Focus on Finance

Hitting the High Points

If you’re one of the lucky ones and your parents can simply write a check for your education, be very, very grateful. You are one of the chosen few. For most people, coming up with the money is the biggest roadblock to a college degree.

Obviously, we can’t cover every aspect of college financing in a single newsletter. What we can do is address the major options and point you to more information so that you can do further research.

• Scholarships

• Loans

• Grants

• 529 Plans

• Work-Study

In addition, be sure to go to the From Nest to Wings channel on YouTube and check out all of the videos on financing.

Scholarships

This is the first thing that most people think of when it comes to getting money for school. From Nest to Wings is always telling you to apply for as many scholarships as you can, as soon as you can, but there are thousands and thousands of scholarships out there. You can’t possibly apply for them all. Instead of using the shotgun approach, make a list of the kinds of scholarships for which you qualify. There are roughly seven categories:

• Academic scholarships

• Need-based scholarships

• Athletic scholarships

• Scholarships for hobbies and extracurriculars

• Community service scholarships

• Scholarships based on applicants' identities

• Employer scholarships and military scholarships

When you read through this list, you will find that you qualify in several categories. Make a list of your strengths, hobbies, qualities that set you apart, even in a small way. Be honest. Don’t waste time applying for scholarships for which you don’t meet the criteria. Make a plan.

One of the most important parts of applying for scholarships is to have a means of keeping track. There can be a dizzying array of different due dates, requirements, etc. There are a multitude of tracking spreadsheets online. Find one that makes sense to you and use it religiously. Otherwise, you may find yourself in the position of not knowing whether you have actually completed all the work for a particular scholarship. What a waste of time to only submit part of the information required and be disqualified.

It’s a little daunting to get started, but once you get into it, you will find that you can get into a rhythm. Lots of scholarships ask for the same information. Many ask similar questions. “Explain how you overcame an obstacle.” “Give an example of a time when you were in a position of leadership.” Create a nice, polished answer for every such question and then let cut-and-paste be your friend. But be honest. If you just answer with what you think they want to hear, you never know…you could be wrong. So maybe talk about a time when you were in a leadership position and it went horribly wrong. What did you do? What did you learn from it?

Grants

“Here, have a wad of free money!”

A grant is a sum of money that a student receives for educational expenses. Scholarships and grants are often lumped together. The major difference is that grants are usually need-based, while scholarships are more likely to be merit-based, though there are certainly overlaps. Grants are, by and large, provided by the federal govenment. There are grants that come from states, corporations, etc., but they are in the minority.

FAFSA…Gateway to Free Money

Probably the single most important step to take when considering how to fund your education is to fill out the Free Application for Federal Student Aid.

The logic can’t be more simple; no FAFSA, no money from the Fed. In addition, many schools and states also use the FAFSA. And a lot of the money is awarded first-come, first served. Don’t wait until you have been accepted. Don’t even wait until you start applying to colleges. The FAFSA opens on October 1st. Remember, once you get to school, you need to keep applying every year, if you want to keep getting funds.

The link below takes you directly into the horse’s mouth. It’s the official list of everything you will need to fill out the form. Be prepared…this is not an quick-and-easy task. Go through the list and assemble everything you need before you start. If your parents are going to contribute, they need to participate too.

Loans

This is one area where you really need to do your homework. Making a mistake when you choose your student loans can have ramifications for decades into your future. Loans are available for both parents and students. Unlike scholarships, loans have to be paid back and with interest.

There are two different varieties of student loans: federal and private. Federal loans are funded by the goverment. They usually come with a lower interest rate and more flexible repayment plans than private loans. For example, my daughter got an education degree. For every year that she taught in a Title I school, a portion of her loan was forgiven.

Private loans come from banks or credit unions. They are not bound by the dollar limitations of federal loans. A private loan can fill the gap between the cost of college and what the federal government will lend. They are generally more expensive and less flexible in their repayment options.

Loans can sound like a great way to finance your education. After all, as soon as you graduate, you will be employed and be able to pay them off quickly, right? No problem! It’s easy to get stars in your eyes when someone holds out a pile of money that will help you achieve your dreams. The truth is that your loans have to be paid back no matter what. It doesn’t matter if you can’t find a job. It doesn’t matter if the job you find doesn’t pay enough to live and pay off the loan. It doesn’t matter if your loan payments keep you from buying a house. It doesn’t matter that you were forced by circumstances to drop out of school. Like death and taxes, loan payments can suck the life out of your life.

That doesn’t mean that you should never consider a loan. But be sure to approach them like you would a stick of dynamite…slowly, carefully, and with the help of an expert.

The Scoop on 529 Plans

Listen up, parents! This is for you.

A 529 plan is a college savings plan that comes with some nice tax and financial aid benefits. There are two kinds of 529 plans: prepaid tuition plans and college savings plans. Most states have one or the other, although details vary by state. The basic idea is that money invested in a 529 percolates tax-free, and there are no taxes due on the money you take out, as long as the money is spent for approved educational expenses.

It’s worth your time to investigate the plans that other states offer as well. You might get a better deal outside of your home state. Don’t forget to take into consideration what happens to that money if your child gets a full-ride scholarship, or if they decide not to go to college at all. The financial impact can be substantial.

Here’s another piece of advice I always offer to parents who want to help their kids go to college. It may look enticing to take money out of your 401K. But this is one time when it’s okay to be just a little selfish. There are loans for education. There are no loans for retirement!

Work-Study

Work-Study is another form of Federal financial aid. You earn money to apply toward the cost of your education. If you are awarded a work-study job, you won’t be able to earn more than the amount awarded. You are not guaranteed a job. You will have to interview and be hired. The difference is that the employer is required to take your class schedule into account.

From Nest to Wings on Finance

Here’s a link to all of the YouTube videos produced by From Nest to Wings that address financing. It’s everything you ever wanted to know and then some!

Scholarships

As always, here’s a list of scholarships with a July deadline. Sorry to cut your time short; we don’t publish our newsletter when the first weekend of the month is a holiday. We hope that you’re taking a break and having fun!

Can You Build a Road to a Scholarship?

How has Minecraft impacted your life? The Minecraft folks would like you to tell them how Minecraft can positively impact education and career development. If you have a good answer to that question, and you want to study Computer Science, give it a shot. Maybe mention how it kept you sane during Covid? There’s 2 grand up for grabs. The deadline is July 31st.