4 Main Mistakes Parents Make in the College Funding Process

Paying for college can be difficult for many parents. When funding college, parents often make mistakes. Avoiding these mistakes can make college funding easier. College Funding Hero helps you navigate the college funding process. More in this article below.

4 Main Mistakes Parents Make in the College Funding Process

Paying for college can be expensive, and many parents may find it a daunting task to pay for a full-length college education. Parents often make some common mistakes when dealing with the college funding process. Knowing how to avoid these mistakes can go a long way to making paying for college easier.

At College Funding Hero, we're here to help educate you on what you need to do to navigate the college funding process.

Common Mistakes Made By Parents In the College Funding Process

Here are 4 of the main mistakes that parents commonly make when going through the college funding process. These mistakes are often the ones that end up being the most costly.

1. Not Planning

One of the first things that can really impact paying for college is not planning ahead. Many parents simply help their child apply to multiple schools that they want to get into, and are shocked when there aren’t many merit or need-based aid opportunities available.

By not establishing a budget and not planning for how much college will cost, many parents get stuck paying the total price for a college education that they cannot afford in reality. Sitting down with your child and discussing what is affordable for the family can help set parameters and be proactive in the college process. This can help set proper expectations for your child and help them understand the value of that education. Understanding your resources can go a long way to knowing what you can spend on a college education, whether those resources are your cash flow, 401k plans, brokerage accounts, savings, etc. This can help you determine how much you have set aside to spend on college.

2. Excess Information

Another common mistake that parents make is they give colleges too much information rather than providing required information on the FAFSA form. It is essential to understand what information is required and what isn't. Providing the college with too much information can be used against you.  For example, on the FAFSA form, they ask about investments. Parents often assume that when asked for investments, you have to provide information about any retirement assets. However, this information is not looked at when it comes to college funding and need-based aid. The only investments you need to consider are cash that you have in the bank, stocks and bonds you have in a taxable account, or a 529 Plan.

3. The Stafford Loan

Another mistake is parents not taking advantage of Stafford Loans.

Stafford loans are "good" student loans that the U.S government subsidizes. The Stafford loans can provide the lowest interest rates available, but many parents use their assets to pay for college early on and then run out of money.

Stafford loans must be used in the freshman year; this is why parents who try to get the Stafford loan, later on, find themselves out of luck. With Stafford loans, you use it or lose it. Otherwise, you don't have the opportunity. Going back to the first mistake example, planning can give parents the benefits of knowing when you need to take Stafford loans or if you're going to take Stafford loans because interest rates are going to be lower.

4. Monthly Payments

The last mistake that parents make is not factoring in cash flow. Many parents assume that they have just the entire college lump sum saved by their student entering college, which is not necessarily accurate. The reason for that is your child has additional living expenses. You can pay monthly at most colleges instead of a lump sum each semester, making paying for college easier. When this option is at your disposal, it's usually zero interest and a way to pay over twelve (12) months instead of one (1) lump sum. Looking into the monthly payment options can help you factor in your cash flow to ease how much you have to pay for college. Paying for college doesn't have to be a daunting burden. By recognizing these common mistakes and planning, you can prevent these mistakes and have enough money available to fund your child's college education.

Start your college funding journey here with our Master College Funding Course.

College has gotten ridiculously expensive. If you’re here, I probably don’t need to tell you that.

Many people pay the college sticker price and potentially jeopardize their financial future in the process. They do this all because they don’t realize that you should never pay full price for college! You can get potentially 50+% discounts on degrees! It takes a lot of work and potentially some sacrifices but it’s entirely doable!

By the end of this course, you’ll have the tools and knowledge to save THOUSANDS on college costs.

Good planning combined with an understanding of how merit based and need based financial aid work can significantly lower your college bill.

I hope this was helpful! If you have any questions, please do not hesitate to reach out.

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