Planning for College – Ways to finance education

A big focus has been placed recently on the amount of student loan debt currently held in the U.S. – now the largest category of consumer debt, surpassing credit cards and auto loans. According to the Federal Reserve Bank of New York, as of first quarter 2012, the average student loan balance for all age groups is $24,301, with about one-quarter of borrowers owing more than $28,000. While the emphasis continues to be on having an education in order to obtain a good job, figures such as these have some students doubting their ability to repay such large amounts even with a college-degree career paycheck.

So how do you prevent yourself or your child from becoming overwhelmed with student loan debt in pursuit of an education? The key is to plan ahead and take full advantage of federal programs to finance that education with as little debt as possible.

Planning through Saving

  • Just making a commitment to saving a portion of your income specifically for college is a big step in your college planning process. According to U.S. News and World Report, research shows that students and parents who stow away set levels of college cash at specific intervals are more inclined to feel confident about their ability to pay for college. Determine a monthly goal and have that amount automatically deposited into a separate account titled College. This allows you to keep a running tally of what you’re saving.
  • Consider a 529 plan. Setup through the state, these savings plans with tax advantages were effectively created to lessen the number of investment choices families have to make, according to Mark Kantrowitz, founder of Similar to IRAs, users may select from a variety of funds, including real estate and money market accounts, in which to invest. Many offer agebased investment allocation, including riskier options for younger children and re-allocating to safer options as the child nears college-age for maximum returns. To learn more about Ohio’s plan, visit or contact your investment advisor.

Exploring Scholarships, Grants and Loans

  • Even if you’re starting college this year, don’t assume it’s too late to find scholarships. According to SimpleTuition’s CEO Kevin Walker you should scour the internet, community listings and your high school counseling office for sources of aid that have gone unused. His site,, offers a scholarship section with links to free scholarship databases. “Don’t waste your money on fee-based scholarship matching services,” he warns. Most students will get around 15 to 25 good matches with the free services.
  • Be sure you complete the Free Application for Federal Student Aid (FAFSA) in order to qualify for federal grants and loan programs. Many people assume they won’t qualify for financial aid so they don’t bother to complete this form. That’s a mistake, according to Walker. “Federal loans, such as Stafford and Perkins loans, are cheaper and have more flexible repayment options than private loans. And no matter your income you can get a federal Stafford loan.” If your FAFSA does show evidence of financial aid need, it qualifies you for consideration of federal grants, such as Pell grants or campus-based aid through Federal Supplemental Educational Opportunity Grants. Grants such as these are gifts paid directly to your school and do not require repayment.

Planning for college is less overwhelming if you educate yourself on the process and in turn develop a financing plan. Citizens National Bank offers College Planning educators and calculators on our website to aid you in this process. Calculators include determining how much to save for college and budgeting for college living expenses. Educators discuss the financial aid application process, types of loans available and savings plans. Find all this information at


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