(BPT) - Families who have children heading off to college are likely navigating an array of options when it comes to actually paying for higher education. A new white paper by Prudential Financial titled Paying For College: A Practical Guide for Families, seeks to dispel some of the misconceptions surrounding loans, grants, scholarships, and available tax benefits. If the bad news about financing a college education is that it can be complex and time-consuming, the good news is that families willing to educate themselves on the process (and familiarize themselves with the potential pitfalls) can develop a strategy that does not break the bank for students or the parents.
'It can be a daunting process, but well worth the effort, especially if it means avoiding large amounts of debt or not dipping into retirement savings ' said Caroline Feeney, President, Prudential Advisors. 'If it seems too intimidating, don't be afraid to seek guidance because there is a good chance you'll be able to put the right payment strategy in place that works for your family.'
Creating a Plan that Fits Your Family
While earning a college degree is certainly a worthwhile pursuit, the skyrocketing costs of college tuition can leave many students laden with burdensome levels of debt. Parents can also struggle, often sacrificing retirement savings to help their children.
According to Feeney, 'We urge families to tap in to school resources, guidance and financial aid counselors, as well as the experience of a financial professional who can help them make critical decisions with respect to leveraging existing financial resources in a way that helps protect longer-term financial security.'
The report provides a roadmap for financing a college education. It provides basic, foundational information about qualifying for undergraduate financial aid, taking out public and private education loans, and taking advantage of potential tax deductions and credits. It also offers targeted advice for single, as well as divorced parents.
Seeking Aid: Knowledge is Power
One of the primary goals when researching college payment options is identifying all of the sources that do not result in long-term debt. For families who lack the resources to save in advance or to fund that education on a pay-as-you-go basis, seeking all types of financial aid is essential. Some considerations include:
* Becoming familiar with the application deadline and requirements for the Free Application for Federal Student Aid (FAFSA)
* Learning the pros and cons of aid sources available, including grants, scholarships, work-study programs, tax credits, and tax deductions.
*Researching the variables that affect a student's access to financial aid, including choice of school, how much and in what form the family has saved for college, and how adept the family is at working through the process of applying for help.
Once they do their homework, families may be surprised to learn about more effective ways to qualify for grants and scholarships, and if student loans must be taken out, how to navigate the new repayment options that have become available.
Divorced and single parents also have special provisions available to them that are worth looking into.
'Every family has unique circumstances to consider. Investing time with a financial professional who can help guide them through resource planning can help alleviate some of the stress associated with understanding the process and making sure that the family's finances are well handled,' said Feeney.
To learn more, visit www.prudential.com/payingforcollege.