 TITLE: Should Parents Pay for College? CONTENT: How to Pay for College\n----------------------\nMany parents choose to pay for at least a portion of their child's education. If you still have some time before your child goes off to college, start planning now for the costs ahead. Here are a few strategies to save money on college costs and ways to pay for school:\n### 1\\. Stay Local\nIn-state tuition at a public school could cost as much as 40% less than the cost of out-of-state tuition. Talk to your student about in-state options and show them the difference in price. They could also consider attending a junior college for a year or two before transferring to save money.\n### 2\\. Apply for Scholarships\nScholarship applications can take time to complete, but investing the time can pay off. There are thousands of scholarships available that your student can apply for, and scholarship money is free money they don't have to worry about paying back.\n### 3\\. Utilize 529 Plans\nThere are two types of 529 college savings plans: prepaid tuition plans and education savings plans. The prepaid tuition plans let you purchase college credits today for future attendance at a specific school, while 529 education savings plans are investment accounts for education expenses.\nSavings in 529 plans grow tax-free as long as you use funds for qualifying expenses, such as tuition, books, room and board, and other education costs. If time is on your side, putting away money each month into a 529 plan could help you cover most (if not all) of your child's college costs when it's time to send them off.\n### 4\\. Apply for Student Loans and Parent PLUS Loans\nIf your student is getting ready to begin college and you need assistance paying for tuition and other costs, you could consider borrowing money. Typically, federal student loans offer the best rates and terms, especially those your child takes out in their name. Students may qualify for subsidized or unsubsidized federal student loans, and you may be eligible for federal parent PLUS loans. Private student loans may also be an option.\nIf you and your student decide taking out loans is necessary to help pay for their education, you may be best off getting federal student loans in their name and helping them pay as loan payments become due (typically six months after they leave school). This will give them access to potential benefits down the road, such as income-based repayment or student loan forgiveness.\n### 5\\. Take a Hybrid Approach\nPaying for education expenses doesn't have to be all or nothing. If you look at the numbers and determine that footing the entire college bill would put you in a financial bind, you and your student could each cover a portion of their education expenses. Here are some hybrid scenarios:\n*   **Give your student a stipend.** Figure out a dollar amount that you can afford to give your student for college each semester. Then the student could use student loans or income from a job to pay for costs the stipend doesn't cover.\n*   **Pay tuition and have the student cover the rest.** If your student goes to an affordable in-state school or junior college, you may be able to pay the tuition each semester out of pocket. Then you can have them pay for room, board and other living costs.\n*   **Use college savings and have the student pay for what it can't cover.** Develop a budget for the college savings you have. If you don't have enough to cover all expenses for all four years, help your student come up with a plan to pay for the rest, which could include a combination of student loans and income earned from a part-time job.\n*   **Split up the student loans.** If you need to borrow money to pay for education costs, you could take out some loans in your name and have the student take out some loans in their name. With this approach, neither one of you is shouldering all of the debt.\nIf you decide to borrow money for school, it's important to be mindful of the debt load you and your student take on. The average student loan debt in 2020 was $38,792, according to Experian data. Debt balances that are high compared to your income can be challenging to pay off. Keeping up with debt payments can also make it hard to meet other financial goals as you look toward retirement and your student looks toward starting a life post-college. Making money-saving decisions early on, such as attending a less expensive school or finding ways to avoid student loans, can make a big difference financially down the road. END