How You Can Plan to Pay for College

How You Can Plan to Pay for College

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Every March, thousands of 17-year-olds open acceptance letters from colleges and celebrate. After years of slogging through classes, studying for grueling standardized tests, and probing their inner thoughts and motivations for absurd application essays, many of these high school seniors breathe a sigh of relief.

But the acceptance letter marks the start of a new quagmire of questions. How much will college cost? How do you apply for financial aid and scholarships? Is it possible to contest financial aid packages? How should you choose a student loan?

There are hundreds of websites and apps to help students and parents make sense of how to pay for college, but the endless resources can be overwhelming. Here are a few useful tools we found that provide guidance throughout the process, from finding micro-scholarships during freshman year of high school all the way to refinancing student loans after college graduation.

Do you know about other tools and websites that help students and parents financially plan for college? Add them in the comments section below!

Note: All websites and tools mentioned in this article are free, unless marked otherwise.

Planning Early: Finding Scholarships in High School

Universities and private organizations award billions of dollars of scholarships to admitted seniors each year. But according to Preston Silverman, CEO and co-founder of Raise.me, “that’s simply too late, for a lot of families.” Raise.me offers students a head start by partnering with colleges to offer them micro-scholarships—each worth anywhere from $50 to $2,000—starting in freshman year of high school.

On Raise.me, 65 colleges, from small private schools like Oberlin College to large public universities like Penn State, offer micro-scholarships for a variety of traditional achievements (doing well in STEM courses or scoring a five on an AP exam) and less conventional accomplishments (receiving the Girl Scout Gold Award or learning to code).

High school students then log their achievements through a portfolio on Raise.me and “earn” micro-scholarships towards as many of the 65 schools as they like. If a student then applies and is accepted to one of the schools as a senior, he or she has already accumulated small scholarships towards that school.

Raise.me targets younger students in 9th and 10th grade. “We engage students really early so they have time to plan and make really good decisions by junior or senior year,” Silverman says.

Getting Down to Business: Tools for 11th and 12th Graders

For many students, micro-scholarships are just a drop in the bucket. Scholly offers a $3 mobile app (and free website) to help students, from high school to graduate school, find bigger scholarships. “We aim to follow students all the way through,” explains Chief Technology Officer, Nick Pirollo. Scholarship entries in the database—there are currently a few thousand, worth around $20 million, according to him—are all “vetted by an actual human being,” so Scholly takes down scholarships that are closed or inactive. The tool, which also offers a calendar with deadline notifications, has been equally adopted by high school students and parents, he explains.

After winning $40,000 on Shark Tank this year, Scholly is starting to see some big adoption: for the 2014-2015 school year, the city of Memphis spent $8,000 to provide the app to each of its high school juniors.

The scholarship money a student needs varies widely based on a school’s cost. Unfortunately, it can be tough for a student to figure out how much financial aid he or she is eligible for. College Abacus calculates that price tag, by entering a student’s information into financial aid estimates on the websites of different colleges. (Each college is legally required to have a net price calculator on its site.) “We’re the only site that enables you to get a financial aid estimate directly from the school you’re interested in, based on your individual circumstances,” explains Abigail Seldin, founder of College Abacus. A student enters personal financial information, as he or she would on a college’s net price calculator, and College Abacus calculates how much he or she would pay at each of 4,000 schools, based on financial aid packages. College Abacus standardizes questions about adjusted gross income or military benefits, Seldin explains, since "every school customizes its calculator, and asks questions differently."

Financial aid is often available, but too often students (and parents) get lost in the mire of paperwork. NerdScholar offers resources to walk students through the forms, from the FAFSA (Free Application for Federal Student Aid) to award letters. NerdScholar’s FAFSA guide, created with a grant from the Gates Foundation, is designed to “walk you through it step by step—keep it open as you fill out the FAFSA,” says Gianna Sen-Gupta, content marketer for NerdScholar. “We particularly work to help students from nontraditional backgrounds, whose parents are divorced, or gay, or foster parents,” she explains. “These students often have a harder time figuring out how to fill out the FAFSA.” NerdScholar also offers resources on how to navigate other financial paperwork, including award letters from colleges and student loan refinance.

In the Thick of It: Navigating Student Loans

So you’ve got the scholarships and financial aid package for your dream school—how do you tackle the remaining costs? As student debt casts a longer and longer shadow, it’s worth taking the time to find loans with the best possible rates. “If you’re not the Kardashians, you’ll get grant aid from the government and scholarship money from the school, but 40% of traditional undergrads still need private educational finance,” explains Patrick Kandianis, co-founder of Valore.

The company’s SimpleTuition tool helps students understand the differences between available loans and strategize which is best for them. “People don’t talk about the impact of financing costs [like interest] on the overall cost,” says Kandianis. “There are costs to the money, so it pays to compare the different private finance players.” SimpleTuition compiles loan details from different organizations, including national banks like Sallie Mae, regional banks and credit unions, and provides a student with different options based on how much he or she will need to borrow.

Yet many students and recent graduates lack the credit score to get student loans at a manageable interest rate. And if their parents can’t cosign the loan, where can they turn? Eric Mayefsky co-founded WeFinance to help these young adults find a lower rate by crowdfunding loans from their own communities. “Borrowers create a listing in their own words, defining how much they want to raise, their terms, and a description of themselves,” he explains.

Users have crowdfunded loans for tuition on WeFinance, but have also borrowed for unpaid internships and travel. Borrowers typically ask for a 4% interest rate, compared to rates around 7% for graduate school tuition. As Mayefsky sees it, WeFinance is a way for a community to invest in young people who they trust will succeed. “You’re actually a lower-risk investment on WeFinance than you would be otherwise,” says Mayefsky, reasoning that sourcing loans from your friends and relatives “adds an additional social pressure to repay.”

How Financially Worthwhile is College, Anyway?

Do those four years of college really earn back the thousands of dollars spent by American students? Almost always, the answer is yes, according to Jody Hoff at the Federal Reserve Bank of San Francisco. “College does pay, in terms of persistent earning advantage over a high school graduate,” she explains, despite high-profile outliers like Mark Zuckerberg or Steve Jobs. “It’s still the best investment that you can make in yourself over the long term.”

But don’t take her word for it. The Federal Reserve Bank offers an “Is College Worth It?” calculator, based on its analysis of 70 years of data comparing earnings of high school and college graduates. Students and parents can enter tuition costs and saving habits to see how long it will take them to pay it off.

Let’s Talk About Money

For high school freshmen to grad school applicants to worried parents, the experts all have one big piece of advice. Talk honestly about your finances—and do it early. “Make sure you’re talking to your parents,” warns NerdScholar’s Sen-Gupta. “Really consider what going to your dream school is going to look like for your finances, and for your parents’ finances down the line.” College Abacus’ Seldin agrees. “Most people talk about social fit, and academic fit—but can you afford to go?” she asks. “For every student, there’s an affordable school that’s also an academic and a social fit.”

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