28 September 2012

FInance Tips for College Students and Their Parents

The price tag on a college education is a key factor for many parents. It is also one of the main elements of a long-term planning process for one's financial security. A college education can be an extremely valuable resource, as well as a rewarding experience, but it can also be very expensive; if students and parents do not plan the financial aspect of college carefully, they may wind up jeopardizing their financial future.

Occasionally parents find it difficult to pay the college tuition for a single child. The whole situation gets worse when they have multiple children. Under such conditions, one has to be properly educated in certain topics of personal finance to overcome the obstacles and send one's children to college without any worries. Read ahead to understand some tips that may be useful in accomplishing this goal.

Applying for financial aid

About two-thirds of all college students are eligible for some forms of financial aid, and this enables a family to spend less on college education. The aid is usually provided based on the family's income level. There are even times when family with an annual income of more than $100,000 can be eligible. In order to receive financial aid, the student should fill up the FAFSA (Free Application for Federal Student Aid) forms to apply for financial aid.

Financial Education

As a parent, it is very important to educate one's kids on topics in personal finance. Being able to manage one's personal finance is going to be useful during a student's academic career. Parents should also make sure that they have enough resources for their children's continuing education. With some concepts in personal finance, a student is able to utilize the money in the right way. In addition, teaching one's children to balance their checkbooks will also be of great help. It is important to teach your kids to be responsible when they are using a debit or credit card for the first time. Understanding the advantages and disadvantages is going to be very helpful for the students. This tactic also helps the parents stay in the safe zone.

Tips for parents

It is a bad idea to allocate savings for one's retirement for the college tuition of one's children. If one is in a situation where it is becoming increasingly difficult to cover the expenses with one's regular income, it is a good idea to take a look at Stafford Loans, Parent PLUS Loans and other student loans. This helps protect a family's financial security for the long term. Also, it is advisable to look at other assets that are available to meet the expenses associated with a college education.

It is also important to check for expenses that emerge during the first semester. By recording the amount of money the students spend, parents can make sure that their children won't run out of money after the first month of college. As the students should have some prior knowledge in personal finance, the whole process should not be tedious for the parents. Families who have multiple children can consider sending them to college all at once. This removes the need to pay for multiple tuition bills, and it lowers the contribution as a whole. Parent EFC takes into account when one's children are attending college. For one dependent, if the EFC is $40,000, the same amount will be split when there are two children who are attending college. As a result, the total number goes down as a parent no longer has to apply for another EFC.

In most colleges, students have the chance to work while completing their educations. As they work through their schooling, they get to understand the importance of good money management and are more likely to spend their money more carefully. Finally, it is also advantageous to take out student loans early in a student's academic career. A student who faces the prospect of debts takes his or her courses and responsibilities more seriously. As it creates a sense of urgency, this procedure reduces the overall cost of college expenses.

This article was written by Karl Stockton for the team at Kanetix. If students need help with other financial issues, such as new mortgage rules, Kanetix can be of great value.


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