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How to financially prepare for college

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Kenneth Washington, 73, is already looking ahead to his 14-year-old son attending college. He understands that in order to prepare his son for higher education he has to be prepared financially. 

“In his school, they met with students and spoke about college. My son said he wants to go, so I plan on saving money and finding out how much everything will cost,” said Washington, who added that he plans to look for grants and scholarships as well.

According to Kristin M. Casper, chief of staff for the State Student Assistance Commission, college students may be receiving less money than expected from state grants such as the Frank O’Bannon Grant.

The O’Bannon Grant, a need-based grant that helps students pay tuition and other fees, is a way for Indiana students to receive money for school that doesn’t require repayment after graduation. Some of the funds are being transferred to the 21st Century Scholars program, which offers low-to-moderate income students with a minimum 2.0 GPA a scholarship that covers tuition. This scholarship is available only to students who signed up for the program in 7th or 8th grade and were accepted.

Casper said, “The 21st Century Scholars program is an entitlement program. We will pay for 21st Century Scholars first before awarding the O’Bannon Grants. We have had to transfer money from the Frank O’Bannon grant to the 21st Century Scholarship program to cover this entitlement. Students just receiving the Frank O’Bannon grant have seen a reduction in their awards.”

In tough economic times, parents and students may worry about paying for school. However, parents such as Washington believe college is more important now than ever before.

“It’s hard getting a job even with a degree, much less without one. I want my son to go to college because he will gain wisdom and learn how to be independent,” Washington said, adding that his son is a part of the 21st Century Scholars program.

Experts say there are plenty of ways to ensure students are financially ready for college.

Linda Handy, director of financial aid at the University of Indianapolis, believes parents, students and schools all play a role in the financial process. She added that the process of investing in a student’s future should start with the parents while the child is young.

“You have to think about what the cost of attendance is going to be when the child is ready for college. Start a savings account, making contributions to that account over time. The interest can increase which is helpful,” said Handy.

Despite grants and money saved by parents, some students will have to take out loans. To apply for grants and loans, students must fill out a Free Application for Federal Student Aid (FAFSA). The deadline for submitting the FAFSA is March 10th each year.

Handy, from the University of Indianapolis, said it’s important to know the different types of student loans that are available. Subsidized loans don’t gain interest until after graduation, while unsubsidized loans gain interest while the student is still in school. There is a six-month grace period after graduation for the Federal Stafford Loan, and a nine-month grace period for Federal Perkins Loans, before students are required to start paying them back.

“It’s excellent to start paying off the interest while you are in school and during your grace period,” Handy said.

Many students looking for scholarships have been referred to websites such as Fastweb.com, but Handy thinks there are better ways to find scholarships.

“A student’s high school or college may offer scholarships, so I would check there first,” she said, “After that, try the local community such as your church or clubs and organizations that students or parents may be involved in. Search engines like Fastweb is a long shot, so only use them after you have exhausted all other options.”

Indiana University offers $1,000 annually to Indiana residents who were high school valedictorians. The state of Indiana offers scholarships to minorities majoring in nursing or teaching.

Handy points out that on-campus jobs are a great way for students to earn money while in school because the economy will not affect campus jobs as much. Schools rely on students to fill those positions.

 

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