Planning For College
The key to saving for college is to start early.
- Go over your monthly finances and find a little extra money you can put away. Even $25, $50 or $100 can make a big difference.
- Make a commitment to devote at least that amount each month, and to add to it as your income increases. This can be a part of your monthly spending plan.
- Shop around for the best interest return you can get for your money. Banks and credit unions may offer interest on a savings account. They may also offer other interest-bearing accounts that can increase your savings over time.
Visit the Saving and Spending section for helpful information about the saving process.
University or State College
Another way to save for college is to consider the cost of a university versus a state college. State colleges typically cost less than a university, while some offer the same programs of study. Attending a state college will give you some time to transition into this new phase of your life. Also, getting accepted into a Florida university tends to be a bit easier if you have gone through the state college system.
Preparing for college can begin as early as a family may wish to do so. Some families may decide to save money using traditional means like a savings accounts but there are other saving vehicles that can offer benefits like tax-free earnings.
All fifty states offer at least one kind of college savings plan known as a 529 plan. You can participate in almost any 529 plan nationwide, but your home state may offer state-specific benefits. A 529 plan is a tax-advantaged savings plan with two types: prepaid tuition plans and education savings plans.
Prepaid Plans Advantages:
- Allows you to make contributions toward tuition and fees over time
- Locks in current tuition prices
- Earnings are tax-free when used for qualified higher education expenses
- Can be used nationwide
- If plans to attend college change, your plan can be transferred to another
family member or you can get a refund for what you paid into the plan
Savings Plans Advantages:
- Allow you to invest and save over time for a wide range of education expenses
- Earnings are tax-free when used for qualified higher or K-12 education expenses
- Can be used nationwide
- If plans to attend college change, your plan can be transferred to another
family member or you can close the plan and withdraw the remaining balance
529 College Saving Plans and Financial Aid Availability
Any assets that you or the beneficiary own, including 529 plan assets, can affect eligibility for need-based financial aid. If the 529 plan is owned by the parent, on average, about 5.6% of the account would be considered in determining the Expected Family Contributions (EFC). In most cases though, a 529 plan will have a minimal effect on the amount of aid a student can receive. 529 plans won’t affect merit-based aid or scholarships.
To learn more about Florida’s College Savings Plans, visit Florida Prepaid
Coverdell Education Savings Accounts
Coverdell accounts are another tax-advantaged education savings option but come with qualifications and restrictions:
- Only available to families below a specific income level
- Designated beneficiary must be under the age of 18 or have special needs when the account is established
- You can only contribute up to $2,000 a year per child
- Funds must be used by the time a student is age 30
For more information on this type of savings account please visit www.irs.gov/taxtopics/tc310.
Financial aid is money to help pay for college or career school. Grants, work-study, loans and scholarships help make higher education more affordable and can come from federal, state, school and private sources. Some students may qualify for extra aid dependent on their area of study, whether they are in the military services or a veteran. Learn more, visit Types of Financial Aid.
Complete the Free Application for Federal Student Aid (FAFSA)
Filling out the FAFSA form is a straightforward and easy process. The FAFSA Process graphic is a great resource to help you prepare, complete and then submit a FAFSA form.
LEARN IMPORTANT TIPS ABOUT FILLING OUT THE FAFSA FORM!
After You Apply
Soon after applying online, you will receive a Student Aid Report (SAR). It will have all the information you submitted when you applied. Look it over carefully. Don’t worry if there are any mistakes; you'll be able to reopen your application and amend it.
If you meet the basic eligibility criteria for federal student aid, the financial aid office at your college or career school will determine how much you are eligible to receive. They use a formula that involves your Cost of Attendance (COA) and your Expected Family Contribution (EFC). You can find your EFC in the upper right-hand corner of your SAR. Visit the Complete Aid Process for next steps about how to compare and reply to financial aid offers and more.
The U.S. Department of Education’s office of Federal Student Aid provides more than $120 billion in financial aid to help pay for college or career school each year.
Visit StudentAid.gov, the U.S. Department of Education's official website for information about grants, loans, work-study, and tax credits for education and how to apply for them.
The best form of financial aid for college is the grant. This is money that, unlike a loan, you don’t have to pay back except for reasons like early withdrawal from a program or an enrollment status change. Grants are an option that are offered by the federal government and sometimes the school itself. They are offered based on income, major accomplishments and needs. Most times you can use several grants throughout your college career. There is a limited amount of grant money available so applying early is key to being awarded a federal financial aid grant. Each school sets its own deadlines that you can find on its website or by asking someone in its financial aid office.
FEDERAL PELL GRANTThe most common federal grant for higher education is the Pell Grant. It's available only to undergraduate students who haven't earned a degree. To get one, a family must demonstrate financial need, based on their income and assets, and on the cost of the school to be attended. Visit the Federal Pell Grants page for amounts awarded and when and your duties on how to maintain a Pell Grant if you should receive one.
FEDERAL SUPPLEMENTAL EDUCATIONAL OPPORTUNITY GRANT (FSEOG) If your financial need is particularly high, you might qualify for an additional grant, the Federal Supplemental Educational Opportunity Grant (FSEOG). These are given to supplement Pell Grants given to recipients with the lowest expected family income. These grants range from $100 to $4,000 a year, depending on: your financial need; when you apply; the amount of other aid you get; and the availability of funds at your school.
TEACHER EDUCATION ASSISTANCE FOR COLLEGE AND HIGHER EDUCATION (TEACH) GRANT If a student is interested in teaching as a career after college, a Teacher Education Assistance for College and Higher Education (TEACH) Grant could be the right way to go. This federal grant is awarded to students who agree to teach in a high-need field for four years at an elementary school, secondary school, or educational service agency that serves students from low-income families. Additional requirements may be necessary. If the service obligation is not met, the grant is converted to a Direct Unsubsidized Loan.
Another non-loan way to cover the cost of college is work-study where the recipient works a part-time job in exchange for college expenses. The work is paid by the hour. The employer, typically the school, must allow for a flexible schedule so as not to interfere with school responsibilities. The program encourages community service work and work related to the recipient's course of study. Check with your school’s financial aid office to find out if your school participates.
Many nonprofit and private organizations offer scholarships to help students pay for college or career school. This type of free money, which is sometimes based on academic merit, talent, or area of study, can make a real difference in helping you manage your education expenses. You can learn about scholarships by contacting the financial aid office at the school you plan to attend and by researching online. Be careful to avoid student aid scams, make sure the scholarship information is legitimate and remember that you don’t have to pay to find scholarships or other financial aid.
When you receive a student loan, you are borrowing money to attend a college or career school. You must repay the loan as well as interest that accrues. It is important to understand your repayment options so you can successfully repay your loan. Loans made by the federal government, called federal student loans, usually have more benefits than loans from banks or other private sources.
Learn more, visit Federal versus Private Loans.
Types of Federal Student Loans Available
- DIRECT SUBSIDIZED LOANS are loans made to eligible undergraduate students who demonstrate financial need to help cover the costs of higher education at a college or career school.
- DIRECT UNSUBSIDIZED LOANS are loans made to eligible undergraduate, graduate, and professional students, but eligibility is not based on financial need.
- DIRECT PLUS LOANS are loans made to graduate or professional students and parents of dependent undergraduate students to help pay for education expenses not covered by other financial aid. Eligibility is not based on financial need, but a credit check is required. Borrowers who have an adverse credit history must meet additional requirements to qualify.
- DIRECT CONSOLIDATION LOANS allow you to combine all of your eligible federal student loans into a single loan with a single loan servicer.
NOTE: What is a Stafford Loan? LEARN MORE
Visit Federal Student Loan Programs. to learn more.
Learn about different types of Student Loans in the Life Events section of Finance Your Future, a free online financial literacy
course that teaches important financial skills, including planning
for the future.
Managing Your Federal Student Loans
Understanding the details of repayment on your federal student loan can save time and money. These resources will help you learn about the repayment process:
Overwhelmed by student debt?
It is now easier than ever to create a personalized path to affordable monthly student loan payments with the use of the CFPB's Student Loan Payback Playbook. This is a tool that helps borrowers gain a better understanding of the repayment options available to them for paying off their student debt.