Four components of a good college financial plan
February 01, 2023
It is understandable – that overwhelmed feeling you get when thinking about how to pay for college.
While much of that feeling is due to the amount of money involved, you can mitigate it somewhat with a college financial plan.
The college financial plan consists of understanding the cost of attending college and what financial resources are available. By having this information, a student can determine how much they want to seek in scholarships or other funding.
The college financial plan should include the following:
- Cost of attendance. Research the cost of attendance at any school the student is considering attending. The cost of attendance includes tuition and fees, books and supplies, room and board, and transportation or other living expenses. Students can find more about the cost of attendance on the college website, at CollegeScorecard.ed.gov, or at the College Navigator website.
- Current financial resources. Include any financial resources, such as savings, 529 or prepaid tuition plans, or other funds.
- Future financial resources. Estimate a portion of earnings if the student plans to work part-time while pursuing an education and plans to use some of the earnings to help pay for the cost of attendance. In some cases, parents may also plan on using a portion of their earnings to pay for the student’s education.
- Estimated financial aid. Estimate what financial aid the student may be eligible to receive. Until a student gets the financial aid offer from the college, they will need to estimate the amount of financial aid they may be eligible to receive. A student can use the Student Aid Estimator to determine if they are eligible for any federal financial aid. The student should estimate any state aid, scholarships, or other funding, if eligible. Financial aid includes grants, scholarships, and loans. Because loans must be repaid, students should include loans as optional funds, which are available only if needed to pay for the cost of education.
After comparing the costs of attendance to the financial resources, the student will have an idea of the amount of money needed to pay for college. If the cost of attendance exceeds the amount of financial resources available, the student should pursue scholarships to cover that amount and consider borrowing student loans only after all other sources of funding have been exhausted.