"How can I pay my college tuition bill?!"
With college costs on the rise and exceeding $40,000 a year in some cases, college bills have become increasingly more difficult to pay. Often times, salary, assets and savings, including education plans, are not enough to cover your family’s contribution. Financial aid can help reduce the costs of college but families are still often left with a considerable bill to pay.
Ideally, you should attempt to get as much free money as possible before turning to loans to cover college costs. You may receive grants and/or scholarships in your financial aid package from your school but outside scholarships are also available to help families fund a higher education. Local scholarships are widely available and are often easier to obtain than national scholarships. Visit RIScholarships.com to search through a comprehensive listing of local scholarships. Scholarships are not just for straight-A students and exceptional athletes. Many scholarships are available to financially-needy students or to students with certain interests, students that belong to community or religious organizations, or are children of employees of a particular company.
Once you have exhausted your “free money” options, you might consider taking a look at a payment plan, parent or student education loan, or a home equity loan, as described below. Your individual situation will help determine which option is right for you.
Most colleges offer a payment plan that allows you to spread out the cost of tuition over a specified number of months. Typically, a payment plan administrator charges a one-time enrollment fee without interest or other fees. Contact the college Bursar’s office to get information regarding payments plans. Some popular plan administrators are Tuition Management Systems (TMS), Academic Management Systems (AMS) and FACTS.
You should always look into your federal loan options before seeking a private education loan since terms, rates, and fees are typically more favorable on federal loans. With your award letter, your school may have included a list of preferred lenders to assist you with the lender selection process. While financial aid offices usually recommend lenders based on loan terms and customer service, it pays to do some research before choosing a lender to make sure you are getting the best deal for you. To learn more about the different types of loans, click here.
Home Equity Loans
There are advantages and disadvantages to using a home equity loan to finance an education. The advantage is that home equity loans are generally tax deductible. The disadvantage is that if you borrow 4 years worth of tuition, you may have to include the remaining amount of your unspent assets on your subsequent FAFSA forms, which will affect your eligibility for financial aid in the future.