If you or your child is getting ready for college, now is the time to prepare. Whether you?re planning to return for another year in the fall, or if you?re gearing up for freshman year, here are three things you need to do right now.
January isn?t normally the time that we think of fall semester ? nearly nine months away. However, if you or your child is getting ready for college, now is the time to take action to ensure the best possible financial outcome during the fall.
Here are three things you should do now, whether you plan to return for another year of school, or whether you start as a freshman in the fall:
1. NOW is the Time to Fill Out the FAFSA
When getting ready for college, one of your best financial tools is the Free Application for Federal Student Aid (FAFSA). The FAFSA allows you to apply for all the federal financial aid you are eligible for in one application. Subsidized and unsubsidized federal student loans, as well as access to grants and work study programs are all handled through FAFSA.
It is recommended that you fill out the FAFSA as soon as it becomes available because FAFSA is given out on a first come first serve basis. Once you receive your tax information you can always go back and update those parts in the form. Discover Student Loans offers a handy resource for understanding the FAFSA that helps families prepare the documents they need ahead of time — before they go in to fill out the FAFSA.
Fill out the FAFSA quickly so that you can see what you can expect from federal aid, allowing you more time to close the college funding gap if you need to. Begin researching other options, including private student loans, now as well. I ended up using private student loans for my graduate degree?since the federal student loans and a scholarship were inadequate.
2. Apply for Scholarships
Even before you get news back about the status of your federal student aid from your FAFSA, it?s a good time to apply for scholarships. The earlier you apply, the better, since you have the chance to get more (free!) money for schooling. There are a number of interesting scholarships available, from those meant for redheads to those meant for tall women. There are also contests and scholarships that can be entered, like the $2,500 Discover Student Loans Scholarship Award.
Apply for scholarships at the schools you are trying for, as well as with major retailers and service organizations. For example, my ex-husband won a small scholarship from his local bank. From obscure scholarships to well-known offers, it?s possible to get financial help if you look. January is a good time to start looking, and making a list of scholarships you are eligible for.
I ended up with more than $100,000 in scholarship offers, and that?s just from the schools I applied for. However, several small scholarships from independent sources can be even more effective?since they can add up over time. You can even apply for scholarships if you are already in college,?as many of these are one-time awards that you qualify for, no matter your year in school.
3. Figure Out the 529 Plan
Finally, as you are getting ready for college, you need to see where you stand with the 529 plan. Understand the requirements in terms of what you can use the money for. You should also coordinate your 529 plan with your other financial resources. If you qualify for scholarships, you might be able to let the 529 plan grow a little more (and keep contributing) and withdraw another year.
If you haven?t been contributing to a 529 plan, you can start now, and spend a couple years letting it grow while you use other funding resources. Understand how you will tap into the money, and make a plan for withdrawing it in time to pay tuition and other qualified costs if you need to. You can also determine whether or not it?s a good time to consider a Roth IRA instead, or some other tax-advantaged vehicle.
Now is the time to start positioning yourself for better finances in college. As you?re getting ready for college, do what you can to plan ahead so that you aren?t caught in a bind when it?s time to start school.
Disclosure: This blog post was written as part of a sponsored program for Discover Financial Services. All views expressed are entirely my own, and were not influenced or directed by Discover Financial Services.