We recently hosted a webinar about how families finance a college education. Jill Gosse, a longtime staff member at Sallie Mae, was our featured speaker. She had a wealth (pun intended) of information for our counselors. While there is no “one size fits all” solution for financing college, she said that families should follow the 1-2-3 approach:
1. Find free money that doesn’t have to be paid back.
Of course, this is what we all want! Included in this topic were scholarships, grants, work-study, and tuition payment plans. She gave three examples of reputable scholarship search sites that you may share with your students: SallieMae.com/ScholarshipSearch, Fastweb.com/college-scholarships, and bigfuture.collegeboard.org/scholarship-search.
2. Explore federal student loan options.
She covered direct subsidized and unsubsidized loans. Every student may receive an unsubsidized loan, but the student needs to complete the FAFSA in order to be eligible. It is important for every student to complete the FAFSA because the student will at least be eligible for an unsubsidized loan–and maybe more aid.
3. Fill any remaining gap with other sources.
Remaining sources families use to fill the gap include home equity loans or home equity lines of credit; personal loans such as PLUS loans, private student loans, private parent loans, or credit cards; and funds from long-term investments. It is not recommended to take money from a retirement account to pay for college.
A few counselors had questions regarding undocumented students. Undocumented students are not eligible to receive federal financial aid. However, several private lenders will allow a student who has Work Authorization documentation to apply for a loan with a cosigner who is a US citizen or permanent resident.
In conclusion, many financing vehicles are available to families. Some of those tools have more disadvantages than advantages, and they should be carefully analyzed before pursuing.
This post is only a brief summary of our 31-minute webinar. You are welcome to listen and share it: https://uwexics.adobeconnect.com/p26rrufa9dc/.