College Financing 101

January 14, 2012 5:44:28 AM PST
This is the time when a lot of parents of college-bound students are trying to choose the right university or college. Among the big questions is how to pay for tuition? Joan Jensen, president and CEO of the Central Credit Union of Illinois, shared with ABC7 some tips for parents to avoid five costly mistakes.

Mistake #1: The Wrong Fit
Besides finances, size, location, reputation, and programs are also very important factors. Choose a school where your student can succeed, graduate, and maximize his or her future opportunities.

Mistake #2: Thinking Only Short Term
Weigh benefits and costs that extend beyond the college years. The cheapest option might not be the best investment for the best return on a college education. Ask yourself: How much do I need to pay now? If you are financing part of your education with a student loan, will you be able to manage the payments within your post graduation income? If you will take out an adjustable rate loan, remember: rates are low now, but will most likely rise during your repayment period.

Mistake #3: Eliminating All Expensive Schools
You might qualify for financial aid from expensive, private schools. You might also qualify for a merit or athletic scholarship.

Mistake #4: Taking the First Offer
Negotiate the best offer you can get. If a solid second choice school offers a better financial aid package, share that information with the student aid office at your top choice school to see if it would consider improving its offer.

Mistake #5: Not Having a Plan B
If you can't afford your first choice, consider going to a less expensive school or even a good junior college for your first two years. Then, transfer to your first choice school. Check ahead of time for transfer requirements so you will be academically qualified and not lose any credits.