Planning and Paying for College: You Need to Do What, When, How?!?

The 250-page book has advice about filing the Free Application for Federal Student Aid (FAFSA), along with a step-by-step guide to completing the application form, as well as tips about increasing eligibility for need-based aid, avoiding the most common errors and appealing for more student aid. Read on for advice about financial planning for college, scholarships and more.

It is never too early to start planning on how you will pay for college. It is also never too late, but families who start sooner will have more flexibility in choosing a college than families who procrastinate.

Procrastination in college planning is so common that I even included the word, “Procrastinate,” in the glossary of my new book about filing the Free Application for Federal Student Aid (FAFSA). I defined it as “To procrastinate is to delay or postpone taking action.”

Too often, students and parents wait until the spring of the student’s senior year in high school to start figuring out how to pay for college. By then, half of the scholarship deadlines during the senior year alone have already passed. There are also many scholarships that are available to younger students. One of my favorites is the Jif Most Creative Peanut Butter Sandwich Contest, with a top prize of a $25,000 scholarship for an amazing culinary creation. There’s also the National Spelling Bee, National Geography Bee, National History Day Contest, and Doodle 4 Google. Use a free scholarship matching service, like StudentScholarshipSearch.com, to find the scholarships for which you are eligible. Also, visit ScholarshipPoints.com to earn points that can be used to enter random drawings for scholarships.

Scholarships are part of the plan for paying for college, but not the entire plan. Less than 1% of students enrolled in 4-year colleges get enough grants and scholarships each year to get a free ride to attend college. About one in eight college students use any scholarships to pay for their Bachelor’s degrees each year, and the average total scholarship amount is about $4,000. Families have a tendency to overestimate eligibility for merit-based aid and underestimate eligibility for need-based aid. So, while families should search for scholarships, they should not neglect need-based aid either.

Every family should submit the FAFSA every year, even if they got nothing other than low-interest-rate loans last year. Financial aid formulas are complicated enough that the only way to be certain how much financial aid you’ll get is to apply.

Be sure to file the FAFSA as soon as possible after January 1, the official start date of the FAFSA application season. The FAFSA is not just your gateway to financial aid from the federal government. The form is also used to apply for financial aid from state governments and colleges and universities. Some states have very early FAFSA deadlines to qualify for state grants. Two states have deadlines in February, ten states have deadlines in March, and seven states award grants on a first-come, first-served basis until the money runs out. If you wait until you file your federal income tax return or college admissions letters start arriving, you might miss out on money you need to help pay the college bills.

Don’t procrastinate on saving for college, either. I started saving for my children’s college educations before they were born. If you start saving when your child is a newborn, about a third of the savings goal will be met with interest on contributions. If you wait until your child enters high school, less than 10% of the goal will come from savings. But, even if you get started late, every dollar you save is a dollar less you’ll have to borrow. It is literally cheaper to save than to borrow. If you save $200 a month for ten years at 6.8% interest, you’ll accumulate about $34,400. If instead of saving this money, you borrow it and repay the debt over ten years at 6.8% interest, you’ll pay about $396 a month, nearly twice as much. Time is your greatest asset. Don’t squander it.

Add these tips to your “To Do” list:

·         Start saving for college ASAP.

·         Start searching for scholarships immediately.

·         File the FAFSA as soon as possible after January 1 each year.

Mark Kantrowitz is Senior VP and Publisher of Edvisors.com, a group of web sites about planning and paying for college. He is the author of three best-selling books about college scholarships, student loans and financial aid.