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What parents should know before funding their kids college education

Another school year is about to begin and as parents send their high school seniors off to their final stint before college, they are likely thinking about the next step. For obvious reasons, parents will almost certainly be wondering how they will finance their students' years at the university, which can be a stressful experience to say the least. Before looking into the options available in terms of scholarships, financial aid and other funding opportunities, there are a few things of which all parents should be aware. 

Here are a few of the more important matters to keep in mind when preparing to begin the search for funds:

Costs are rising across the board
The College Board offered several statistics regarding the rising costs of attending a university, broken down by the types of institutions students choose for their higher education:

  • Public four-year, in-state: Tuition rose 2.9 percent between 2014 and 2015 at these establishments, growing from $9,145 to $9,410. What's more, room and board rose 3.6 percent to $10,138, and the total cost, including fees, books and other expenses, went up 3.3 percent in the study period. 
  • Private four-year, non-profit: Similar increases in costs were recorded among private institutions, which saw a 3.2 percent increase in room and board to reach $11,516, and 3.5 percent in total costs which are now $43,921 annually. Tuition logged the largest rise at 3.6 percent to $32,405. 

It is worth noting that public two-year institutions for in-district students, public four-year for out-of-state students and private four-year for-profit schools all saw increases in prices between 2014 and 2015. This trend is not expected to ease anytime soon. As such, parents need to ensure that they are planning for rising annual costs of school, especially when sending their students to four-year higher education establishments. 

There are a lot of calculations to complete before sending students off to college. There are a lot of calculations to complete before sending students off to college.

Financial aid breakdown 
The National Center for Education Statistics offers data regarding the average amount of funds provided from financial aid in 2014, broken down by category:

  • Federal grants: The average first-year student awarded a federal grant was $4,629 for public schools and $4,788 for private institutions.
  • State grants: This type of funding broke down to $3,752 for public colleges and $3,792 for private schools.
  • Institutional grants: With a much greater discrepancy between public and private school attendees, NCES found that $5,476 went to the former group and $17,088 went to the latter. This is one of the reasons why parents need to understand the differences in funding between public and private institutions.
  • Loans: Public university students were awarded an average $6,701, while private university attendees received $8,128.

With student debt above $1 trillion in the United States, parents would do well to learn as much as possible about the funding process before diving in. Rather than trying to go it alone, a great option available is to speak to a college funding expert, as this will help deliver the right information in accordance with unique needs. Speak to a Smart TrackTM college funding expert today to ensure the best possible outcomes in your students' finances following graduation.