Managing Finances

Financing your student’s education

  1. Know your role. Your role as cosigner should be to assist the student. This does not mean doing everything for them. You want the best for the student but if you are making all of the decisions and planning everything out without their efforts or involvement then your work will be in vain. As a cosigner, you take a vested interest in seeing the student succeed. You are an advisor, a facilitator and a source of support for the student. 
  2. Managing college tuition is very importantFiguring out how the school bills get paid is every bit a part of the college experience as studying for exams, writing term papers, playing sports, joining clubs, and having fun with friends. It’s all part of the process, but none of those things will occur if the costs are not accounted for. The tuition bill has only one name on there; the student’s. Make sure the student takes ownership over the process as they would take ownership over their studies. This is an opportunity for the student to learn valuable life lessons in personal financial management.
  3. Start saving early and often. Demonstrate to the student the value of saving money by putting something aside for their college education and encouraging them to do the same. Leading by example is a powerful force and can leave an indelible mark by way of a healthy habit. One method you could follow is a monthly matching program where you and the student match dollar for dollar on contributions. There are many different methods of saving for college, including 529 plans, Coverdell education savings accounts and UGMA’s. When using a college savings plan, you will want to keep the parent as the owner of the asset rather than the student. Reason being is that the Free Application for Federal Student Aid (FAFSA) will weigh the value of assets under the student’s name more heavily than the value of assets under the parents’ name. In order for your child to remain eligible for potentially more financial aid keep college savings under accounts owned by the parent.
  4. File the FAFSA early every year. The Free Application for Federal Student Aid (FAFSA) is the single most important form that must be completed in order for the student to get college funding. Federal and state government agencies along with the school you plan to attend determine how much financial aid you are eligible for based on the information provided on the FAFSA. It requires that you data input information from the parent’s and student’s prior year taxes. So if you are starting school in fall 2014, then the FAFSA requires the 2013 tax information for processing. Go to to complete the form. Bring the student along for the ride so they can get involved in the process. Remember, you want the student to take ownership of their education bill pay process. File your FAFSA by at least February 15th to ensure maximum funding eligibility. This is because many grants are awarded on a first come, first serve basis. Filing the FAFSA late can put you out of contention for certain grants because schools simply do not have enough money to go around. The student must coordinate with their family to make sure the goal of filing the FAFSA on time is achieved for every year they attend college. If family taxes are unable to completed by the February 15th deadline, then complete the FAFSA on time with your best estimation and return to the website as soon as you have the taxes ready to enter the actual correct data.
  5. Grants are free money. The money you want the most is the kind you don’t have to repay. By filing the FAFSA early you stand the best chance of acquiring need based grants. They originate from three areas; the federal government, state governments and the colleges themselves. 
  6. Scholarships are also free money. Scholarships are merit based and awarded by considering a student’s grades and standardized test scores, athletics, extracurricular activities, or other characteristics. They can come from a variety of sources like the school you attend or from scholarship organizations that you can apply for independently. Getting scholarship money to go to college is a great boon but requires extra work on part of the student.
  7. Access Federal loansWhile you want to avoid going into debt as much as possible, keep in mind that federal loans are the best loans you can use to help pay for college. The most common loan program is the Federal Stafford loan. Offered through Direct loans, they come in two varieties; Subsidized and Unsubsidized. The government also offers the Parent Plus loan. This is a loan in the parents name and begins repayment while the student is in school. Then there is the Perkins loan. Perkins is a need based loan awarded and processed by individual schools.
  8. Only after you have exhausted all federal loan options should you look into taking a private loan. Private loans are credit based and in the student’s name. Because most recent high school graduates have little or no credit history they will need a cosigner to get approved for a private loan. Interest rates on a private loan can vary based on the lender and the creditworthiness of the borrower and cosigner.
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