Move-in day for your college freshman will be here before you know it, but even with scholarships and other financial aid, you’re still short of covering the tab.
What can you do?
Take a deep breath — there is still time to pursue strategies to plug the money gap.
Here are some ideas I’ve compiled from reports and tip lists released by several financial aid experts in recent weeks.
▪ Scholarship money. Yes, many of the most lucrative scholarships have already been handed out by companies, nonprofits and other groups. But some are still accepting applicants.
It’s been my experience that many scholarships in the $1,000 to $5,000 range often go unfilled. You can’t win if you don’t try, even at the 11th hour.
▪ Tuition installment. Most schools offer this option, which allows students to split up their payments over the course of a semester or the entire year. Ask the college financial aid office if you can sign up.
The plans typically come with an upfront fee of about $100, but signing up can be worth it if you can’t pay the full bill in one shot at the start of the semester.
▪ Take out a private or PLUS loan. As I noted in my column a week ago, loans from private lenders often come with favorable interest rates and no fees compared with federal PLUS loans.
But the federal loan program for parents has its advantages, including more flexible repayment terms.
▪ Borrow from your 401(k). Consider taking out a loan from your 401(k) retirement plan or pension plan, if rules allow, but even then only if you’re confident you can pay it back, said Kalman Chany, co-author of the Princeton Review’s “Paying for College Without Going Broke.” You can borrow up to half your account balance, up to $50,000, and generally you have five years to repay the loan.
The upside: You are repaying yourself rather than paying the interest to a bank.
But use caution. As Chany noted, if you lose your job or change your employer, this loan could become due immediately. And if you can’t pay it back, you could be subject to early withdrawal penalities that will eat into your retirement nest egg.
▪ Appeal the package. Your best bet for a successful financial aid appeal is if your family has experienced a change in financial circumstances since originally applying for aid. That could involve a loss of a job, a pay cut, a disability, the death of a family member or an unexpected expense such as a large medical bill.
When talking to the financial aid officer, experts recommend being very specific about what you’re asking for and providing documentation about the recent change in your financial situation.
And finally, don’t forget to use some of the money your student is pulling down from a summer job for books, lab fees and other line items on the college bill. After all, your freshman-to-be should be chipping in too.
Steve Rosen: 816-234-4879