College  |  September 26, 2018  |  Rob Zodda

Parents—wondering how to pay for college? Start here.

What you'll learn
  • What to discuss with your child
  • When your child should apply for scholarships
  • How federal loans compare to private loans

Maybe the paying-for-college process has changed a lot since your glory days. Or maybe your student will be the first in your family to go to college. Whatever the case, it can be tough to know where to start when it’s time to help your kids pay for college. Try breaking it into steps with this 1-2-3 approach.

1. Use savings, scholarships, and grants


According to Sallie Mae’s national study, How America Saves for College, the average amount that parents with children under age 18 have saved for college is $16,380. However much you’ve saved, it’s important to set clear expectations with your child before that tuition bill comes due.

Yes, your high school senior is busy (and you probably don’t want to burden them with finances), but if you have an honest conversation now, your student will thank you later. It’s important that students understand what their financial choices will mean for them after graduation.

Make sure you’re on the same page about the answers to these questions:

  • Is paying for college your responsibility or does your child have skin in the game?
  • How much money has your family saved for college?
  • How much savings can your child contribute to their own education?
  • Who will make student loan payments, if necessary?

One of the biggest missed opportunities in terms of paying for college is college scholarships, free money for college that your child won’t need to pay back. They’re offered by colleges, towns, states, religious organizations, companies, non-profits, and more. Scholarships can often range from $500 to more than $25,000.

Scholarships have come a long way—they’re not just for straight-A students and athletes. There are opportunities for kids with any skill or interest:

  • crafters
  • gamers
  • musicians
  • future Democrats/Republicans
  • volunteers
  • film buffs
  • lefties
  • and more

Your child will need to search, using a tool like Nitro by Sallie Mae, and apply for scholarships. Applications might require an essay or other submission. Check out Nitro by Sallie Mae where you can get matched to scholarships and track your college funds all in one place. (By clicking this link, you’ll go to our trusted affiliate, SLM NitroCollege LLC. Any use of the site will be governed by SLM NitroCollege LLC’s terms of use and any information you provide will be governed by the terms of SLM NitroCollege LLC’s privacy policy.)

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Pro tip:

Parents who have been through the process say applying for scholarships during senior year of high school almost seems late. Juniors can (and should) apply early and often. Think of scholarships as on ongoing item on your student’s to-do list.

College grants are another free money option for college. The difference with grants is that they’re usually given out based on financial need.

For your student to qualify for grants, your family needs to fill out the FAFSA (Free Application for Federal Student Aid), a form that determines how much federal financial aid you’re eligible for.

2. Take advantage of federal student loans

If your family needs to borrow money for college, borrow from the federal government before exploring private student loans. Federal student loans usually have lower interest rates and more flexible repayment options than private student loans.

To qualify for federal student loans, again, your family needs to fill out the FAFSA. You can submit the FAFSA as early as October of your student’s senior year of high school.

Have this info handy when filing the FAFSA:

  • Student’s driver's license and Social Security number
  • Parents’ Social Security numbers and birthdates
  • Your family’s latest federal income tax returns
  • W-2 forms
  • Bank statements
  • Information on your family's investments (real estate, money market funds, stocks, etc.)

3. If you still need money, consider a private student loan

Private student loans are offered through banks, credit unions, and other financial institutions. Work with your child to find the lender that offers the lowest interest rates and loan repayment options that work for you.

Need money for college?

Consider a Sallie Mae® private student loan

  • Available for online or on-campus study
  • Competitive fixed and variable rates
  • No origination fee or prepayment penalty
  • Multi-Year Advantage: Returning undergraduate students have a 97% approval rate with a cosignerfootnote 1

When cosigning a private student for your child, be sure you can both answer these questions:

  • When will the first loan payment be due?
  • How much will the monthly payment amount be? (This might depend on the repayment option you choose. See your options with a student loan repayment calculator.)
  • What’s the interest rate?
  • Is the interest rate fixed or variable (meaning, is it always the same or can it change?)
Pro tip:

Cosigning a loan is more than just signing a piece of paper. Cosigners are equally responsible for making sure payments are made on time. Missed and late payments could trigger late fees. Plus, late payments might be reported to consumer reporting agencies, impacting your credit score.

You’re on the right track

By starting early, following the 1-2-3 approach, and having open conversations with your child, you can help them make a great investment in their future.

footnote 1. Sallie Mae loans cover enrollment periods of up to 12 months. Students must apply for a new loan each school year. This approval percentage is based on students who were approved for a Sallie Mae undergraduate loan with a cosigner in the 2020/21 school year and were approved for another Sallie Mae undergraduate loan when they returned with the same or new cosigner in 2021/22. It does not include the denied applications of students who were ultimately approved in 2021/22.

footnote Sallie Mae does not provide, and these materials are not meant to convey, financial, tax, or legal advice. Consult your own financial advisor, tax advisor, or attorney about your specific circumstances.