Fast Fact

In a survey of parents across all income levels, 65% have saved less than $5,000 for their child's education.

Source: College Savings Foundation, 2008

Before College

Getting ready to send your son or daughter off to college? Worried about how to pay?

Fortunately, more than $100 billion in financial aid is awarded every year. You and your college-bound child will want to explore as many aid options as possible, so you can make an informed choice based on your financial need and economic situation. One size does not fit all.

Research your aid options.

Grants, scholarships, and loans are the primary sources for college funding.

If you must get a loan to cover any gaps in funding, be familiar with the different types of loans and know what to look for.

Meet with the financial aid staff at the schools under consideration to talk about your options.

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Include your son or daughter in the aid process.

Include your high school student in any discussion about paying for college.

Step 1. Have an open conversation about money.

Determine how much you are willing to contribute to your son's or daughter's college costs and share this information. Decide together who is responsible for paying and how much each is able to give (for example, toward tuition, books, room and board).

Step 2. Set some ground rules.

Don't do all of the footwork on your own. Students who participate in the aid process seem to take the responsibility more seriously.

Step 3. Encourage participation.

Give your college-bound child a few financial tasks to promote understanding of the commitment involved in getting a loan. This is particularly important if your child will be the borrower (that is, the person responsible for repaying the loan).

Step 4. Make the final decision together.

It's a good idea to have your child evaluate every award letter. Don't be surprised if you have differing opinions about which aid package provides the most value in terms of educational experience. Have an open dialogue about what's important to each of you and be prepared to compromise.

Step 5. Prepare your son or daughter with knowledge.

Make sure your son or daughter knows his or her student loan responsibilities before either of you sign any promissory note. Your role is to provide support and guidance.

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Develop a financial plan to help your child pay for college.

If you want to help your child pay for all or a portion of his or her college costs but don't know where the funds will come from, don't panic. Here are few tips that may help you prepare for upcoming college costs:

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Have a discussion about money management.

Now is a good time to teach your child some basic money management skills. While at college, your son or daughter may be making financial decisions for the first time. A college student who is uninformed about money is at greater risk of doing long-term damage to his or her bank account and credit history.

Give your son or daughter the skills to face any unexpected money issues that may arise throughout college:

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Helpful Tips

Calculators

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