9 Financial Planning Tips to Prep for College - MUST KNOW!

For those serious and want to plan ahead, here are my 9 financial planning tips to get you started! Pre-planning will save you valuable time and money, so yes, each tip is worth it! 

1. Know how will YOUR PARENTS help: 

• Figure out what their thoughts are with your new venture in life, how much they can support you financially/emotionally, and how involved they will be in your career education.
• This helps to see how much help you are getting even before you start your new journey. 
• If they are NOT supportive in any way, then you have to consider finding ways to fund your education - FAFSA, scholarships, and side-jobs – as well as frugal spending with disciplined savings.  Every dollar not spent is a dollar+ saved (considering tax and such).
• Even if they are 100% supportive, you cannot just solely rely on them, but also consider working hard to fund your own education (as if they’re not helping), so you can have more savings. 

2. Consider the COSTS of yourschooling  

• Student housing? Driving? Or Public transportation?
• Dorm or rent rooms nearby?
• What do you want to experience? College life or just get an education?
• Will you go to community college then transfer to your desired University route?
• Factors to consider are: 
• If money is an issue, consider going the community college route then transferring to a university, the cost will be cut by many folds. You will still get the graduating degree from the University you attended, no one will even know you went to a community college, nor do they really care. A degree earned comes from the college you graduated from. :)
• If money is NOT an issue, still consider ways to support yourself, save what you can, and you will be impressed how amazing it will feel with saved up money that can be invested, so you can become financially independent. 

3. Know HOW you will PAY for your education

• Cost of Attendance (COA) - Expected Family Contribution (EFC) = Financial Need (FN)
• How much you need per year for college is based on this calculation: COA - EFC = FN

• COA: numbers each college will give you as an annual cost 
1. You pay directly to school (tuition/fees, room & board, supplies, transportation)
• EFC: use the FAFSA page to calculate how much your family can help you.  (you can try an estimated online calculator here: https://finaid.org/calculators/finaidestimate/)
• FN: this will differ with each school you choose, so if you want to save money, choose a school with lower COA.

4. Apply for FAFSA (early, and annually)

• This is money you can receive for your education, and some grants can be free/forgiven. Look into types and terms.
• Before you accept your money disbursement, you need to know WHERE it’s coming from and WHAT is expected of you – such as when you have to pay back. 

5. Choose your LOANS wisely

• If you can avoid private loans, great.  If you can’t, understand your future expectations once you accept the loans.  Consider repaying these higher interest rates loans first, as a priority. 
• Direct subsidized loans: need-based loans for which the government pays your interest while you’re in school
• Direct unsubsidized loans: non-need-based loans, in which you are responsible for the interest right when it’s disbursed.
• Variable interest rates that can change with time, without a maximum limit
• Carry different loan terms, fees, penalties, and repayment schedules.
• A co-signer may be needed
• There will be government aid (lower interest rates with more lenient pay-pack time, and sometimes can be forgiven) and private loans (higher interest with terms you need to be familiar with).
• Government loan known as Federal Direct Student Loan Program has two types:
• Private loans (from banks, credit unions, etc) have different terms: 

6. Know HOW your are EXPECTED to payback (REPAYMENT options)

• Standard repayment plans: pay loans within 10 years
• Extended payment plans: play loans within 25 years
• Graduated repayment plan: repayment usually start low, then increase every 2 years or so
• Income-based repayment plan: in which they would take a cap income level to determine an affordable amount that you can repay.
• Consider a temporary delay option if you have trouble, in which you can defer repayment of principal and interest if you have special circumstances like illness, unemployment, or military service.   Or you can also consider forbearance if you don’t qualify for deferment, which reduces or delays your payments but interests will continue to accrue. 
• Know that usually it’s a monthly payment.  Keep your debt-to-income ratio to less than 10-15%, otherwise you’ll have a hard time repaying.
• Types of repayment plans include standard vs. extended, graduated vs. income-based
• Not Paying - or late payment - can cause you big problems with your credit score. 
• Loan forgiveness if given in a special work field (military, etc), in which part or all of your student loans can be forgiven. 

7. KNOW FREE MONEYis out there, look for them

• Federal Pell Grants & Supplemental Education Opportunity Grants (FSEOG) - for low income students
• Teacher Education Assistance for College and Higher Education (TEACH) given to those who will teach in schools that serve low-income families
• Grants: 

• Scholarships

• Church, foundation, or high achievement scholarships are available, search and apply!
• Scholarships websites:
• www.fastweb.com
• www.finaid.org/scholarships
• www.bigfuture.collegeboard.org/scholarship-search
• Avoid scams!
• Know terms and apply before deadlines. 

8. Work Study:

• Need-based financial aid program, allows you to work while you’re in college based on jobs set up by your school.  Schools would have to participate in this program. From your FAFSA application, you will be given how many hours you can work.  Minimum wage is a guaranteed.
• Look into also the Reserve Officer Training (ROTC) (if you consider serving after college) and the GI Bill (if you’ve already served and are returning to school)

9. With all of this information, you will know some sort of amount that you need for your education, and estimate your general expenses. Once again, the more you save, the less you will have to worry.

• See if you can avoid spending on things that will drain your account such as:
• coffee/tea
• Eating out/fancy dining.
• Fashion clothing
• Party 
• Traveling 
• Alcohol (they’re so pricy and they don’t have good outcome)
• Etc.
• Once again, a penny saved is MORE THAN a penny earned. :)
• Become a member (free for everyone) and have access to all the tools & resources, including the money flow & spending plan worksheet, so you will have a clear picture of your personal finance.