance your financial aid eligibility. These discussions are more successful when they are conducted well in advance of your child's financial aid application deadline.
Admittedly, I wish I would have taken some of these steps a few years ago myself as my oldest are months away from college visits and applications. This is definitely worth a look and a few minutes planning well ahead of time.
→ 5 steps to take 5 years before college | Fidelity Viewpoints