How Parents Pay for College (And Keep Costs Low)

Paying for college is one of the biggest pressures parents face. You want the best for your child and understand that a college degree can make a huge difference in their future. But college is expensive, and you may stress over how your family can afford it. You are not alone.

Between tuition and fees, room and board, books and supplies, transportation and living expenses, paying for college can be overwhelming. According to a College Ave Survey conducted by Barnes & Noble InsightsSM How Families Pay for College in 2019, 62% of parents will pay for the full cost of their child’s college, which means 38% of parents plan to partially pay for school or not at all.

If you’re determined to help your child pay for college, one of the first things you should do is look for ways to reduce college expenses. Let’s take a look at some ways parents help pay for their child’s education while keeping costs low.

Fill Out Financial Aid Forms with Your Child

In 2018, over $2.6 billion in financial aid was left on the table due to students who did not complete or made mistakes on the Free Application for Federal Student Aid (FAFSA). The federal government and many schools use the FAFSA to determine how much financial aid to award students, which could come in the form of grants, scholarships, work-study, subsidized loans, and unsubsidized loans. Some of the most important questions on the FAFSA pertain to household income which can be confusing for your student to answer without your help.

Student loan expert, Mark Kantrowitz, encourages students and their families to file the FAFSA early to receive more money. Some of the federal and state financial aid made available through the FAFSA comes on a first-come, first-served basis. Those who complete their FAFSA as soon as it becomes available each year have a better chance at getting free aid, such as grants.

An analysis performed by the financial advice website NerdWallet found that the two main contributing factors to unclaimed financial aid were parents who did not wish to share financial information with the federal government and student errors that disqualified them from receiving aid.

To avoid lost aid, it’s a good idea to help your child fill out the FAFSA as soon as it becomes available each October.

Note that some schools have additional forms to qualify for financial aid, such as the CSS Profile. Be sure to ask your child’s school’s financial aid office for all relevant forms.

Learn more about how parents and students can tackle college financing.

Encourage Your Child to Get College Credits in High School

Parents can lower college costs by having your child take Advanced Placement (AP) or College Level Examination Programs (CLEP) while in high school.

  1. Students who take AP courses are more likely to graduate within four years than average. As more and more students graduate in five or six years, this can save you from paying for extra semesters in college and gets your child into the workforce sooner.
  2. Taking AP or CLEP courses increases eligibility for merit-based scholarships and grants. You may qualify for AP-specific financial aid awards.
  3. Dollar for dollar, AP and CLEP credits are cheaper than college credits. An AP exam costs $94 (or $30 if financial need is demonstrated) and CLEP costs $89 (or free for qualifying military service members) but each of these exams can knock three credits off your tuition bill. A 2018 study by Student Loan Hero found that the average cost of just one college credit to be $594. Not all colleges accept AP or CLEP exams for credit, so be sure to ask.

Here are six ways high school seniors can save for college.

Go Local – You Could Save Big

While many students dream about going away to school, you can save thousands on college tuition and fees just by having your student go to college a little closer to home. Take a look at the 2020-2021 average cost of college tuition and fees.

Simply by choosing an in-state school, your family can save on average between $15,000 and $25,000 per year vs going out-of-state or to a private university.

You can also suggest to your child that they take their first or second year of school at a community college, where the average 2020-2021 tuition and fees are just $3,770. Students can take care of prerequisites and required courses for a lot less money at a community college than at a four-year institution, and that could save you thousands. Just make sure that the four-year college they want to attend will honor the credits from the community college.

Here are some more tips to help your child pick the right college.

Ditch the Room and Board

Maybe you never want to let them go, or maybe you can’t wait to get your home back–either way, eliminating or reducing room and board expenses can lower college costs by thousands.

In some cases, room and board (which makes up “rent” and “food”) can be just as expensive as tuition. For example, the average room and board for public colleges (both in- and out-of-state) is $11,620, while in-state tuition is $10,560. And these costs can go up by about 2 to 4 percent each year.

You may still be chipping in to cover your child’s groceries, but it will be much less than paying for a college meal plan plus the dorm.

Have Your Child Look into Becoming a Resident Advisor

A resident advisor, also known as an RA, is a student who is responsible for managing the residence hall experience. Not only do RAs develop leadership skills, but they also make long-lasting connections with other students and faculty.

Schools offer various forms of financial incentives to RAs such as free room and board or even a stipend, so be sure to ask at your child’s school. Each school may have different qualifications to be an RA, though most colleges require the student to have completed a certain amount of credits and maintain a certain GPA.

If Their Schedule Allows Have Your Child Work (Part-Time)

Instead of depositing a monthly allowance in your child’s bank account, encourage them to find part-time work so they can help pay for their living expenses. Students who fill out the FAFSA may qualify for the federal work-study program, which provides funds to schools in exchange for part-time work. As they become more senior at school, on-campus teaching or research assistant jobs may become available.

Here are the best ways to make money in college.

Understand Student Loans Options for Parents

If student loans are part of your strategy to help pay for your child’s college education, there are a few things to keep in mind that can help you control the costs.

First, understand which student loan options are available to parents paying for college.

  1. Federal Parent PLUS Loans
  2. Private Parent Loans
  3. Cosigning a private student loan

The least expensive one will depend on several factors such as your credit score and income.

The federal government offers federal Parent PLUS Loans to parents who want to take on full responsibility in paying for their child’s education. A Parent PLUS Loan requires you to have good credit and offers a fixed interest rate. Since the Parent PLUS Loan typically has a higher interest rate than other federal student loans, it could make financial sense for your child to take out a federal student loan in their name first, with the understanding that you will assist in making the payments. Then you could consider a Parent PLUS Loan if you still need more money to cover college.

Private Parent Student Loans, which are offered by banks and other private lenders like College Ave, may have lower interest rates on loans for parents than the federal government. Private lenders consider your credit score, debt-to-income ratio, and income in deciding your interest rate, which could be fixed or variable. If you have excellent credit, you may get a lower fixed interest rate with a private parent loan than with a federal Parent PLUS Loan. And if you only need to borrow a small amount and can repay quickly, you may find a lower variable interest rate. Some lenders, such as College Ave, will disburse a portion of the private parent student loan funds directly to the parent.

Another option is to cosign on a private student loan for your child and use your credit score to help your student secure a lower interest rate. Over 90% of private student loans include a cosigner. In this scenario, repaying the loan is a team effort: the parent and the child take equal responsibility for paying back the loan, and it appears on both credit reports.

Use our parent student loan calculator to explore what a loan could cost you or get a more accurate estimate by prequalifying.

Do What’s Best for Your Family’s Budget

Even if you are unable to pay for all the costs related to college, you may be able to help with some. Looking at the College Ave Survey conducted by Barnes & Noble InsightsSM, How Families Pay for College in 2019, you can see other ways parents chip in, for example, 72% of parents pay for their child’s phone bill, 65% help cover healthcare costs and 39% give a monthly allowance of $100 or more.

When it comes down to it, paying for college can be a huge undertaking. Although you want to give your child the best, don’t sacrifice your family’s financial security by taking on too much. Take the time to have an open conversation about what you can afford and how much you expect your child to contribute to their education.


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