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Paying for college is no inexpensive matter, and college tuition and fees are rising every year. According to CollegeBoard.org, over the last 20 years (2009 - 2010 and 2019 - 2020) published in-state tuition and fees at public four-year institutions increased by $2,020 and $6,210 for private four-year universities.

However, parents need to know that paying for their children's higher education does not have to be a solitary affair. Parents, in fact, have several tools that they can rely on to help cover these costs.

Parents can rely on, at least partly, their savings. Alternatively, they can help their children receive grants or scholarships. Finally, student loans – though they require repayment – can help ease the financial burden of paying for a college education.

Here, then, is a summary of the tools that can help overwhelmed parents.

Savings

The best way for parents to help pay for their children's college education is to rely on their savings. For many parents, though, this is unrealistic. They simply don't have enough savings built up to cover the escalating cost of a college education.

However, parents can significantly reduce the stress of funding a college education by socking away money early. Parents who start saving early – long before their children hit high school – will find a significant nest egg available when it's time for their sons and daughters to go to college.

Parents, though, need to be careful. It's good to help pay for their children's higher education. However, it is not good for them to shortchange their retirement years. Too many parents funnel too much of their cash toward building college funds for their children. This can leave them without enough money for their retirement years. Parents who have to choose between saving for their children's college education and providing for their retirement years should save for retirement first and look at other options to pay for college.

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Grants and scholarships

Grants and scholarships can be a big help to parents struggling to save for their children's college education. These sources of funds are especially welcome because students do not have to pay them back. It's why many financial experts advise parents and future college students to seek out grants and scholarships before they worry about applying for student loans: Grants and scholarships, after all, represent free money.

In general, grants are awarded to students based on financial need. Scholarships are usually given to students based on merit. Students might earn scholarship money because they earned straight-As in high school. Their achievements on the football field, debate team or science club might help them earn a scholarship.

Scholarships and grants are available from several sources, everything from colleges themselves to corporations, the federal government, state governments and charitable organizations.

For instance, many organizations offer scholarships based on students' essay-writing skills. The John F. Kennedy Profile in Courage Essay Contest offers up to $10,000 to high-school students who submit essays about elected officials who have demonstrated political courage.

The Coca-Cola Scholars Foundation provides 150 $20,000 scholarships, 150 scholarships ranging from $1,000 to $1,500 and 180 four-year scholarships of $1,000 to students who display leadership and excellence. Davidson Fellows Scholarship provides $50,000, $25,000 and $10,000 to students under 18 who have completed a significant piece of work in the field of science, literature, music, technology, philosophy or math.

Student loans

Student loans are often a last resort for parents. This is understandable: Every day we hear horror stories of college students graduating with tens of thousands of dollars’ worth of student loan debt.

The truth is though that student loans come with terms and interest rates that are typically more favorable than you'd find with other types of consumer loans.

Student loans come in two forms: federal loans, which are based partly on financial need, and private loans that are offered to all students regardless of need. Federal need-based student loans come with the lowest interest rates and best terms. The interest rates associated with private students loans can soar quite high.

These loans work much like other consumer loans. The loans help students pay for anything from college tuition to room-and-board, supplies, books and meals. They do not have to pay back these loans until a set number of months after they graduate from college. Once the loan comes due, graduates must pay back the money they borrowed in monthly installments that include interest. Graduates can often delay repayment depending on their financial situations and on whether they've found a job.

To determine how much in federal loans their children can receive, parents must first fill out the Free Application for Federal Student Aid form, better known as FAFSA. Parents can find this form online. Once parents fill out this form, they become eligible for aid from the U.S. federal government, including aid available from the Stafford Loan, PLUS Loan, Perkins Loan and Pell Grant programs.

Parents might also discover that their children are eligible for the Federal Work-Study program. This program, based on the financial need of students, provides part-time jobs to students to help them cover the cost of attending college. Students who do not qualify for federal work-study might qualify for private work-study programs.

No one said that financing the college educations of children was an easy task for parents. As long as college tuition and fees continue to rise, helping to fund a college education will remain a financial struggle for many parents. However, parents should take comfort in the fact that so many opportunities for financial help are available to them.

The key is to start planning early. Parents who start saving early for their child's college education, and who start researching financial aid opportunities at the start of the college selection process, will be in the best shape once their student heads off to college.


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