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Research your options early and plan accordingly.

intent-vs-abilityA college education can come with a hefty price tag. And while 77 percent of parents say they plan to help their kids with the cost, an increasing number of parents — 32 percent, compared to 27 percent in 2012 — feel their children should pay for most of the bill, according to a Discover Student Loans survey.If you and your teens feel overwhelmed by the cost of higher education, you’re not alone — two out of three families say they are somewhat or very worried they won’t be able to cover the cost. But with some planning and research, you may be able to get some financial support.

Check out these five funding sources to start weighing your options:

  1. Private loans: Generally more expensive than federal loans, loan amounts from a bank or other lender can often be larger, according to the Consumer Financial Protection Bureau, and shopping around can help you find the best possible rate. For additional info and a list of sites offering loan comparisons, check out this article from FinAid.org®.
     
  2. School-based funding: College financial aid packages frequently feature a mix of federal and private loans, grants and work-study funding — and can be so significant that pricey private universities can sometimes be less expensive to attend than state schools, according to U.S. News & World Report. To find out what your child’s proposed school will offer, the Department of Education suggests talking with the school’s financial aid office, getting information from its website and filling out the school’s aid application.
     

    Related: 8 ways to manage the burden of post-college debt

  1. Government-awarded grants: The U.S. Department of Education offers several types of grants for students attending four-year higher education institutions, community colleges and career-based schools. Note that grants are different from loans in that you usually don’t have to repay them, so long as you complete your education.
    • Pell Grants, typically given to undergrads who haven’t earned a bachelor’s or professional degree, are need-based and don’t have to be repaid. The maximum can change yearly and is is $5,815 for the 2016-17 school year. Each school that participates in the program receives enough funds from the Department of Education to provide every student who qualifies with a Pell Grant.
    • To receive a Federal Supplemental Educational Opportunity Grant (FSEOG), you need to fill out the FAFSA form, which lets your school know your financial need. Students with Pell Grants and the most need get first dibs on FSEOGs, which vary between $100 and $4,000 a year and don’t need to be repaid.
    • For a Teacher Education Assistance for College and Higher Education Grant (TEACH GRANT), you need to take certain kinds of classes, then pursue a career in teaching (including working at an educational service agency that serves low-income students) for at least four academic years to prevent the up to $4,000 grant from becoming a loan that you need to pay back.
    • You may be eligible for an Iraq and Afghanistan Service Grant, equal to the maximum Pell Grant amount, if your parent or guardian was a U.S. armed forces member and died as the result of military service performed in Iraq or Afghanistan after 9/11 and you were under 24 years old or enrolled in college at least part-time. Recipients can’t be eligible for a Pell Grant, based on their expected family contribution, but need to meet the other Pell requirements.
       
  1. Local, state and national scholarships: Grants and scholarships covered 31 percent of college expenses for the average U.S. family in 2014, according to Sallie Mae.Nearly every state has a scholarship program for residents who attend in-state colleges, according to the College Board. Private sources, ranging from corporations to fraternal organizations, also give more than $3 billion each year to help students pay for college, according to a study from the Institute for Higher Education Policy, National Scholarship Providers Association and Scholarship America. The Department of Education recommends looking for scholarship information through confirmed, legitimate sources, including a college financial aid office; high school guidance counselor or the Department of Labor’s scholarship search tool.
     
  1. Federal loans: Students can apply for four types of low-interest federal loans, with the U.S. Department of Education acting as the lender, by completing and submitting a Free Application for Federal Student Aid (FAFSA) form online on the U.S. Department of Education’s website. Note that the maximum amount of both loans depends on what year a student is in and other factors.
    • Direct Subsidized Loan may be an option for undergrads who can prove financial need. The U.S. Department of Education will pay the interest while you’re in school at least half-time, for the first six months after you leave school (referred to as a grace period*), and during a period of deferment (a postponement of loan payments), according to the Federal Financial Aid website.
    • Direct Unsubsidized Loans may be awarded to eligible undergraduates, and graduate and professional students. Recipients don’t have to demonstrate financial need. However, you’ll be responsible for paying the interest, and if you choose not to pay the interest while you’re in school and during grace periods and deferment periods, your interest will accumulate and be added to the principal amount of your loan.
    • If you’d rather be the one borrowing money, as long as your child is your dependent and an undergrad, a Direct PLUS loan may be an option to pay for educational expenses other financial aid doesn’t cover. (Graduate or professional students can also apply for Direct PLUS Loans.) You can borrow the amount it costs to attend your child’s school, minus any other financial aid that’s given. Direct Consolidation Loans let borrowers combine all eligible federal student loans into one loan, with one servicer.
    • Undergrads and graduate students with exceptional financial need may qualify for a Perkins Loan, with their school serving as the lender. The current interest rate is 5 percent (not too shabby), and you can borrow up to $27,500 as an undergrad, but not all schools participate in the program.
       

Click here to view the Department of Education’s chart comparing the different types of federal loans.

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