The Hidden Costs of College Your Financial Aid May Not Cover
(3 Minute Read) – Whether you’re off to college this fall or preparing to send your child, that tuition bill will likely be hitting your inbox very soon. Invoices for the fall semester usually arrive in July with a payment due in August. While you may have some of the financial planning done for college, unanticipated expenses may take you by surprise as you prepare for this next stage of life.
According to government data, Americans spend $288,000 raising a child. But that does not include the cost of higher education. The average cost of college is $35,331 per year, when you consider all expenses. That’s more than $141,000 for a four year degree. A recent study found 85% of college students have financial help from their parents.
While most students receive some financial aid through the FAFSA (Free Application for Federal Student Aid) process, which includes federal grants, work-study programs, and loans, the total cost of college isn’t usually covered. On average, a student borrows an average of $11,836 per year to pay for school; public university students borrow more than $30,000 to attain a bachelor’s degree. Parents borrow $12,500 on average each year their child attends college.
Have a strategy
Sallie Mae, an education financing corporation, recommends the following strategy to pay for college:
- Start with money you won’t have to pay back. Supplement your college savings and income with scholarships, grants, and work-study programs.
- Complete the FAFSA and explore federal student loans, which are fixed and usually offer a lower rate.
- Consider a private student loan, like Unitus’ education line of credit, to fill the gaps between your funding sources and actual costs.
Unitus student loans can be used to cover more than just tuition. Many students will need more funding than what is included in their financial aid package. Our education line of credit can help cover the top three non-tuition funding needs:
- Off-campus housing, such as rent for an apartment
- Textbooks or other necessary supplies for classes
- Technology, including a laptop, printer, or scientific calculator
In addition to those non-tuition needs, other living expenses, like transportation, personal care, and entertainment are costs that a Unitus education line of credit can help cover. These expenses can range from $2,700 to $6,000 per year.
So what are the benefits of using a Unitus education line of credit?
- Competitive rates keep payments lower
- Flexible funding and repayment options to fit your needs
- 24/7 call center and application support is available
- You’re borrowing from your local, trusted, not-for-profit credit union
However you decide to fund your future, make sure you’re also looking out for other expenses down the road. A home equity line of credit may be another financial tool to help cover college costs.
And while you’re paying for your child’s college, don’t put off saving for retirement. You can reach out to a Unitus Financial Advisor to develop a plan to put your child—and yourself—on the path to a bright financial future.