How Much Will Your Child’s College Education Cost?

How much will college cost! Now that you are in a panic, relax! A substantial percentage of students receive financial aid in the forms of grants, loans, and work-study earnings. But if start by looking at how much college will likely cost in the future the amounts are staggering.

In the 2007-08 school year the average cost for one year at a public college was $12,700, and the average private college cost was $22,800. The reason I keep quoting numbers is to show you how much things and gone up in the last dozen years. According to conservative estimates, the total cost of a public four-year college education for A child born today will be over $100,000. Private college education weighs in at over $200,000, and an Ivy League degree has a projected price tag of $300,000 or more. These estimates include tuition, books, room and board, and other costs.

Trying to figure out the costs your family will incurred for your children to get through college is completely subjective and I can only give broad guidelines when discussing the amount of money you will need to get your child, or children, the education they desire. The truth is you really won’t know the true costs until your son or daughter has reached freshman level, assuming a 6% annual increase.

The amounts are staggering. If you’re starting from ground zero today with nothing set aside for education, these amounts look impossible to achieve. The good news is that your likely to get a substantial amount of financial aid.

Applying for Financial Aid

Let’s first look at how much financial aid your likely to get, based on today’s rules (keep in mind that they are likely to change in the future). The federal program analysis to assess financial aid is done on a standardized basis nationwide using formulas that are specifically regulated by Congress (I’m sure this gives you a great deal of confidence). The congressional methodology (need analysis) developed in 1986 and the Federal Methodology enacted in 1993 to 1994 use a uniform formula and set of factors for all college students in the United States.

Usually taken into consideration are parental and child income, age of the parents, number of siblings, how many children are in college and dates of attendance, family medical costs, the value of certain assets, and an allowance for living expenses. (Depending on your income, some of thisinformation is not required.) The good news here is that Congress recognizes how important it is to save for your own retirement; the value of your retirement plans is usually not included when considering how much money you must put toward your child’s college education.

In addition, the cash value of your life insurance, the value of any deferred annuities, the value of your home equity, personal property, and vehicles are not included in the federal methodology calculation.

You can qualify for federal grants, scholarships, or work-study programs by filling out forms and submitting them to organizations the process these forms and coordinate the calculation of your expected family contribution. To make the process simpler, you now have to complete only one form to be considered for federal aid, the free application for Federal Student Aid (FAFSA). FAFSA is used at all the colleges to which your children will be  applying. The same form is often used for state-level aid and college specific aid, discussed later on our blog.

Also, the US Department of Education has made applying for federal aid simpler because families with adjusting gross incomes of $50,000 or less who did not file an IRS 1040 form (in other words, the use a simplified income tax forms) do not have to provide details about all of their assets.

There are a variety of types of financial aid. The best of course is a grant, because grants to not have to be repaid. Loans do have to be repaid, as do some scholarships. Work-study money may be available; in this case your child will get a job in college and earn money to put toward tuition or other expenses. These difficult types of aid may or may not be dependent on your economical or social status, depending on the type of aid you receive.

Ending Different Financial Aid Options and Student Loans [1]

Related posts:

1. Financial Aid and Student Loans [1] Many of us will be concerned about paying for college tuition during our lifetimes; with the American economy in its current state, education more and more is becoming a family affair with grandparents, aunts, uncles, and other relatives pooling their funds to help deserving children....
2. Financial Aid and Student Loans [2] Continued from [1] The problem with is that education has become so costly that it is often one of the top three most expensive undertaking in our lifetime, along with retirement and buying a home. I know many people living in Ohio who end up...

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