Personal Finance

The 7 smartest ways to pay for college

Senior Estate Planner, Mike Repak, discusses the best strategies to fund college education
today and provides tips on how to save.



With the consistent increase in population, competition for entry level jobs has escalated to levels never seen by previous generations, which makes it that much more important to obtain an advanced education. There is no price tag on learning and how it can enrich one’s future.

Many parents are unable to save enough money for their children’s college education, especially since the price of college is so high today. When college application time comes, they are left scrambling, trying to figure out how they will pay tuition. But, there is hope and options available for those that weren’t able to save.

A good approach to paying for college is to use a combination of these seven smartest ways to fund college education:

1. Saving

The smartest way to fund college is through saving. Set up a UGMA/UTMA/529/Coverdell Education Savings Account (an advisor can help choose the most appropriate plan for each unique situation).

2. Budgeting

Take a hard look at your annual spending and income. Two or three years prior to your child attending college, look to pay down debt or pay off other expenses so that funds from current income and bonuses can be used to pay a portion of your child’s college tuition.

3. Borrowing

Borrowing is a perfectly acceptable option for funding college. But it is also very important to have a realistic plan for paying off loans after college. Students need to understand the cost of borrowing compared to their future earnings potential and make smart borrowing decisions. If the student decides to borrow, a Stafford Loan might be a good choice:
  • Stafford Loans offer lower rates than consumer loans (currently 4.29% through June 30, 2016).
  • They can be repaid in 10-25 years starting 6 months post completion or half time enrollment.
  • The loan may be subsidized where the government pays the interest while the student is in school, or unsubsidized where interest accrues and is paid back later.
  • Limits: Dependent: $3,500 per year for freshmen, $4,500 for sophomores, $5,500 for juniors and seniors, additional $2,000 in unsubsidized loans. Independent: Same limits, but higher unsubsidized amounts (up to $6,000 for freshman and sophomores, $7,000 for juniors and seniors).

4. Financial Aid

The first step in establishing how much aid a student and/or parent can receive is by filling out the FAFSA form (Free Application for Federal Student Aid) to apply for financial aid.
  • Tip: the FAFSA is due after January 31st of the child’s senior year (obtaining advice from an advisor when completing the FAFSA can be beneficial). The FAFSA allows for grants and federal student loans. 
  • Parents can also help by applying for the Parent Loan for Undergraduate Students aka PLUS Loan (Federal Direct PLUS Loans). The current PLUS Loans rate is 6.84% through June 30, 2016.
  • It is fixed for life, with payments beginning 60 days after receipts and with up to 10 years to repay with interest. 
  • They are generally the most common and often the only available direct option for higher resource/ income families. 
  • One last loan type is Private Student Loans. These types of loans are generally, unsecured loans and may also be referred to as signature loans. These loans typically have very high interest rates and may be difficult to obtain without impeccable credit.

5. National Grants

Look into Pell Grants, Academic Competitiveness Grants, or National SMART Grants to help fund your child’s education.

6. Local Scholarships

In some areas, there are civic and/or religious scholarships available. The search should start prior to their junior year in high school, and some scholarships may be specific to a school or even area of study. If the school where the child may attend is known, the parents can check with them to see what scholarships may be available (a high school guidance counselor may be able to help too).

7. Benefactors

Groups such as AmeriCorps, Peace Corp, National Health Services and ROTC can sometimes help with educational costs in exchange for service commitments. Although these methods of saving for and funding college are great considerations, some of the best techniques for helping with college expenses don’t involve money at all. Obtaining good grades, advanced placements in school, extracurricular activities (which could involve sports, civic, or religious organizations), gaining college credits while still in high school, and scoring as best as possible on SAT/ACT exams can all serve to reduce the costs and improve choices for a child’s (or children’s) education.

Your team at Janney can help create a plan that best suits your needs, or sort through the various options if you haven’t been able to save for college. Call your Janney Financial Advisor today for more information.

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Michael Repak
Vice President/Senior Estate Planner
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Mike provides advice and guidance in all aspects of financial, tax, and estate planning issues. He earned his Bachelor’s degree from William Paterson University in Wayne, New Jersey, and has a Master’s degree from the University of Wisconsin in Madison, Wisconsin. He has a CPA/PFS credential, and Series 7 and 66 securities licenses. He received his J.D. from the University of Florida and his LL.M. in Tax Law from NYU. 

He has been an adjunct professor in the MBA program at Temple University and is a sought-after speaker for professional conferences and events. He is also frequently featured as a Money Doctor on www.360financialliteracy.org, the public education site of the American Institute of Certified Public Accountants. Mr. Repak has served on several non-profit and civic boards, is a graduate of Leadership Philadelphia, and a member of the Union League of Philadelphia.


Janney Montgomery Scott LLC, its affiliates, and its employees are not in the business of providing tax, regulatory, accounting, or legal advice. These materials and any taxrelated statements are not intended or written to be used, and cannot be used or relied upon, by any taxpayer for the purpose of avoiding tax penalties. Any such taxpayer should seek advice based on the taxpayer’s particular circumstances from an independent tax advisor.

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