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A message to parents on paying for college

Explore key insights on college financing, from its undeniable worth to the importance of applying for financial aid. Learn about the FAFSA, the gateway to grants, loans, and work-study opportunities, and understand the role of loans in funding education. Start early, stay informed, and make college affordable!

FAFSA | CSS Profile | Federal Student Loans | Federal Parent PLUS Loans | College Scorecard & Net Price Calculator | FAFSA4caster | Additional Info on Beth Kobliner


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Video transcript

- If you've been watching a lot of these Khan videos for students, well, this is one for your parents. So grab your adult and bring 'em into the room to listen. Okay, parents, listen up. If you're like a lot of other parents, one of your big worries is paying for your kid's college. And believe me, every parent feels this way, whether they've been to college themselves or your kid is the first in family to go to school. I know this, I write about personal financial and money a lot. Here's six questions along with answers that may help. First, "Is college really worth it?" The answer is yes, absolutely. Despite what you hear, not going to college is not a good decisions for most students. Sure, there are other paths, but the facts speak for themselves. College grads earn a million dollars more over their lifetimes on average than kids who only graduate from high school. Clearly is a good investment for most students. Two, "Can my family afford college?" The answer is also yes. No matter how much money you make, you can afford college. But here's the problem. Every year, millions of financial aid dollars go untapped, just left on the table 'cause people don't apply for it. Sometimes it's 'cause just think it's too expensive and they assume that college is out of their reach. But here's the thing. There is a lot of financial aid out there. This isn't just a myth. And it comes in the form of grants and scholarships, which is money you don't have to pay back, and also work-study, which is working during school. And then loans, which is money your child does have to pay back. But the most important thing for you as a parent to know is that you need to fill out the financial aid forms. Particularly if your income is low, much of the cost, if not all of it, will be covered by financial aid. The Big Kahuna of all the forms is called the FAFSA. Remember that name, 'cause that's the most important form you need to know about. It's the Free Application for Federal Student Aid. And the FAFSA is just the key to the money. By filling it out, you're opening the door to all these grants and loans and jobs, and it's money from the federal government, the school, your state, and private scholarships. And even families who have a higher income, they shouldn't not apply 'cause they think they won't qualify. Filling out the FAFSA's important for you too because you may be eligible for lower-cost loans. I have to be honest here. Filling out the FAFSA is not fun. It is a bit of a pain. But you have to do it. And you have to fill it out every year. Beginning in January 1st, the forms become available. And also the thing about the forms is that aid is often handed out on a first come, first served basis. So you wanna fill out as soon after January 1st as possible. Another form you may need is called the CSS. A lot of private schools and some public require this form as well. Basically, check out the Khan videos about all of these forms to get a sense of exactly what you need to do. Another question I'm asked a lot is, "How do I find the best school at the lowest cost?" And this is a bit of a trick question, because a more expensive college may actually have more financial aid to dole out. So in the end, it could cost you about the same as one with a lower sticker price. And this is so important for you to know, because again the key to getting that money is filling out the FAFSA. That way you'll know what each school will actually cost you. Parents wanna know, "Is it really wise "to have my kid go debt for college?" It seems like a huge endeavor. And going into lots of debt seems like a scary idea. But the truth is realistically, your child will probably have to take out some loans. Most students do, 70% of students do. And your job as a parent is to make sure the amount of loans they take out is reasonable and do it in a really smart way. The best loans you wanna look to are federal student loans. It's best if possible to stick with these federal loans. They're called Federal Direct Loans. They used to be called Stafford Loans. And they tend to have very low interest rates. Recently it was 4.7%. Federal loans are better deals than private loans, which charge much higher rates of 18% or more. The other big benefit of federal loans is that they offer a variety of repayment plans that'll make it easier to pay back after graduation. Now as a parent you might wonder should you take out loans to send your kid to college? You might feel guilty, but the truth is, unless you're in really great shape yourself financially, it's not a good idea to go into deep debt to pay for your kid's college. The point to keep in mind is remember your child can borrow for college, but you can't borrow for your own retirement or financial security. If you do think borrowing makes sense, Federal Plus Loans for parents are definitely worth looking into. The interest rates tend to be lower than the rates on private loans. There's a good website, studentaid.gov/plus, which can give you some information. And finally, "When do I start talking "to my kid about paying for college?" The answer is, "As soon as possible." If you can, starting at the beginning of high school is great, but honestly, now that you're watching this video, it's the time to start. You wanna get your kid in the right mindset. You wanna make sure he realizes grades are really counting now toward college. And mostly you want him to know that there are a lot of choices out there. There's some really good tools in the Department of Education to figure out what you'll be expected to pay and what's the right school for your kid. But most of all, being positive and stressing that you're in this together really goes a long way. A long way to that ultimate goal of seeing your child graduate from college.